10KSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

(Mark One)

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007 or

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____ to _____

Commission file number: 333-130394

VeruTEK Technologies, Inc.
(Exact name of small business issuer in its charter)
Nevada	06-1828817
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

65 West Dudley Town Road, Suite 100 Bloomfield, CT	06002
(Address of principal executive offices)	(Zip Code)

Issuer's telephone number: (860) 242-9800

Securities Registered Under Section 12(b) of the Exchange Act: None

Securities Registered Under Section 12(g) of the Exchange Act:

None

(Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.    Yes |_|    No |X|

Check 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 |X|    No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.    |_|

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

    Yes |_|    No |X|

State issuer's revenues for its most recent fiscal year: $616,331.

The aggregate market value of the voting common equity held by non-affiliates was $9,472,608 based upon the closing sales price of Common Stock on the OTC Bulletin Board on March 17, 2008 of $1.60 per share.

As of March 17, 2008 21,310,813 shares of Common Stock, par value $.001 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (Check one):    Yes |_|    No |X|

VeruTEK Technologies, Inc.

INDEX

Part I	Description	Page Number
Item 1	Description of Business	1
Item 2	Description of Property	21
Item 3	Legal Proceedings	21
Item 4	Submission of Matters to a Vote of Security Holders	21
Part II
Item 5	Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	22
Item 6	Management's Discussion and Analysis or Plan of Operation	23
Item 7	Financial Statements	32
Item 8	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	52
Item 8A(T)	Controls and Procedures	53
Item 8B	Other Information	53
Part III
Item 9	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act	54
Item 10	Executive Compensation	56
Item 11	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	62
Item 12	Certain Relationships and Related Transactions and Director Independence	63
Item 13	Exhibits	64
Item 14	Principal Accountant Fees and Services	65
Signatures		66

FORWARD LOOKING STATEMENTS

Forward Looking Statements - Cautionary Statements

This Form 10-KSB contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Specifically, all statements other than statements of historical facts included in this report regarding VeruTEK Technologies, Inc.'s (the "Company") financial position, business strategy and plans and objectives of the Company's management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such statements (the "cautionary statements") reflect the current view of the Company's management with respect to future events and are subject to risks, uncertainties, and assumptions related to various factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, product introductions and acceptance, technological change, changes in industry practices, one-time events and the other risks identified elsewhere herein. Although the Company believes that expectations are reasonable, it can give no assurance that such expectations will prove to be correct. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements. The Company does not assume any responsibility to publicly update any of its forward-looking statements regardless of whether factors change as a result of new information, future events, or for any other reason. The Company advises you to review any additional disclosures made in its Forms 10-QSB, 8-K, 10-KSB and other reports filed with the Commission.

PART I

Item 1.   Description of Business

Description of Our Company

VeruTEK Technologies, Inc. (“VeruTEK-Delaware”) was organized as a Delaware corporation on February 1, 2006. VeruTEK-Delaware was formed to develop and commercialize new technologies in the field of environmental remediation. VeruTEK-Delaware provides technical and consulting services to clients to resolve complex environmental remediation matters at a wide range of waste sites, principally by combining surfactant and oxidant chemistries.

On May 9, 2007, a Nevada corporation formerly known as Streamscape Minerals, Inc. ("VeruTek-Nevada") entered into and closed a share exchange agreement with VeruTEK-Delaware, and each of VeruTEK-Delaware's shareholders (the "Purchase Agreement"). Pursuant to the Purchase Agreement, VeruTek-Nevada acquired all of the issued and outstanding capital stock of VeruTEK-Delaware from the VeruTEK-Delaware shareholders in exchange for 16,684,112 shares of VeruTEK-Nevada common stock.

We conduct our business operations through VeruTEK-Delaware, our wholly-owned subsidiary. As used hereafter, the terms “Company”, “VeruTEK”, “we,” “us,” or “our” refer to VeruTEK-Nevada and our wholly owned subsidiary, VeruTEK-Delaware.

VeruTEK-Nevada was incorporated in the State of Nevada on February 3, 2004. Until we acquired VeruTek-Delaware, we were an exploration stage company in the business of the acquisition and exploration of mining properties and intended to be in the business of mineral property exploration. Management determined that the lack of capital and a lack of funding sources to fund mining explorations and mining operations would not allow us to execute our business plan in a viable fashion. Management decided not to proceed with a mineral exploration program and consequently elected to merge with VeruTEK-Delaware.

1

Description of Business

We are an environmental remediation company that provides environmental solutions for complex environmental problems. We have developed new clean and green technologies using food-grade surfactants and food additives that remove contamination without risk to humans or the environment. We anticipate that our technologies will allow development of the following revenue streams:

•   remediation of contaminated sites;

•   sale of branded green chemicals,

•   licensing of proprietary technology;

•   laboratory services; and

•   high-level consulting.

We currently derive our revenue from high level consulting services related to the evaluation of environmental contamination risks for clients, laboratory services related to treatability studies intended to evaluate the effectiveness of our technology, know-how and processes in addressing specific contamination issues at specific client sites and from pilot projects intended to demonstrate the effectiveness of our capabilities by directly addressing contamination issues at client sites. Our objective is to utilize activities from each of the above revenue sources to successfully demonstrate our capabilities in addressing environmental remediation issues and thereby secure much larger contracts for full scale remediation of environmental issues at client sites. We are continuing to pursue such opportunities. As of this date, the Company has secured one large project with Keyspan Corporate Services LLC (“Keyspan”) and three relatively small commitments for full scale remediation projects. Securing a sufficient number of full scale remediation projects at acceptable profit margins is critical to ensure the long-term viability of the Company.  We have not yet established revenue streams related to the sale of branded green chemicals or licensing of proprietary technology.

The Company had two customers that accounted for approximately 83% of its revenues for the year ended December 31, 2007. A major utility Company located in the Northeastern United States and a major engineering firm accounted for 57% and 26% of fiscal 2007 revenues, respectively.

We have successfully tested the first series of clean, green and effective technologies for surface and subsurface contamination in laboratory and field studies. The tests have involved both laboratory and field study. Laboratory studies were conducted by an independent third-party laboratory. Field tests were observed by a third party consultant and the New York State Department of Environmental Conservation (“NYSDEC”). A report on field tests prepared by the third party consultant has been accepted by the NYSDEC.  In addition, we have received approvals from the South Carolina Department of Health and Environmental Control and the Florida Department of Environmental Protection to utilize our technology for remediation at potential client sites in their respective states.  We will use this technology to diversify our revenue streams. In the long term, these technologies will be used to penetrate the fragmented environmental market  so the Company can become the first large, green environmental services firm.

Currently, most contaminated surface soil is excavated, treated at an off-site facility and landfilled. Initially, remediation of contaminated sites will be our most significant revenue stream. We will clean soils, sediments, and groundwater especially for clients with large liabilities (such as Fortune 500 industrial clients, utilities, the federal government and others). These solutions remove contamination at complex (large) commercial/industrial and government sites. Our opportunity and vision is to replace the dig/haul/landfill mentality that pervades the environmental market. Instead of costly removal of vast quantities of contaminated soil, we now have the ability to design treatments in place using food-grade materials.

Branded green chemical development is our second revenue stream. We have developed our first line of green, biodegradable solutions for environmental cleanup. The continual development and branding of the VeruSOL line of products will facilitate movement of the marketplace to more intelligent, earth-friendly solutions. We believe selling of branded green chemicals will catalyze our position in the environmental marketplace.

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The environmental market is fragmented between water resources management, laboratory and analytical, consulting, real estate, and remediation sectors. Remediation (or cleanup) and laboratory services are common themes of these markets; both are marketing vehicles and revenue generators. Initially, our laboratory services will focus on high-end and specialty analysis of pollutants with the expectation and treatability studies. As we grow, the laboratory will grow to provide support for our growing services.

With a previous dearth of real environmental solutions available, the environmental consulting market is currently commodity driven by technologies centered on excavation and landfill disposal. These traditional remediation technologies are basic to many implementers and result in a lack of differentiation and higher levels of competition. With more complete, long-term solutions for cleanup, the environmental consulting market will be changed to high-end consulting for true cost-effective remediation utilizing green chemistry that can be safely implemented. We are positioned to capitalize on this trend in the market.

Our technologies can achieve complete or near complete cleanup of soils to provide a real solution. We use plant-derived natural surfactants that constitute our green solution.  The cost of our technology is comparable to excavation and landfill disposal technologies for contamination near the surface of the ground. However, unlike traditional excavation and landfill remediation, our technology is not depth limited and consequently we are able to remediate subsurface soil contamination at greater depths. The cost of excavation and landfill disposal remediation at depth is prohibitive. In addition, excavation and landfill disposal is almost never 100 percent effective and sometimes leaves significant amounts of contamination in place. Excavation and landfill disposal also increases the likelihood of exposure to contaminants for workers and communities through which contaminants are hauled. By design, landfill disposal moves the contamination from one location to the landfill location without eliminating the contamination. Our technology has none of these limitations.

Our technologies are effective in remedying organic chemical based non-aqueous phase liquids in soils and groundwater.  Organic chemicals are carbon and hydrogen compounds that are important constituents of many products and industries such as paints, plastics, food, explosives, drugs, petrochemicals, to name but a few. As a result of our technology development, we have positioned ourselves as a solution provider for many types of organic chemical contamination by providing uniquely designed solutions in partnership with the traditional environmental remediation consultants and implementers. We believe our technology is unique and patent applications covering our technology are pending. The Company is using its green chemistry solutions and implementation technologies for a number of applications, including providing remedies to treat herbicide and pesticide contamination and contaminated real estate.  The Company is also evaluating opportunities in its laboratory including oil spill remediation, oil extraction and water treatment. Accordingly, we believe we are uniquely positioned to capitalize on the drive toward more effective, safe and economical solutions to environmental problems.

We expect our technologies will have an impact on the “brownfields” real estate market. These green technologies are non-intrusive and can safely remedy contamination in-place in cities and residential areas without having to destroy structures or move residents. Our technologies can be used to essentially eliminate significant obstacles faced in the sale or resale of these properties. This area offers another source of potential revenue.

We believe we have the opportunity to redefine the environmental market with green-brand, thoughtful, and cost-effective solutions. In addition, borrowing marketing strategies from other industries will help transform the large commodity-driven environmental market to a specialty market.

As of December 31, 2007, we had 13 employees of which 10 are full time salaried employees and 3 are hourly employees. We have not experienced any work stoppages and we consider our relations with our employees to be good.

3

Products and Services

We have developed several new, patentable technologies that we believe will change the nature of the environmental remediation market at complex waste sites. By combining surfactant and oxidant chemistries, we have invented a proprietary controlled dissolution and desorption process (by dilute surfactant mixtures) with concomitant biological or chemical destruction processes. We have already developed a simultaneously coupled co-solvent/surfactant activated persulfate oxidation process. Our goal is to have our remedies replace generic site remedies with designer surfactant/oxidant combinations that are environmentally safe and non-intrusive to the nearby community. Designer remedial applications have the same brand appeal to environmental stakeholders that “designer drugs” have in the pharmaceutical industry. We expect the environmental industry to evolve toward a pharmaceutical-like business with green chemicals (the VeruSOL™ line, for example) continually developed and sold under developed brand names.

Our Surfactant-Enhanced In Situ Chemical Oxidation (S-ISCO™) is a technology that safely destroys (reduces to carbon dioxide and water) organic contamination.  It can target contamination deep in the subsurface of soils such that remediation is possible where previously it was not possible.  It is disruptive because it will force Principal Responsible Parties to remedy their subsurface contamination instead of leaving it in place.  It also provides a cost-effective and safe means to remedy surface and subsurface contamination in place without excavating it and sending millions of tons of contaminated soils to landfills, many of which are hundreds or thousands of miles away.  Our technology has been tested in the laboratory for a specific contaminated site with coal tar in the subsurface.  It was also successfully implemented at a pilot test site from April 2006 to November 2006.  An independent third-party report concluded that our S-ISCO™ mixtures traveled together (coeluted) to targeted soil zones and contaminants were solubilized and destroyed through the pilot test area. Results of the transport data show that contaminated soil strata were and can be targeted for treatment by the S-ISCO™ method. The pilot test demonstrated that S-ISCO™ can be used to treat the contaminants such as tar saturated soils, tar blebs and tar-coated lenses beneath buildings and other potential obstructions (for example, railroad tracks).  The State of New York Department of Environmental Conservation (NYSDEC) has also approved the application of S-ISCO™ for full scale remediation at the site of our pilot test. S-ISCO™ is one type of a family of coelution technologies that we are developing.  We have completed extensive laboratory work for the remediation of chlorinated compounds.  We are beginning to work on implementing a remedy for the remediation of common herbicides and pesticides often found as residual material in farm soils.

We have developed Green Chemistry solutions using plant-derived surfactants and implementation technologies that remediate and eliminate the environmental effects of chemical waste.

COELUENT TECHNOLOGIES™

Coelution Technologies™ include Surfactant-enhanced in Situ Chemical Oxidation (S-ISCOTM) and provide treatment that enables the rapid removal of contaminants from soils and groundwater.

S-ISCO™

The S-ISCO™ process uses groundwater to move Green chemicals that destroy contaminants where they are located in the soil.  Alternatively, in soils that have low permeability S-ISCO™ can be deployed using emplaced fracturing methodologies or direct-push injection.  S-ISCO™ requires no heavy equipment, no destruction of buildings, little odor control, and very little community impact.

VeruSOL™

The Company’s VeruSOL™ product is a surfactant (surface active agent) based solvent. By combining VeruSOL™ with traditional oxidant chemistries the Company is able to remove contaminants from soils and groundwater through a controlled dissolution and desorption process, eliminating the need for excavation.

Currently the Company provides five variants of VeruSOL™, each designed for a specific type of contamination:

•           VeruSOL 1 – Designed to clean MGP and heavy diesel contamination

•           VeruSOL 2 – Designed to clean lighter organics, NAPLs and gasoline

•           VeruSOL 3 – Designed to clean chlorinated DNAPLs

•           VeruSOL 4 – Designed to clean soil and groundwater PCBs

•           VeruSOL 5 – Designed specifically for clay matrices

4

Additional Product Opportunities

The Company’s primary market is the remediation of surface and subsurface soil and groundwater contamination.  The Company also currently has field tests which include herbicide/pesticide and contaminated real estate remediation.  We believe our solutions have applications in oil spill remediation, oil extraction and water treatment.

HERBICIDES AND PESTICIDES

The Company has developed a remedy for legacy soil and groundwater herbicides and pesticides such as endrin and DDT that it is currently testing in a field demonstration.  Remedying herbicide and pesticides is useful in marketing to chemical companies that have a portfolio of contaminated properties from past improper disposal practices, railroads that used them extensively on their right of ways and military sites.  It also provides an additional opportunity to formulate a retail product that can be sold for residential buyers concerned about the presence of toxic compounds in their lawns.  Notably, communities around the US are preventing residential and commercial development of farmland soils that have had past agricultural activities until removal of legacy herbicides and pesticides.

CONTAMINATED REAL ESTATE REMEDIATION

The Company believes its technologies will have an impact on the “Brownfield’s” real estate market.  The Company’s green technologies can safely remedy contamination in-situ in cities and residential areas without having to destroy structures or move residents.  These technologies can be used to essentially eliminate the stigma of these properties for sale and resale.  A partnership or joint-venture with a real estate investment companies to cleanup urban, contaminated properties is potentially one of our most lucrative revenue streams.

OIL SPILLS

S-ISCO™ products are readily applicable to oil spills.  Because they are made of natural surfactants, they do not impact the marine environment.  Their action in slowly dissolving and then degrading coal tar is easily transferred to beach oil, both on rocks and which has seeped into the beach sands.

Demand

Government, industry, and the public are interested in cleaning up the environment. Federal and State laws require the cleanup of contamination that has been released into the environment.  When hazardous waste is dumped in soil, it poses a direct risk to dermal exposure and contaminants volatilize such that people can be harmed by inhaling minute quantities of gas that volatilize from the soil.  The hazardous waste also migrates to groundwater where minute quantities of the organic compounds dissolve in the groundwater.  These dissolved contaminants, benzene, for example, are transported off-site, where they volatilize into the soil gas and eventually can make their ways into houses.  The exposure pathways are called “vapor intrusion.”  Inhalation of the minute quantities of contaminants has been identified by the United States Environmental Protection Agency as a significant potential exposure pathway to be evaluated on hazardous waste sites.  There is no permanent remedy that removes contamination to provide sufficient protection to the general public and ecology.   As such, most owners of contaminated land generally approach the clean up through a risk based standard where they do the minimum clean up in order to limit their liability.  Risk-based standards are not a permanent remedy for several reasons:  (1) they are constantly being revised (usually downward) based on new or updated toxicological information, (2) there are new compounds that added to the regulatory list as new toxicological information is acquired and (3) based on new toxicological information, any site that is “closed” but that has residual contamination (that is, most, if not all, contaminated sites) can be reopened by EPA to require a more extensive cleanup.  We believe parties engaged in site clean up will begin to migrate from risk based standard remedies to designer surfactant/oxidant combinations that are environmentally safe and non-intrusive to the nearby community.

5

Distribution

Our products and services will be distributed and marketed by direct marketing, environmental consulting firms, licensees and chemical companies. We are currently distributing exclusively through two channels (direct marketing and environmental consulting firms). We will continue to patent site-specific remedies for system and license upgrades. This plan assumes that we will continue to rent, lease or resell equipment developed for the implementation of these new technologies.

Environmental Market

The environmental market is fragmented between water resources management, laboratory and analytical, consulting and remediation sectors. Remediation, which is an endpoint of all environmental projects, ties these markets together.

Trends in the Remediation Market

The market for environmental remediation is being driven by a number of trends including:

•           a better understanding of the health risks associated with environmental contamination;

•           an increased awareness as it relates to environmental conservation;

•           a stricter regulatory environment;

•           an improved understanding of the benefits of Green Chemistry solutions; and

•           the desire to solve environmental contamination with solutions that are economically sustainable.

Government, industry and the public are demanding the clean up of the environment, in no small part due to the increasingly proven negative health effects of contamination.  While consumer advocacy groups are stridently demanding further regulatory and legislative mandates and are increasingly vocal, it is important to note that federal and state laws already require the cleanup of environmental contamination.

Additionally, federal legislation such as the Clean Water Act, the Superfund law and Sarbanes-Oxley, have created both a legal requirement and a financial incentive to clean up contaminated sites, accelerating demand for environmental remediation. The Clean Water Act restricts pollution of the “Waters of the United States” without a permit.  The Superfund program forces people who own or who have owned toxic waste sites to remedy contamination that has leaked offsite.  The Superfund Amendment, Resource Conservation and Recovery Act (RCRA), legislates that Potentially Responsible Parties (PRPs) are responsible for onsite contamination.  Other important environmental contamination legislation includes the Endangered Species Act, the Community Right to Know Act and the Toxic Substances Control Act.

The profit motive also drives the environmental remediation market.  Real estate developers have increasingly focused on acquiring and remedying contaminated properties due to their low acquisition costs and potential for value recovery.  Property owners, insurers and shippers importantly seek to mitigate their environmental liabilities through environmental remediation.

Due to such legislation, large corporations must set aside substantial reserves to pay for environmental remediation.  These firms are required by Federal and state law to cleanup the contamination that has been released into the environment.  Corporate reserves mainly address the impact of contamination on human health and the ecology.

As a result, VeruTEK believes that over the next several years, federal, state, and local governments and private industry will commit billions of dollars annually to clean up sites contaminated with hazardous waste and petroleum products from a variety of industrial sources, which should drive demand for environmental remediation services and technologies.

Technology

Excavation and landfilling is the most frequently used method of soil and groundwater remediation in the US. However, much of the simple surface contamination amenable to low-tech removal has been completed. The remaining problems are deeper subsurface and contributing substantial contamination to groundwater and vapor in residences and commercial establishments. Because there is no effective remediation of subsurface contamination, there is a high demand for an effective remedy to subsurface contamination.

6

Technology Implications of VeruTEK Technologies

Remediation costs have been a prohibitive factor in speeding the pace of cleanups and the flow of revenues for firms concentrating on remedial construction. Cost effectiveness is already a vital competitive differentiating factor for contractors and is expected only to grow in importance. For many complex sites, such as those with Light Non-Aqueous Phase Liquids (LNAPLs) or dense non-aqueous phase liquids (DNAPLs), including chlorinated solvents, Manufactured Gas Plant (MGP) residuals and Polynuclear Aromatic Hydrocarbons (PAHs), treatment has been practically limited to excavation with off-site disposal.

Technology has played a limited role to date in the remediation of hazardous waste sites but will become increasingly important in the future as in situ remediation (remediation of contaminants in the place they are situated) methods gain importance. Previously, “dig and haul” was the method of choice for remediation. The table below presents the limitations of traditional remediation systems.

Remedy	Limitation
Soil excavation and incineration or disposal	Incapable of handling enormous volumes; not able to nondestructively remedy beneath buildings; liability retention associated with off-site disposal.
Off-site disposal	Environmental and community concerns, cost.
Pump and treat - groundwater	Liability not eliminated, only shifted. Proven ineffective, especially for non-aqueous phase liquids - acknowledged as a containment method.

EPA policy and a strong emphasis on cost effectiveness from the buyers of remediation services are both helping to drive in-situ methods, which require better technical solutions. The majority of “backlogged sites” are problem sites, which may either require novel treatment or new technologies. There is an urgent need in the marketplace for ways to treat both groundwater and soil contamination.

Fewer of the more complex sites have been cleaned up and many U.S. Department of Energy sites are specifying “cap and contain” solutions to prevent contamination problems from spreading or worsening while they await remediation. In effect, this creates a technology waiting game until cost-effective on-site treatment methods are proven and approved by regulators.

Development of In Situ Technology

The development of soil-vapor extraction (SVE) was a significant development in the in situ remediation of petroleum-based wastes (Dr. Hoag, one of the founders of VeruTEK was the primary developer of SVE technology in the early 1980s). However, the presence of chlorinated compounds, NAPLs, or DNAPLs nullifies the effectiveness of the combined SVE and current above-ground systems. Many chlorinated Volatile Organic Chemicals (VOCs) are (1) not well absorbed onto activated carbon, (2) resistant to effective catalysis, and (3) corrode internal combustion engines because of hydrochloric acid formation. The slow rate of extraction of NAPLs or DNAPLs makes SVE an impractical remedial method for those contaminants, particularly those at depths lower than the water table.

More recently, in-situ chemical oxidation has been used to remediate soils and groundwater, especially in media that are contaminated with chlorinated VOCs. In-situ chemical oxidation (ISCO) involves injecting chemical oxidants into the soil and/or groundwater to oxidize organic contaminants. The common oxidants are hydrogen peroxide-based, Fenton’s reagent, and potassium permanganate (KMnO 4), better known as permanganate. Ozone can also oxidize organic contaminants in-situ, but it has been used less frequently when higher levels of contaminants are present. Complete mineralization to carbon dioxide and water is the desired endpoint of an ISCO process. These ISCO technologies can work well on simple sites with low-level soil and ground water contamination, but generally have failed on sites (complex sites) that have NAPLs present. Potassium permanganate is limited to treating chloroethenes, such as trichloroethene (TCE) but is ineffective at treating non-chlorinated hydrocarbons and most pesticides, herbicides and PCBs. Our successful combination of surfactant and oxidant chemistry has allowed the development of a controlled release of NAPL and absorbed contaminants into the aqueous phase with subsequent degradation by oxidants. Coupled with free-radical based in-situ chemical oxidation processes such as activated persulfate and Fenton’s Chemistry, industry and government agencies will now have a remedial alternative that can treat their many waste sites.

7

We believe the more complex sites with chlorinated contaminants, heavier organics (semi-VOCs) and metals make up the majority of waste sites that have not begun remedial action.

The Company has filed patent applications for both its S-ISCO™ green chemistry solutions as well as its Coeluent Technologies™ implementation equipment.  S-ISCO™ can target and destroy subsurface soil and ground water contamination for complete remediation.  The Company’s Coeluent Technologies™ are a controlled dissolution and desorption process for biological or chemical destruction processes.

Technology Opportunities

The trends in technology applications and characteristics of waste sites requiring remediation provide market opportunities for technologies that:

•    Are completely in-situ;

•    Minimize residuals;

•    Treat chlorinated hydrocarbons;

•    Treat LNAPLs and DNAPLs where conventional SVE and ISCO is generally ineffective;

•    Are proprietary and provide market differentiation;

•    Simultaneously treat groundwater and soil;

•    Can be used in tandem with other complementary technologies.

As previously shown, our technologies are directly applicable to each of the most likely remediation opportunities presented in the next 5 years.

Competition

The remediation market is composed of a substantial number of companies. We believe most top remediation companies are large construction management firms that mainly provide low-technology solutions that move soils to treatment centers or landfills. We believe the trend is toward smaller high-tech companies.

Several mid-sized, full-service remediation companies are poised to compete with the larger remediation firms by using innovative technology as a differentiator. One such company has also branded a calcium peroxide-based, slow-oxygen-release product as a key technology. This technology may compete with our Company on specific sites, but is more likely a useful partner to our Company on sites requiring multiple strategies and higher levels of technologies required for cleanup and site closure.

There are several smaller remediation companies that would have a similar client base to our Company. However, the quality of many smaller-sized implementers work has become an issue amongst industry and regulatory agencies because of a lack of focus. Their range of services and their implementation of “one remedy fits all” is in line with the larger remediation market, where excavation and removal is the clear choice. In the ISCO and innovative technology market, it is clear that high-level consulting is a key success factor in what is now a niche market.

Several other smaller remediation companies provide a menu of new technologies including chemical oxidation methods. Generally, they are regional companies with one office and limited capabilities. As such, they can be considered potential teaming partners of the Company.

8

We believe the trend in environmental remediation is moving toward more sophisticated cleanup operations that emphasizes risk and liability management. The trend is moving away from specialization reflecting that a team should be able to solve more than one problem or use one technology. This trend benefits smaller firms that can provide niche services to the larger remediation companies that dominate the market.

The beliefs regarding the competitive dynamics in each of the three main remediation markets are outlined below.

The traditional excavation/landfill market is comprised of consultants, who recommend dig and haul strategies and then contract the landfill type companies.  These companies are also allies of the Company because they are supposed to be technology neutral.  The Company also works with landfill/treatment companies.

We believe that the problems with traditional excavation include:

•           Not environmentally friendly and requires excavation of material in neighborhoods and transporting through communities;

•           Not a sustainable and green remedy, due to energy inefficiency;

•           Low tech solution;

•           Landfill capacity is shrinking and the cost of landfill space is increasing;

•           Potentially responsible party continues to bear liability even in the landfill, if the landfill leaks;

•           Contamination often exceeds 25 feet and continues into the groundwater.

The containment market is a remedy of last resort.  Containment solutions include a wall constructed in the soil to keep contamination contained. We believe that issues with this solution include:

•           It does not solve the problem;

•           The wall dissolves;

•           Liability is still there;

•           Can not generally reuse the property;

•           Expensive solution;

•           Community unfriendly.

The final market, which is usage of an oxidant, is mainly employed by chemical companies. We believe that oxidant solutions have several shortcomings which include:

•           Remedy is not permanent in nature;

•           It can be expensive;

•           Inject it and forget it;

•           Oxidant solutions are not effective.

Barriers to Entry

We have identified four barriers to competition that are important to maintain during implementation of our business plan. First, we have implemented an aggressive patent program to ensure that intellectual property rights are maintained. A provisional patent that acts as an umbrella for all S-ISCO technology was applied for in April 2006. Final patents were applied for in March of 2007. Second, we plan to focus our competitive efforts on more complex issues where simple solutions such as excavation are not effective. We are providing the leadership to refocus competition on the larger excavation market and partnering with potential competitors in delivering its products and solutions to clients.

Third, the science and engineering behind ISCO is sufficiently complex to provide a barrier to competition and barriers to entry. We have completed comprehensive treatability studies and a field test regarding remediation of contaminants by our S-ISCO chemical oxidation process. Together, these processes required 18 months of project implementation.

Fourth, we will through research and development and branding begin to differentiate our surfactant/oxidant formulations. This will provide potential clients with a brand that provides assurance of effectiveness through a record of success. We have begun this strategy by offering four different VeruSOL products for specific applications.

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Risk Factors

The following section describes the risks inherent with our business. You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this document entitled “Information Regarding Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially affected, the value of our common stock could decline, and you may lose all or part of your investment.

Our substantial indebtedness could adversely affect our financial condition.

We have substantial debt and, in turn, substantial debt service requirements. Our ability to make payments on our convertible notes due 2009 and any future indebtedness we may incur depends on our ability to generate sufficient cash flow. We cannot assure you that:

• our business will generate sufficient cash flow from operations to service our indebtedness;

• future borrowings or proceeds from equity issuances will be available in an amount sufficient to enable us to pay our indebtedness on or before the maturity date of such indebtedness; or

• we will be able to refinance any of our indebtedness on commercially reasonable terms, if at all.

Factors beyond our control may affect our ability to service our indebtedness. These factors include those discussed in this “Risk Factors” section.

If, in the future, we cannot generate sufficient cash flow from our operations to meet our debt service obligations, we may need to refinance our debt, obtain additional financing, issue equity or sell assets, which we may not be able to do on commercially reasonable terms, if at all, and which we may be prohibited from doing under the terms of our indebtedness. We cannot assure you that our business will generate cash flow, or that we will be able to obtain funding, sufficient to satisfy our debt service obligations. Our inability to generate cash flow or obtain funding sufficient to satisfy our debt service obligations could materially and adversely affect our financial condition.

Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.

Although our management team has been engaged in the field of environmental remediation for an extended period of time, VeruTEK-Delaware did not begin operations of its current business concept until February 1, 2006. Further, we have only recently completed the acquisition of VeruTEK-Delaware. We have a limited operating history in our current combined form, which makes it difficult to evaluate our business on the basis of historical operations.  As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses.  If we make poor budgetary decisions as a result of unreliable historical data, we could be less profitable or incur losses, which may result in a decline in our stock price. 

Our results of operations have not been consistent, and we may not be able to achieve profitability.

We incurred a net loss of approximately $4.2 million for the year ended December 31, 2006 and a net loss of approximately $5.9 million for the twelve months ended December 31, 2007.  Our management believes that our current business plan will be successful and that we will be able to limit our losses; however, our business plan is speculative and unproven.  There is no assurance that we will be successful in executing our business plan or that even if we successfully implement our business plan, that we will be able to curtail our losses now or in the future.  If we incur significant operating losses, our stock price may decline, perhaps significantly. 

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There is substantial doubt about our ability to continue as a going concern as a result of our working capital deficiency, sustained net loss, the lack of a sufficient number of full scale remediation projects with adequate profit margins, the violation of certain terms of our term note facility and the fact that three customers represent nearly all of our revenues and if we are unable to generate significant revenue or alternative financing we may be required to cease or curtail our operations.

As shown in the accompanying financial statements, we have a working capital deficiency of approximately $2.2 million as of the period ended December 31, 2007 and have an accumulated deficit of approximately $10.1 million at December 31, 2007.   The working capital deficiency is largely affected by the $2.2 million derivative instrument liability that we do not expect to be settled with cash. As is typical with early stage growth companies, these losses are largely a result of business development expenses as well as investment in infrastructure for growing our business and operations.  We are also not in compliance with certain provisions of our term note with our bank which provides the bank with the right to demand repayment or increase the stated interest rate. Should the Company’s bank choose to demand repayment of the term note, all interest and principal would become due and payable immediately. In addition, our revolving credit facility with our bank expired on May 25, 2007 and all amounts owed were repaid. We are pursuing a replacement facility and other potential sources of funding with other financial institutions of which there is no guarantee that we will be successful in obtaining such financing. As of this date, the Company has secured one large project with Keyspan Corporate Services LLC (“Keyspan”) and three relatively small commitments for full scale remediation projects. Securing a sufficient number of full scale remediation projects at acceptable profit margins is critical to ensure the long-term viability of the Company.  Further, we have two customers that accounted for 83% of our revenues for the twelve-month period ended December 31, 2007.  These factors raise substantial doubt about our ability to continue as a going concern.  The financial statements do not include adjustments that might result from the outcome of this uncertainty and if we are unable to generate significant revenue or alternative financing we may be required to cease or curtail our operations.  If we do not secure a project or projects for full scale environmental remediation of sufficient size and profitability or if we do not secure additional funding from other sources, we estimate current funding will sustain our operations through April of 2008.

We are dependent upon two customers and if we are to lose any one of our customers we may be forced to cease operations.

We have two customers that accounted for 83% of our revenues for the twelve-month period ended December 31, 2007.   If we are unable to develop additional customers or lose one of our existing customers our operations may be severely impacted and we may be forced to cease operations.

Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.

Our acquisition of VeruTEK-Delaware has only recently occurred on May 9, 2007. Following the acquisition of VeruTEK-Delaware, the management team, consisting of John Collins, George Hoag, and Michael Vagnini, is responsible for the operations and reporting of the combined company. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements and compliance under the Sarbanes-Oxley Act of 2002 not previously required as a private company prior to the acquisition of VeruTEK-Delaware. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.

Operating as a small public company also requires us to make projections about future operating results and to provide forecast guidance to the public markets. We have limited experience as a management team in the combined company with dealing with the public markets and as a result our projections may not be made timely or set at expected performance levels and could materially affect the price of our stock. Any failure to meet published projections that adversely affect our stock price could result in losses to investors, shareholder lawsuits or other litigation, sanctions or restrictions issued by the SEC or the exchange upon which the combined company's stock is traded.

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While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate internal control over financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our management to report on the operating effectiveness of the Company's Internal Controls over financial reporting  for the year ended December 31, 2007. Carlin, Charron & Rosen, LLP, our independent registered public accounting firm, will be required to attest to the effectiveness of our internal control over financial reporting beginning with the year ended December 31, 2009. We must establish an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. We expect that the cost of this program will require us to incur expenses and to devote resources to Section 404 compliance on an ongoing basis.

It is difficult for us to predict how long it will take to complete Management's assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and process on a timely basis. In the event that our Chief Executive Officer, Chief Financial Officer or independent registered public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected.

We are dependent on the environmental remediation industry, which has experienced volatility in capital spending.

We derive the majority of our revenues from sales of products and services to the environmental remediation industry. Purchases of our services may be deferred as a result of many factors including mergers and acquisitions, regulatory decisions, weather conditions, rising interest rates, clean-up specific financial situations and general economic downturns. In the future, we may experience variability in operating results, on both an annual and a quarterly basis, as a result of these factors.

Environmental remediation industry sales cycles can be lengthy and unpredictable, which can cause delays in purchasing and variability to our financial projections and could adversely affect our results of operations.

Sales cycles with customers in the environmental remeditation industry are generally long and unpredictable due to a variety of factors including political influences, customers’ budgeting, purchasing and regulatory processes. Accordingly, realization of revenues from projects can take longer than expected. Our remediation customers typically issue requests for quotes and proposals, establish evaluation committees, review different technical options with vendors, analyze performance and cost/benefit justifications and perform a regulatory review, in addition to applying the normal budget approval process within a company. Delays in completing these processes can cause delays in purchasing and variability to our financial projections and could adversely affect results of operations.

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We face competitive pressures from a variety of companies in the markets we serve which may have an adverse effect on our operating results.

We are a small company in a highly competitive market. Some of our present and potential competitors have, or may have, substantially greater financial, marketing, technical or manufacturing resources, and in some cases, greater name recognition and experience than we have. Some competitors may enter markets we serve and sell products at low prices in order to obtain market share. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. They may also be able to devote greater resources to the development, promotion and sale of their products and services than we can. Current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers. It is possible that new competitors or alliances among current and new competitors may emerge and rapidly gain significant market share. Other companies may also produce products or provide services that are equal or superior to our products and services, which could reduce our market share, reduce our overall sales, severely impair our ability to secure business and require us to invest additional funds in new technology development. Our technology is new and we have secured only one large scale remediation project and three relatively small projects for the full scale remediation of contaminated environmental sites. Securing a sufficient number of full scale remediation projects at acceptable profit margins is critical to ensure the long-term viability of the Company.  We may face competition from other environmental remediation firms with alternative technologies that will be less costly to the client and result in our inability to secure projects or result in our inability to secure such projects at acceptable profit margins. If we cannot compete successfully against current or future competitors, this will have a material adverse effect on our business, financial condition, results of operations and cash flow.

Our financial forecasts may not be achieved as a result of the unpredictability of customer buying patterns, which could make our stock price more volatile.

We do not maintain significant levels of backlog. Revenue in any year or quarter is dependent, in significant part, on contracts entered into, booked and completed in that period. Forecasts may not be achieved, either because expected sales are delayed or do not occur or because they occur at lower prices or on terms that are less favorable to us.

In addition, fluctuations may be caused by a number of other factors, including:

· the timing and volume of customer contracts, projects and customer cancellations;

· a change in our revenue mix of services and a resulting change in the gross margins;

· the timing and amount of our expenses;

· the introduction of competitive services or products by existing or new competitors;

· reduced demand for any given service or product;

· the market’s transition to new technologies.

Due to these factors, forecasts may not be achieved, either because expected revenues do not occur or because they occur at lower prices, at later times, or on terms that are less favorable to us. In addition, these factors increase the chances that our results could diverge from the expectations of investors and analysts. If so, the market price of our stock would likely decrease and may result in shareholder lawsuits.

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We need to manage growth in operations to maximize our potential growth and achieve our expected revenues and our failure to manage growth will cause a disruption of our operations resulting in the failure to generate revenue.

In order to maximize potential growth in our current and potential markets, we believe that we must expand our, sales and marketing operations. This expansion will place a significant strain on our management team and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively hire, train, motivate, and manage our employees. Our failure to properly manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

If we are not able to implement our strategies in achieving our business objectives, our business operations and financial performance may be adversely affected.

Our business plan is based on circumstances currently prevailing and the assumptions that certain circumstances will or will not occur, as well as the inherent risks and uncertainties involved in various stages of development. However, there is no assurance that we will be successful in implementing our strategies or that our strategies, even if implemented, will lead to the successful achievement of our objectives. If we are not able to successfully implement our strategies, our business operations and financial performance may be adversely affected.

If we need additional capital to fund our growth, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.

In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including the following:

· our profitability;

· the release of competitive products by our competition;

· the level of our investment in research and development; and

· the amount of our capital expenditures, including acquisitions.

We cannot assure you that we will be able to obtain capital in the future to meet our needs. If we cannot obtain additional funding, we may be required to:

· limit our investments in research and development;

· limit our marketing efforts; and

· decrease or eliminate capital expenditures.

Such reductions could materially adversely affect our business and our ability to compete.

Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

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We depend on our ability to develop and release new products from development in a timely and consistent manner.

Our products have only recently reached the point of commercialization, been approved for use by regulatory authorities and still may require additional and continuing development to become competitive with other competing products and services. We expect to continue to make substantial investments in technology development. Our future success will depend, in part, on our ability to continue to design and manufacture new competitive products and to enhance and sustain our existing products. This product development will require continued investment in order to maintain and grow our market position. We may experience unforeseen problems in the development or performance of our technologies or products. In addition, we may not meet our product development schedules. Finally, we may not achieve market acceptance of our new products and solutions. These factors could materially affect our ability to forecast operations and negatively affect our stock price, results of operations, cash flow and financial condition.

Our technology may have defects that could lead to a loss of revenues or product liability claims.

Our products and services use complex development technologies and may contain defects, especially when first introduced or when new technologies are implemented. Despite laboratory testing, we may not detect defects in our new products or technologies until after we have commenced commercial implementation. If defects are discovered after commercial implementation of either new products or technologies:

· potential customers may delay purchases;

· customers may react negatively, which could reduce future sales;

· our reputation in the marketplace may be damaged;

· we may have to defend product liability claims;

· we may be required to indemnify our customers, clients or others;

· we may incur additional service and warranty costs; and

· we may have to divert additional development resources to correct the defects, which may result in the delay of new product and technology implementations.

If any or all of the foregoing occur, we may lose revenues, incur higher operating expenses and lose market share, any of which could severely harm our financial condition and operating results.

We depend on a single, exclusive supplier for surfactants and a limited number of suppliers for other chemicals which are a critical raw material in our environmental solutions, and our inability to obtain sufficient supplies of this raw material in a timely manner or at favorable prices could increase our prices or otherwise harm our business.

Our environmental solutions for complex environmental problems require plant-derived, food-grade surfactants, for which we currently have a ten-year exclusive relationship with a single manufacturer and supplier.  Because we are dependent on this outside supplier for surfactants and do not maintain an inventory of surfactants, we must obtain sufficient quantities of quality surfactants from our supplier at acceptable prices and in a timely manner.  This manufacturer and supplier could discontinue manufacturing or supplying surfactants, experience interruptions in their operations or raise their prices. We are also dependent on a limited number of outside manufacturers and suppliers for other chemicals for which we must obtain sufficient quantities of quality product from our suppliers at acceptable prices and in a timely manner.  Any or all of these manufacturers and suppliers could discontinue manufacturing or supplying surfactants, experience interruptions in their operations or raise their prices.

A major decline in our suppliers’ financial condition could cause a production slowdown or stoppage.  As a result, our customers could cancel orders, which could have a material adverse effect on our business and results of operations.  Any of the foregoing could reduce our sales in a given period, cause a loss of business to a competitor, or otherwise cause our financial condition to suffer.

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Moreover, we may not be able to identify alternative sources of supply in a timely fashion or at all, and any relationship by us with such an alternative source could be inconsistent with our ten-year exclusive relationship with our current surfactant supplier.  Any transition to alternate suppliers may result in delays with respect to the performance of our contracts with our customers or otherwise limit our ability to perform under those contracts and could result in a breach of our arrangement with our current surfactant supplier.

We have a long-term letter of understanding with our surfactant supplier and believe we are on good terms with all suppliers.  However, we cannot be certain that we will continue to have access to our current sources of supply of surfactants and other chemicals or that we will not encounter supply problems in the future.

The Company’s inability to maintain adequate manufacturer and supplier relationships due to its financial position and working capital situation may limit the availability of surfactants and other chemicals and impair the Company’s ability to implement contracts with customers, which could adversely affect our financial position.

We are subject to regulatory compliance and we may incur substantial expenses in complying with these regulations

We are subject to various governmental regulations including those related to occupational safety and health, labor and wage practices and regulations regarding the performance of certain engineering services. Failure to comply with current or future regulations could result in the imposition of substantial fines, suspension of production, alteration of our production processes, cessation of operations or other actions, which could materially and adversely affect our business, financial condition and results of operations.

Our operating results may be adversely affected by the uncertain geopolitical environment and unfavorable factors affecting economic and market conditions.

Adverse factors affecting economic conditions worldwide have contributed to a general inconsistency in environmental remediation spending and may continue to adversely impact our business, resulting in:

· Reduced demand for our products as a result of a decrease in spending by our customers and potential customers;

· Increased price competition for our products and services; and

· Higher overhead costs as a percentage of revenues.

Terrorist and military actions may continue to put pressure on economic conditions. If such an attack should occur or if the economic and market conditions in the United States deteriorate as a result of a terrorist attack, we may experience a material adverse impact on our business, operating results, and financial condition as a consequence of the above factors or otherwise.

Stockholders may experience significant dilutions if future equity offerings are used to fund operations or acquire complimentary businesses.

If future operations or acquisitions are financed through the issuance of equity securities, stockholders could experience significant dilution. In addition, securities issued in connection with future financing activities or potential acquisitions may have rights and preferences senior to the rights and preferences of our common stock. We expect to establish an incentive stock award plan for management and employees. We expect to grant options to purchase shares of our common stock to our directors, employees and consultants and we will grant additional options in the future. The issuance of shares of our common stock upon the exercise of these options may result in dilution to our stockholders.

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We may have difficulty defending our intellectual property rights from infringement resulting in lawsuits requiring us to devote financial and management resources that would have a negative impact on our operating results.

We regard our service marks, trademarks, trade secrets, patents and similar intellectual property as critical to our success. We rely on trademark, patent and trade secret law, as well as confidentiality and license agreements with certain of our employees, customers and others to protect our proprietary rights. No assurance can be given that our patents and licenses will not be challenged, invalidated, infringed or circumvented, or that our intellectual property rights will provide competitive advantages to us.

If our patents do not protect our environmental remediation processes, or our environmental remediation processes infringe third-party patents, we could have difficulty protecting our technology or be subject to litigation and liability.

We have several patent applications pending in the United States, and intend to file others.  Our success will depend, in part, on our ability to obtain and maintain United States patent protection for our environmental remediation chemicals, methods and processes.  We do not know whether any patents will issue from any of our patent applications or, even if patents issue or have issued, that the issued claims will provide us with any significant protection against competitive products or otherwise be valuable commercially.  If we are not able to obtain adequate patent protection, our ability to prevent competitors from making, using and selling similar environmental remediation chemicals, methods and/or processes may be limited.  Furthermore, in a competitive environmental remediation market, our activities may infringe the claims of patents held by third parties.  Defense and prosecution of infringement or other intellectual property claims, as well as participation in other inter-party proceedings, can be expensive and time-consuming, regardless of whether or not the outcome is favorable to us.  If the outcome of any such litigation or proceeding were adverse, we could be subject to significant liabilities to third parties, could be required to obtain licenses from third parties, or could be required to cease sales of our environmental remediation chemicals, methods and/or processes, any of which outcomes could have a material adverse effect on our business.

If we lose the services of any of our key personnel, including our Chief Executive Officer, Chief Financial Officer and Director of Research and Development our business may suffer.

We are dependent on our key officers, including Chief Executive Officer, Chief Financial Officer and Director of Research and Development, our directors, and our key employees in our technology, finance, sales and marketing operations. Our business could be negatively impacted if we were to lose the services of one or more of these persons.

Our executive officers, board of directors and key employees are crucial to our business, and we may not be able to recruit, integrate and retain the personnel we need to succeed.

Our success depends upon a number of key management, sales, technical and other critical personnel, including our executive officers, the Board of Directors and key employees. The loss of the services of any key personnel, or our inability to attract, integrate and retain highly skilled technical, management, sales and marketing personnel could result in significant disruption to our operations, including the timeliness of new product introductions, success of product development and sales efforts, quality of customer service, and successful completion of our initiatives, including growth plans and the results of our operations. Any failure by us to find suitable replacements for our key senior management may be disruptive to our operations. Competition for such personnel in the technology industries is intense, and we may be unable to attract, integrate and retain such personnel successfully.

Our bylaws provide that we may indemnify our officers and directors which may result in significant expenditures for our company, which may further exacerbate our losses.

Our Bylaws provide that we may indemnify our directors, officers, employees, and agents to the fullest extent permitted by Nevada law. We will also bear the expenses of litigation for any of our directors, officers, employees, or agents. This indemnification policy could result in substantial expenditures which we may be unable to recoup.

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The issuance of shares upon conversion of the Secured Convertible Notes and exercise of outstanding warrants issued to the investors may cause immediate and substantial dilution to our existing stockholders.

The issuance of shares upon conversion of the convertible notes issued on May 9, 2007 (the “Notes”) and exercise of warrants may result in substantial dilution to the interests of other stockholders since the investors may ultimately convert and sell the full amount issuable on conversion. Although the investors may not convert or exercise their Notes and common stock purchase warrants if such conversion would cause them to own more than 9.99% of our outstanding common stock, this restriction does not prevent the investors from converting and/or exercising some of their holdings and then converting the rest of their holdings. In this way, the investors could sell more than their limit while never holding more than this limit.

We are subject to certain restrictions and covenants under our Securities Purchase Agreement with the holders our Notes and related warrants.

Pursuant to that certain Securities Purchase Agreement that we entered into with the May 2007 Investors, we are subject to certain restrictions and covenants, including, among others, covenants prohibiting us from terminating our status as an issuer required to file reports under the Exchange Act, generally prohibiting us from selling all or substantially all of our assets except to certain purchasers, limiting our ability to incur indebtedness or issue securities, prohibiting us from amending or modifying our governing documents, and granting certain rights of first offer to May 2007 Investors with respect to certain issuance and of our securities. These restrictions and covenants may have the effect of delaying, deterring or preventing certain transactions and activities by the Company, which could adversely affect our results of operations, cash flow and financial condition.

If we breach our registration rights agreement with certain of our investors, we could be subject to penalties or liabilities that could have a material adverse effect on our business.

As noted elsewhere herein, we previously agreed to effect the registration of shares of our common stock issuable upon the conversion of our Notes and the related warrants under the Securities Act of 1933 pursuant to a registration rights agreement. On January 18, 2008, the Securities and Exchange Commission declared effective our registration statement with respect to 3,270,327 shares of our common stock, which included shares of common stock subject to the registration rights agreement issuable upon the conversion of the Notes and related warrants. This registration did not meet the requirement under the registration rights agreement for the registration statement to be declared effective within 180 days following the May 9, 2007 closing of the “Merger” (as defined and discussed below in “Item 6.  Management’s Discussion and Analysis or Plan of Operation – Overview”). However, we did receive consents we believe extended the registration deadline from investors comprising approximately 70% of the shares of common stock issuable under the issued and outstanding Notes and warrants. Accordingly, we provided an accrued liability of $24,250 for penalties related to the Notes for which holders did not provide consents extending this deadline.  See “Item 6.  Management’s Discussion and Analysis or Plan of Operation – Liquidity and Capital Resources.”  To the extent that we fail to meet any other requirements under the registration rights agreement, we could be subject to additional penalties or liabilities, which could have a material adverse effect on our business.

SPECIFIC RISKS RELATING TO OUR COMMON STOCK

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

 We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

There is a limited market for our common stock which may make it more difficult to dispose of your stock.

 Our common stock is currently quoted on the Over the Counter Bulletin Board under the symbol "VTKT". There is a limited trading market for our common stock. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock.

A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Stockholders who have been issued shares in the May 9, 2007 Merger will be able to sell their shares pursuant to Rule 144 under the Securities Act of 1933, beginning one year after the stockholders acquired their shares.

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In addition, as noted elsewhere herein, we agreed to effect the registration of shares issuable upon the conversion of our 6% secured convertible notes and warrants under the Securities Act of 1933 pursuant to a registration rights agreement. On January 18, 2008, the Securities and Exchange Commission declared effective our registration statement with respect to 3,270,327 shares of our common stock, which included shares of common stock subject to the registration rights agreement and issuable upon conversion of our secured notes and warrants. If the holders of shares of our common stock registered under the registration statement sell substantial amounts of our common stock issued on the public market, the market price of our common stock could fall.

Our management controls a significant percentage of our common stock, and their interests may conflict with those of our other stockholders.

Two of our executive officers, John Collins, who is President, Chief Executive Officer, and Director of the Company, and George Hoag, who is Senior Vice President, Research and Development of the Company, together with their affiliates, collectively and beneficially own or control approximately 62% of the Company’s common stock, as of January 15, 2008.  The concentration of voting control represented by these holdings gives Messrs. Collins and Hoag and their respective affiliates substantial influence over, and the potential ability to control, any matters which require a stockholder vote (which under Nevada law can in certain circumstances be held without a meeting), including, without limitation, the election of our directors, amendments to our articles of incorporation, going private transactions, and the approval of mergers or other business combination transactions.  The ownership positions of these stockholders may have the effect of delaying, deterring or preventing a change in the composition of our board of directors or a change in control transaction, including a transaction in which the holders of the common stock might receive a premium on their shares over a prevailing market price.  Alternatively, such concentration of ownership could result in the Company undertaking certain types of transactions, including change of control transactions that it might not otherwise pursue.

The interests of Messrs. Collins and Hoag, in their capacity as stockholders of the Company, may not always coincide with the Company's interests or the interests of other stockholders and they may act in their capacity as stockholders of the Company in a manner that advances their best interests as stockholders and not necessarily those of our other stockholders.  Sales of a significant number of shares of our common stock by Messrs. Collins or Hoag, or the expectation that such sales may occur, could also significantly reduce the market price of our common stock.

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

The SEC has adopted Rule 3a51-1 which establishes the definition of a "penny stock," for the purposes relevant to us, is any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:

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

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

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

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

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

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

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

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

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

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

Although our common stock is currently subject to the Exchange Act, we may in the future cease to be subject to the Exchange Act.

Shares of our common stock are currently subject to the Exchange Act.  This requires us, among other things, to file periodic reports with the U.S. Securities and Exchange Commission (the “Commission”), but those reporting requirements may be terminated in the future if our common stock is not held by 300 or more holders of record.  The Company may in the future determine that the continued costs associated with being a public company subject to the Exchange Act outweigh the benefits arising as a result of being subject to the Exchange Act, in which event the Company may (if our common stock is not held by 300 or more holders of record, and subject to certain contractual rights that prior investors in the Company may possess requiring us to remain a public company) terminate its reporting under the Exchange Act or, alternatively, take other action that may further limit liquidity with respect to our common stock.  Termination of of our reporting under the Exchange Act would substantially reduce the information required to be furnished by us to our stockholders and would make certain provisions of the Exchange Act no longer applicable to us, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with any stockholders’ meetings and the requirement of furnishing an annual report to stockholders.  Furthermore, the ability of our “affiliates” and persons holding our “restricted securities” to dispose of our common stock pursuant to Rule 144 promulgated under the Securities Act (to the extent Rule 144 would have otherwise been available) may be impaired or eliminated.  In addition, if our common stock were to cease to be subject to the Exchange Act, it would no longer be eligible for listing on the OTCBB, which might further affect liquidity with respect to our common stock and could significantly reduce the value of our common stock.

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Item 2.   Description of Property

The Company’s principal executive offices and laboratory facilities are located at 65 West Dudley Town Road, Suite 100, Bloomfield, Connecticut, 06002. The location contains approximately 8,800 square feet of space which is leased. Approximately one half of the space is office space, approximately 25% comprises laboratory facilities, and approximately 25% is warehouse and storage space. The term of the lease runs to July 31, 2012 with an option to extend the term for an additional five years. We believe the facilities will adequately meet the needs of the Company for at least the next year and possibly longer.

Item 3.   Legal Proceedings

It is possible we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders of the Company through the solicitation of proxies or otherwise during the fourth quarter of the year ended December 31, 2007.

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PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Following the May 9, 2007 Merger of VeruTEK-Nevada and VeruTEK-Delaware, the Company’s common stock was listed for trading on May 17, 2007 on the OTC Bulletin Board (“OTCBB”) under the symbol “VTKT”. Prior to May 17, 2007, there was no active market for the common stock of VeruTEK-Delaware.

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

	Fiscal 2007
COMMON STOCK	High		Low
First Quarter	$	--	$	--
Second Quarter		3.25		.05
Third Quarter		15.00		2.30
Fourth Quarter		4.25		2.00

As of December 31, 2007, we believe our shares of common stock were held by approximately 134 stockholders of record. We believe that the number of beneficial owners is substantially greater than the number of record holders because a significant portion of our outstanding common stock is held of record in broker “street names” for the benefit of individual investors. The transfer agent of our common stock is Island Stock Transfer.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2007, we did not have an equity compensation plan authorizing us to issue shares of common stock to employees or directors.

The Company expects to grant certain officers, directors and employees’ common stock, restricted common stock or stock option awards pursuant to a proposed stock incentive plan that the Company expects to present to its shareholders for approval during 2008. Only the officers, directors or employees who hold less than 10% of stock in our Company will be able to participate in any stock incentive plan.

Dividends

We have never paid cash dividends and have no plans to do so in the foreseeable future. Our future dividend policy will be determined by our board of directors and will depend upon a number of factors, including our financial condition and performance, our cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws and our credit arrangements then impose.

Shares Rescinded

On May 9, 2007, the Company issued to John Collins, the Chief Executive Officer of the Company, 1,848,643 shares of the Company’s common stock.  Subsequently, the Company determined that, because such shares of common stock were unregistered, Mr. Collins would be unable to sell a portion of such shares to pay the related income taxes with respect to the issuance of 478,802 of such shares of common stock.  As a result, on December 31, 2007, the Company’s Board of Directors and Mr. Collins agreed to rescind the issuance of such 478,802 shares and Mr. Collins returned the shares to the Company for no consideration and such shares were cancelled on December 31, 2007. The 478,802 shares granted to Mr. Collins were fully vested when granted and compensation expense of $385,605 was recognized in the first quarter of 2007.

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Item 6.   Management’s Discussion and Analysis or Plan of Operation

FORWARD LOOKING STATEMENTS – CAUTIONARY STATEMENTS

This Form 10-KSB contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Specifically, all statements other than statements of historical facts included in this report regarding VeruTEK Technologies, Inc.'s (the "Company") financial position, business strategy and plans and objectives of the Company's management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such statements (the "cautionary statements") reflect the current view of the Company's management with respect to future events and are subject to risks, uncertainties, and assumptions related to various factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, product introductions and acceptance, technological change, changes in industry practices, one-time events and other risks identified elsewhere herein. Although the Company believes that expectations are reasonable, it can give no assurance that such expectations will prove to be correct. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements. The Company does not assume any responsibility to publicly update any of its forward-looking statements regardless of whether factors change as a result of new information, future events, or for any other reason. The Company advises you to review any additional disclosures made in its Forms 10-QSB, 8-K, 10-KSB and other reports filed with the Commission.

OVERVIEW

VeruTEK Technologies, Inc., a wholly owned subsidiary of the Company, (“VeruTEK-Delaware”) was incorporated as a Delaware corporation on February 1, 2006. VeruTEK-Delaware was formed to develop and commercialize new technologies in the field of environmental remediation.  VeruTEK-Delaware provides technical and consulting services to clients to resolve complex environmental remediation matters at a wide range of waste sites, principally by combining surfactant and oxidant chemistries.

On May 9, 2007, a Nevada corporation formerly known as Streamscape Minerals, Inc. (“VeruTEK-Nevada”) entered into and closed a reverse acquisition merger agreement (hereafter defined as the “Merger”) with VeruTEK-Delaware, and each of VeruTEK-Delaware's shareholders (the "Purchase Agreement"). Pursuant to the Purchase Agreement, the Company acquired all of the 21,430 issued and outstanding shares of capital stock of VeruTEK-Delaware from the VeruTEK-Delaware shareholders in exchange for 16,684,112 shares of the Company's common stock, issued $1,685,000 in convertible notes and warrants, and changed its name to “VeruTEK Technologies, Inc.” (see Note 2 to the Condensed Consolidated Financial Statements included elsewhere herein). The merged company is hereafter referred to as the “Company.

The Company has a working capital deficiency of approximately $2.2 million as of December 31, 2007 and has an accumulated deficit totaling approximately $10.1 million for the period from February 1, 2006 (inception) through December 31, 2007.  The Company is also not in compliance with certain provisions of its term note with its bank  with a balance of approximately $64,000 at December 31, 2007, which provides the bank with the right to demand repayment.  The Company estimates it has sufficient funding to sustain operation through April 2008. Accordingly, it is pursuing potential sources of funding with investors and financial institutions of which there is no guarantee that the Company will be successful in obtaining such funding. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The attached financial statements do not include adjustments that might result from the outcome of this uncertainty.

As is typical with early stage growth companies, the accumulated deficit is largely a result of business development expenses as well as investment in building infrastructure for growing the Company’s business and operations.

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Concurrent with the May 9, 2007 Merger, the Company issued $1,685,000 of 6% secured convertible notes and warrants. Proceeds from the transaction were approximately $1.5 million, net of transaction commissions and expenses.  The notes will be convertible under certain conditions into shares of the Company’s common stock.  The Company agreed to effect the registration of the shares issuable under the notes and warrants under the Securities Act of 1933 pursuant to a registration rights agreement and received a notice of effectiveness of its registration statement regarding shares of common stock issuable under the notes and warrants, as well as certain other outstanding shares of its common stock, from the U.S. Securities and Exchange Commission on January 18, 2008. The Company believes that the registration statement as of the time of its effectiveness registered all of the shares of Company common stock then required to be registered pursuant to the terms of the registration rights agreement. Additionally, on January 4, 2007, the Company raised $600,000 through the issuance of convertible debt to accredited investors (the “Bridge Loan”). Concurrent with the Merger, the Bridge Loan was converted into shares of common stock of the Company (see Note 7 to the Condensed Consolidated Financial Statements included elsewhere herein).

On October 17, 2007, the Company completed a private placement of investment units to accredited investors at the price of $1.50 per investment unit. Each investment unit is comprised of one Common Share; a five year non-callable warrant to purchase one Common Share at an exercise price of $1.80 per share; and a five year non-callable warrant to purchase one Common Share at an exercise price of $2.10 per share. The Company raised approximately $1.9 million (net of $125,648 transaction related expenses) from 29 accredited investors, who were issued 1,373,334 of the aforementioned investment units. There were no underwriting discounts or commissions incurred in the transaction. The securities issued in conjunction with the transaction are not subject to any registration rights.

The Company currently derives its revenue from consulting services related to the evaluation of environmental contamination risks for clients, treatability studies intended to evaluate the effectiveness of the Company’s technology, know-how and processes in addressing specific contamination issues at specific client sites and from pilot projects intended to demonstrate the effectiveness of the Company’s services by directly addressing contamination issues at client sites. The Company’s objective is to utilize activities from each of the above revenue sources to successfully demonstrate its capabilities in addressing environmental remediation issues and thereby secure much larger contracts for full scale remediation of environmental issues at client sites. The Company is continuing to pursue such opportunities. As of this date, the Company has secured one large project with Keyspan Corporate Services LLC (“Keyspan”) and three relatively small commitments for full scale remediation projects. Securing a sufficient number of full scale remediation projects at acceptable profit margins is critical to ensure the long-term viability of the Company.

On March 3, 2008, the Company and Keyspan entered into an agreement, dated as of February 22, 2008 (the “Agreement”), pursuant to which the Company agreed to provide Keyspan with professional services for the purpose of implementing the Company’s Surfactant Enhanced In-Situ Chemical Oxidation ("S-ISCO") remedial measures at Operable Unit number 4 (“OU-4”) Cesspool area of the Bay Shore former manufactured gas plant (MGP) site in Bay Shore, New York.  The Company’s services will be performed in accordance with the New York State Department of Environmental Conservation approved Bay shore/Brightwaters Former MGP Site OU-4, Former Cesspool, S-ISCO Work Plan, dated February 19, 2008.  The Company’s work under this Agreement will focus on the Company’s implementation of S-ISCO at the former OU-4 cesspool area to remediate the MGP-related impacts.  The Agreement contains customary terms and conditions as applied to independent contractors of professional services, including, but not limited to, warranties by the Company regarding the performance of its services in a workmanlike and professional manner, covenants regarding the Company’s compliance with applicable law, indemnification of Keyspan by the Company with respect to, among other things, materials, goods, work and services provided by the Company pursuant to the Agreement, and non-disclosure obligations under the Agreement.  The term of the Agreement will remain in effect until December 31, 2009, unless extended or earlier terminated pursuant to the Agreement’s terms.  The Agreement may be terminated in connection with certain specified events of default, including, but not limited to, any failure by the Company to perform any material covenant for period of thirty (30) days after notice of such failure and any breach by the Company of its non-disclosure obligations under the Agreement.  Keyspan may also terminate the Agreement for convenience upon ten (10) days prior written notice.

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LIQUIDITY AND CAPITAL RESOURCES

Financing and Bank Default

On October 17, 2007, the Company completed a private placement of investment units to accredited investors at the price of $1.50 per investment unit. Each investment unit is comprised of one Common Share; a five year non-callable warrant to purchase one Common Share at an exercise price of $1.80 per share; and a five year non-callable warrant to purchase one Common Share at an exercise price of $2.10 per share. The Company raised approximately $1.9 million (net of $125,648 transaction related expenses) from approximately 29 accredited investors, who were issued 1,373,334 of the aforementioned investment units. There were no underwriting discounts or commissions incurred in the transaction. The securities issued in conjunction with the transaction are not subject to any registration rights.

Concurrent with the Merger of May 9, 2007, the Company issued $1,685,000 of notes convertible into 1,685,000 shares of common stock, and detachable warrants to purchase 842,500 shares of common stock which are exercisable for a 5 year period at an exercise price of $1.20. Gross proceeds from the Merger amounted to $1,685,000 and net proceeds amounted to approximately $1.5 million. Gross proceeds were allocated to the convertible notes and warrants, respectively. The amount allocated to the convertible notes was $1,396,767 and resulted in a beneficial conversion discount of $151,650. The beneficial conversion discount will be amortized to interest expense over the term of the convertible notes. The $288,233 allocated to the warrants was recorded as a discount to the convertible notes and as a derivative instrument liability as of the Merger date in accordance with EITF Issue 00-19 “Accounting for Derivative Financial Instruments

Indexed to, and Potentially Settled in, a Company’s Own Stock.” The $288,233 discount to the convertible notes will be amortized to interest expense over the life of the notes. The warrants are subject to mark-to-market adjustment in each period. As a result, for the year ended December 31, 2007, the Company recorded a pre-tax charge for derivative instrument expense of $1,878,767. The resulting derivative instrument liability was $2,167,000 at December 31, 2007.  The fair value of the warrants was determined by using the Black-Scholes model assuming a risk free interest rate of 3.3%, volatility of 50% and an expected life equal to the May 9, 2012 contractual life of the warrants.

The Company agreed to effect the registration of the shares to be issued upon the conversion of the 6% secured convertible notes and warrants under the Securities Act of 1933 pursuant to a registration rights agreement. The registration rights agreement required the Company to file a registration statement and have such registration statement declared effective within 60 and 180 days, respectively, following the May 9, 2007 closing of the Merger.  In the event that the Company fails to file by the required filing deadline or have such registration statement declared effective by the required effective deadline, then the Company is required to make cash payments to holders of the convertible notes equal to 2% of the purchase price for each 30 day period prorated for partial periods.  However, the Company was entitled to suspend its filing and effective deadline for a period of 10 consecutive business days under certain circumstances.  The Company did not file its initial registration statement until July 20, 2007 which was not within the 60 day period allowed under the registration rights agreement.  The Company believes it was entitled to suspend the filing of such registration period and, as a result, does not owe a cash penalty in accordance with this provision of the registration rights agreement.

The Company received a notice of effectiveness from the U.S. Securities and Exchange Commission on January 18, 2008 for registration of 3,270,327 shares of the Company’s common stock. This registration did not meet the requirement under the registration rights agreement for the registration statement to be declared effective within 180 days following the May 9, 2007 closing of the Merger. However, the Company did receive consents it believes extended the registration deadline from investors comprising approximately 70% of the issued and outstanding convertible notes and warrants. Accordingly, the Company has provided an accrued liability of $24,250 for penalties related to those convertible notes for which holders did not provide consents extending this deadline.  The Company believes the registration statement at the time of its effectiveness registered all of the shares of the Company common stock then required to be registered pursuant to the terms of the registration rights agreement.

In addition, in the event that sales of shares related to the 6% secured convertible notes or warrants issued on May 9, 2007 cannot be made pursuant to the registration statement after it has been declared effective, or the Company is required to file an amendment or supplement (or a new registration statement) with certain timing exceptions, the Company is required to make cash payments to holders of the convertible notes equal to 2% of the purchase price for each 30 day period prorated for partial periods. The Company does not currently believe it is probable that it will incur these penalties under the registration rights agreement and consequently has not recorded a provision for these penalties.

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The Bridge Loan secured on January 4, 2007 was intended to support development plans and fund operations until the Company secured additional financing. The Bridge Loan carried a stated interest rate of 10% which was payable beginning on May 31, 2007. The Company incurred $65,000 in debt issuance costs which were being amortized to interest expense over the term of the loan. The Bridge Loan was to mature upon the earlier of (a) completion of an equity financing transaction, or (b) May 31, 2008. Upon closing of the Merger, the Bridge Loan was converted into 750,000 shares of the Company’s common stock. As a result of the conversion, accrued interest expense of $20,833 was paid through the issuance of 26,051 shares of the Company’s common stock. Additionally, in the second quarter of 2007 the Company accelerated the amortization of the remaining $51,040 of unamortized debt issuance costs. In accordance with the terms of the Bridge Loan, the Company has issued warrants to the holders of the Bridge Loan which are exercisable for up to a 5 year period.  The warrants entitle the holders to purchase shares of common stock of the Company equal to the number of shares converted under the Bridge Loan at a price of $1.20 per share. The Company allocated the gross proceeds of the Bridge Loan to the loan and detached warrants, respectively. Gross proceeds allocated to the loan resulted in a $200,345 beneficial conversion discount which was recognized as interest expense in the second quarter of 2007. The $148,567 allocated to the warrants was based on the fair value of the warrants and was recorded as a charge to interest expense and additional paid-in capital in the second quarter of 2007.  The fair value of the warrants was determined by using the Black-Scholes model assuming a risk free rate of 4.9%, volatility of 50% and an expected life equal to the contractual life of the warrants (May 9, 2012).

On May 26, 2006 and August 16, 2006, the Company secured a $350,000 revolving credit facility (the “Facility”) and an $82,500 term note (the “Term Note”), respectively, from Webster Bank (the “Bank”). The Facility was available through May 25, 2007. Proceeds received from the Merger were used to repay all amounts due and payable on the Facility and the Facility was terminated. The Company is attempting to secure a replacement facility or other sources of funding with other financial institutions or investors.  The Term Note matures on August 16, 2011. Payments of principal and interest on the Term Note total $1,728 per month. The outstanding balance due on the Term note as of December 31, 2007 was approximately $64,000.

As a result of the Company entering into the Bridge Loan financing arrangement on January 4, 2007, and the subsequent issuance of convertible notes on May 9, 2007, the Company has been in default of certain provisions of the Facility and the Term Note. All amounts due and payable under the Facility were repaid, but the Company continues to be in default of certain provisions of the Term Note. As a result, at the option of the Bank, the stated interest rates for the Term Note could be increased and repayment of the Term Note could be accelerated. Additionally, the Bank could elect to increase the stated interest rate for the Term Note to 13.25%.

Should the Bank choose to accelerate the Term Note, all interest and principal would become due and payable immediately. As a result of the Bank having the option to accelerate the Term Note, the amount outstanding under the Term Note as of December 31, 2007 has been classified as a current liability. As of the date of this filing, the Company has not received any notice that the Bank has elected to increase the interest rate or accelerate the repayment of the Term Note. The Term Note is guaranteed by certain officers and a director of the Company.

Proceeds of $600,000 from the January 2007 Bridge Loan were primarily used to fund operations. Proceeds of $1,685,000 received from the May 2007 convertible notes have been used for the repayment of the $349,407 revolving loan with the Company’s bank, to fund operations and for the purchase of equipment.  Proceeds from the October 17, 2007 sale of equity securities is being used to fund operations. If the Company does not secure a sufficient number of projects for full scale environmental remediation of sufficient size and profitability or if it does not secure additional funding from other sources, the Company estimates current funding will sustain its operations through April 2008. Although the Company is currently pursuing opportunities for full scale environmental remediation projects and additional funding, there is no guarantee that the Company will be successful in securing a sufficient number of full scale remediation projects or additional funding. Securing a sufficient number of full scale remediation projects at acceptable profit margins is critical to ensure the long-term viability of the Company. The Company believes it will require additional funding to sustain operations beyond April 2008.

On January 7, 2008, the Company engaged the services of a placement agent to provide exclusive assistance to the Company in securing additional equity financing. The services will be provided on a best efforts basis. Under the terms of the engagement, the Company is obligated to reimburse the placement agent for all reasonable out-of-pocket legal fees and disbursements. Upon the Company’s acceptance and completion of an equity financing transaction, the Company would be obligated to pay the placement agent fees equal to 6% of the gross proceeds, plus warrants entitling the placement agent to purchase common shares of the Company equal to 6% of the securities included the transaction.

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The Company has entered into a lease agreement for office and lab facilities commencing August 1, 2007 and continuing for a 5 year term with an option to renew for a further 5 years. The lease agreement requires annual rental payments ranging from $38,000 in year one to $42,000 in year five. In addition, the Company will be responsible for maintenance, taxes, insurance and other costs related to the facility. The Company has incurred $82,055 in leasehold improvement costs as of December 31, 2008 to substantially complete its renovation plan for occupation of the facility. The Company terminated its former lease concurrent with its occupation of the new facility on September 1, 2007. The former facility was leased on a month-to-month basis for $1,000 per month.

The Company does not have any off-balance sheet arrangements.

Employment Agreements

The Company has employment agreements effective May 4, 2007 with Mr. John Collins, President and Chief Executive Officer (Mr. Collins) and Mr. George Hoag, Senior Vice President, Research and Development (Mr. Hoag) and an employment agreement effective May 14, 2007 with Mr. Michael F. Vagnini, Senior Vice President and Chief Financial Officer (the “Agreements”). The agreements with Mr. Collins and Mr. Hoag expire on December 31, 2016 and the agreement with Mr. Vagnini is an “at-will” agreement. Mr. Collins’ Agreement includes a base salary of $250,000 per annum, Mr. Hoag’s Agreement includes a base salary of $350,000 per annum and Mr. Vagnini’s Agreement includes a base salary of $200,000 per annum.  Mr. Collins and Mr. Hoag are also owed $300,000 each as deferred compensation to be paid at a future unspecified date. These amounts, totaling $600,000, are included in due to officers/directors in the accompanying balance sheets. Mr. Vagnini’s Agreement also included a grant 506,051 shares  of common stock and restricted common stock that will vest over future periods. As of December 31, 2007, 194,635 shares had vested. Mr. Vagnini would forfeit the 311,416 remaining unvested shares should his employment with the Company terminate. Mr. Vagnini will have 77,854 common shares vesting on February 5, 2008, 116,781 vesting on February 5, 2009 and 116,781 vesting on February 5, 2010. (See Note 9 to the consolidated financial statements for further discussion of common stock grants.)

The Agreements also include the following benefits and payments:

a.	annual incentive payments equal to 50% of base salary to be paid at the discretion of the  Board of Directors;
b.	participation in any future stock option program offered by the Company if their respective equity holding is less than 10% of the total equity of the Company;

c.	participation in a profit sharing plan if approved and implemented by the Board of Directors;
d.	twenty days of paid vacation annually;

e.	an automobile allowance of $750 per month for Mr. Hoag.
f.	severance in the event of a termination (or effective termination) that is not for cause in the amount of one year’s salary that coincides with a like term of a non-compete agreement for Mr. Collins and Mr. Hoag and 90 days for Mr. Vagnini.

Director Compensation

During 2007, the Board of Directors, then composed of the Company’s two largest shareholders and senior executives determined that it would be in the Company’s best interest to have a board of directors composed largely of independent, non-employee directors.  The Board of Directors also determined that, although it would be in the Company’s best interest for director compensation be at least partly equity based, the Company did not have the requisite approvals to issue equity as director compensation. Thereafter, and pursuant to a selection process, the Board of Directors confirmed, ratified and approved on October 12, 2007 the election and appointment of Douglas Anderson, Mark Ain, and Carlos Naudon as independent non-employee members of the Company's Board of Directors (the “Board”), effective as of such date.

Douglas Anderson will serve as Chairman of the Board. Mark Ain and Carlos Naudon will serve as board members. Committee chairmen will be determined at a future date.

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Effective October 12, 2007, the Board of Directors has granted the following compensation to Mark Ain and Carlos Naudon for their services as non-employee directors of the Board. For the fiscal year 2007, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $24,000 for services as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or committee meetings, all of which aggregate amounts was paid in one lump sum following their October 12 appointment as directors. For fiscal year 2008, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $24,000 for services as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or committee meetings, all of which aggregate amounts shall be payable in one lump sum as soon as reasonably practicable after January 1, 2008. As of this date, payments to directors for the fiscal year 2008 have not been made.

Effective October 12, 2007, the Board of Directors has granted the following compensation to Douglas Anderson for his services as the Chair of the Board. For fiscal year 2007, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $74,000 for all services to be rendered as Chair of the Board and for all services rendered as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or Board committee meetings, all of which aggregate amounts was paid  in one lump sum following his October 12, 2007 appointment as Chair of the Board. For fiscal year 2008, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $74,000 for all services rendered as Chair of the Board and for all services rendered as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or Board committee meetings, all of which aggregate amounts shall be payable in one lump sum as soon as reasonably practicable after January 1, 2008. As of this date, the payment to Mr. Anderson for the fiscal year 2008 has not been made.

Such stipends, fees and the composition of the compensation are subject to review by the Board from time to time.

Cash Flows Provided By / (Used In) Operations

Net cash used in operations was approximately $2.1 million for the year ended December 31, 2007. The use of cash was primarily a result of operating losses incurred by the Company. The Company’s net loss of approximately $5.9 million from operations included non cash charges of $1,878,767 to mark a derivative instrument liability to market, $874,709 for employee stock compensation expense, $242,068 for the amortization of beneficial conversion discounts, $51,040 for the acceleration of the amortization of debt issuance costs, $79,300 for amortization of debt discounts related to warrants, $148,567 for non-cash interest expense related to warrant issuances, $41,890 for depreciation, $44,733 for amortization and $20,833 for interest paid for by the issuance of common stock. Cash used in operations was partially offset by a $94,369 reduction in accounts receivable, a $55,314 increase in accounts payable and a $312,434 increase in other current liabilities. The decrease in accounts receivable resulted from a decline in revenues. Increases in accounts payable and other current liabilities resulted primarily from higher expenses and the timing of payments. The increase in other current liabilities also included an increase of $87,500 due to deposits received from customers for future services to be provided by the Company.

Net cash used in operations for the period from February 1, 2006 (inception) to December 31, 2006 of approximately $322,000 included a $220,412 increase in accounts receivable that was offset by increases in accounts payable of $151,416, accrued payroll and benefits of $202,976 and other current liabilities of $2,885. The Company’s $4,226,149 net loss from operations included a non-cash charge of $3,100,000 to expense the value of transferred research and development, $600,000 for deferred compensation due to officers and directors, $37,087 for employee stock compensation expense and $25,736 for depreciation.

Cash Flows Provided By / Used In Investing and Financing Activities

Net cash used in investing activities for the year ended December 31, 2007 amounted to approximately $219,000. Expenditures amounted to approximately $95,000 for machinery and equipment, $82,000 for leasehold improvements and $42,000 for other assets including furniture, office equipment and laboratory equipment. Net cash used in investing activities of approximately $124,000 for the period from February 1, 2006 (inception) to December 31, 2006 was primarily for the purchase of machinery and equipment amounting to $92,000 and  for the purchase of furniture, office and lab equipment amounting to $32,000.

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Cash provided by financing activities for the year ended December 31, 2007 of  approximately $3.4 million included $2,060,001 in gross proceeds from the October 17, 2007 sale of equity securities, $1,685,000 in gross proceeds from convertible notes issued on May 9, 2007 and $510,000 in proceeds from the January 4, 2007 Bridge Loan. These proceeds were partially offset by the $349,407 repayment of the Company’s revolving credit facility, $140,000 in debt issuance cost payments, $198,568 in payments directly related to the May 9, 2007 Merger and $125,648 in payments directly related to the October 17, 2007 sale of equity securities. Additionally, scheduled repayments of long-term debt amounted to $18,630.

Cash provided by financing activities for the period from February 1, 2006 (inception) to December 31, 2006 amounted to approximately $514,000. This primarily resulted from $349,407 in net proceeds received from the revolving credit facility, $82,500 in proceeds received from the Term Note and $90,000 received as an advance on the Bridge Loan.

RESULTS OF OPERATIONS – FOR THE YEAR ENDED DECEMBER 31, 2007 VERSUS THE PERIOD FROM FEBRUARY 1, 2006 (INCEPTION) TO DECEMBER 31, 2006

Net revenues for 2007 were $616,331 as compared to $1,650,143 for the period from February 1, 2006 (inception) through December 31, 2006 (hereafter defined as the “Prior Year Period”). In 2007, revenues were derived from consulting services related to the evaluation of environmental contamination risks at various sites for various clients and treatability studies intended to evaluate the effectiveness of the Company’s remediation technology, know-how and processes in addressing specific contamination issues at specific client sites. In 2006, the Company generated revenues related to a pilot project at a customer site which successfully confirmed the effectiveness of the Company’s technology at that site. In addition, the Company also generated revenues in 2006 from the evaluation of environmental contamination risks at various sites for various clients. Revenues in 2006 from the pilot project amounted to $966,664 and were the primary reason for the higher revenues being realized in the Prior Year Period versus the year ended December 31, 2007.

The Company’s objective is to utilize activities from each of the above mentioned revenue sources to successfully demonstrate its capabilities in addressing environmental remediation issues and thereby secure much larger contracts for full scale remediation of environmental issues at client sites. The Company is continuing to pursue such opportunities. As of this date, the Company has secured one large project with Keyspan Corporate Services LLC (“Keyspan”) and three relatively small commitments for full scale remediation projects. Securing full scale remediation projects at acceptable profit margins are critical to ensure the long-term viability of the Company. Management cannot provide any guarantee that the Company will be successful in securing a sufficient number of full scale remediation projects with acceptable profit margins.

For 2007, approximately 30% of the Company’s revenue was derived from consulting services related to the evaluation of environmental contamination risks at various sites for various clients and 27% was derived from project planning activities related to a contaminated client site. Approximately 43% of the Company’s revenue was generated from treatability studies intended to evaluate the effectiveness of the Company’s remediation technology, know-how and processes in addressing specific contamination issues at specific client sites. For the Prior Year Period, approximately 59% of the Company’s revenues were generated from the above mentioned pilot project at a customer site, 32% were generated from consulting services, 8% was related to project planning activities and 1% was generated from treatability studies.

Costs of revenues for 2007 of $1,101,303 were $1,212,306 less than the Prior Year Period. Direct third party costs incurred in supporting projects of $87,123 for 2007 were $684,744 less than the Prior Year Period primarily due to higher costs incurred in the Prior Year Period to support the above mentioned pilot project. Fixed and other overhead costs for 2007 of $1,014,180 were $527,562 less than the Prior Year Period. This decrease was primarily the result of $600,000 in non-recurring accrued compensation costs recognized in 2006 in accordance with the employment agreements of two officers, Mr. John Collins, President and Chief Executive Officer, and Mr. George Hoag, Senior Vice President of Research and Development and $21,625 in lower costs related to stock compensation. This was partially offset by $63,628 in higher salaries and benefit costs and $23,139 in higher laboratory costs and depreciation to support increased activity for treatability studies.

29

Selling, general and administrative expenses of $2,679,316 for 2007 were $2,318,018 higher than the Prior Year Period. The increase was primarily due to a $859,247 increase in non-cash stock compensation expense, a $443,635 increase for legal, audit and professional fees, an increase of $350,000 for fees paid to members of the Company’s board of directors, a $395,118 increase in salaries and benefits, a $68,100 increase for advertising programs and a $65,103 increase for investor relations costs. In addition, the increase also included $24,250 for estimated penalties related to registration rights associated with the May 9, 2007 Merger, $22,425 in recruiting costs associated with new employees hired, $31,624 in higher insurance premiums and $17,313 in higher rent.

Research and development expense declined from $3,178,805 for the Prior Year Period to $167,618 for 2007. In accordance with FAS 2, “Accounting for Research and Development Costs,” the Prior Year Period research and development expense included a $3,100,000 non-cash charge to expense the fair value of technology transferred to the Company by its founding officers and directors at inception. All other research and development expenses incurred in the Prior Year Period amounted to $78,805 as compared to $167,618 incurred for 2007. This remaining increase of $88,813 reflects the increase in research and development activities undertaken by the Company.

Derivative instrument expense increased by $1,878,767 to mark-to-market derivative instrument liabilities related to warrants issued in conjunction with the May 9, 2007 convertible notes.

Interest expense of $677,359 for 2007 was $654,779 higher than the Prior Year Period.  The increase primarily resulted from $200,345 for amortization of the Bridge Loan beneficial conversion discount, $148,567 for amortization of the discount related to Bridge Loan warrants, the acceleration of $51,040 of debt issuance amortization related to the bridge loan  (see Liquidity and Capital Resources discussion above), $218,072 of interest expense related to the convertible notes and $34,793 of interest related to the Bridge Loan. The $218,072 in interest expense related to the convertible notes included non-cash amortization of $30,773 for debt issuance costs, $41,723 for a beneficial conversion discount and $79,300 for a discount related to warrants issued in conjunction with the notes. The $34,793 of interest expense related to the Bridge Loan included $13,960 in amortization of debt issuance costs and $20,833 of interest paid though the issuance of common stock.

The Company did not recognize any benefit or expense for income taxes for 2007. For the period from February 1, 2006 (inception) to the May 9, 2007 Merger, VeruTEK had elected to be treated as an S corporation under relevant sections of federal and state income tax laws and, accordingly, was not subject to federal or state income tax. Concurrent with the May 9, 2007 Merger, VeruTEK’s tax status changed from an S corporation to a C corporation under sections of the federal and state income tax laws. However, at December 31, 2007, the Company had established a full valuation allowance against all tax benefits and accordingly recorded no income tax benefit for the period ended December 31, 2007.

CRITICAL ACCOUNTING ESTIMATES

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements.  The Company’s estimates are based on historical experience and currently available information.  Actual results in these areas could differ from management’s estimates. 

30

Stock Based Compensation

The Company applies the provisions of Statement of Financial Accounting Standards No. 123(Revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) to all share based payment awards made to employees and directors. Under SFAS 123(R) the Company is required to record compensation costs for all share based payments based on the grant date fair value.  The Company accounts for common stock issued to employees for services based on the fair value of the common shares issued. Due to the absence of available arms-length transactions with unrelated parties for the period prior to the Merger, the Company utilized a discounted cash flow method to determine the fair value of common stock shares as of the date such shares were granted to employees. Appropriate discount rates were utilized reflecting venture capital discount rates in the start-up or early development stages. The Company utilized a start-up venture capital discount rate of 70% for the period up to and including September 30, 2006. Subsequent to September 30, 2006 through the date of the Merger, the Company adjusted its discount rate to 50% as a result of the successful completion of a pilot remediation project at a client location, thereby substantiating the effectiveness of the Company’s technology and know-how. Subsequent to the Merger, the Company determines the fair value of common stock shares granted to employees using the adjusted close price from an active market.

Since the Company has not generated any taxable income to date and has not paid any federal or state taxes based on income since inception, it has provided a valuation allowance for the full amount of its net deferred tax assets and, accordingly, no tax benefits related to stock compensation expense have been recorded in its consolidated financial statements.

Research and Development Expense

Research and development expenses include payroll, employee benefits, depreciation and direct expenses associated with the discovery and development of new technologies related to environmental remediation. Research and development costs are expensed as incurred.

At February 1, 2006 (inception), Mr. Collins and Mr. Hoag transferred proprietary technology and “know-how” to the Company. In accordance with FAS 2, “Accounting for Research and Development Costs,” the fair value of the transferred technology at February 1, 2006 (inception) totaled $3,100,000 and was immediately recognized as research and development expense with an offset to additional paid-in capital. Fair value of the transferred proprietary technology and know-how was determined by a discounted cash flow method. The Company used a start-up venture capital discount rate of 70% for this purpose.

Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make such payments, additional allowances may be required. An increase in allowances for customer non-payment would increase the Company’s expenses during the period in which such allowances are made. The amount recorded as an allowance for doubtful accounts in any such period is based on our estimate of probable losses potentially resulting from the inability of the Company’s customers to make required payments. The Company did not require an allowance for doubtful accounts as of December 31, 2007.

Revenue Recognition

The Company generates revenue by providing technical and consulting services related to environmental remediation. Revenues related to technical and consulting services are generally recognized on a time and materials basis in accordance with agreed-upon billing rates in the period such services were provided.

Certain technical services provided by the Company are provided on a fixed price basis and the customer is billed a specific fee upon the completion of the agreed-upon service. For fixed price contracts, the Company recognizes revenue when applicable tasks are completed in accordance with agreed-upon acceptance criteria. In the case of fixed price contracts, the Company bears the risk of cost overruns and inflation.  Accordingly, if circumstances indicate a loss on a fixed price contract, a provision is made at that time for the entire loss.  Revenues related to fixed price contracts comprise approximately 43% and 1% of our total revenues for the year ended December 31, 2007 and from February 1, 2006 (inception) through December 31, 2006, respectively.

Derivative Instrument Liability

The Company accounts for derivative instruments in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities, as amended,” which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of the hedging relationship designation. Accounting for the changes in the fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged.

31

Item 7. Consolidated Financial Statements

VeruTEK Technologies, Inc. and Subsidiaries

Index to Financial Statements

Year Ended December 31, 2007 and Period from Inception (February 1, 2006) to December 31, 2006

Report of Independent Registered Public Accounting Firm	33
Consolidated Balance Sheet	34
Consolidated Statements of Operation	35
Consolidated Statements of Changes in Stockholders' Equity (Deficiency)	36
Consolidated Statements of Cash Flows	37
Notes to Consolidated Financial Statements	38

32

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

VeruTEK Technologies, Inc.

We have audited the accompanying consolidated balance sheet of VeruTEK Technologies, Inc. and subsidiary (the "Company") as of December 31, 2007, and the related consolidated statements of operations, changes in stockholders' equity (deficiency), and cash flows for the year then ended and for the period from February 1, 2006 (inception) through December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VeruTEK Technologies, Inc. and subsidiary as of December 31, 2007, and the results of their operations and their cash flows for the year then ended and for the period from February 1, 2006 (inception) through December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has a working capital deficiency of approximately $2.2 million at December 31, 2007, has sustained net losses of approximately $5.9 million and $4.2 million for the year ended December 31, 2007 and for the period from February 1, 2006 (inception) through December 31, 2006, respectively, and has an accumulated deficit of approximately $10.1 million at December 31, 2007. VeruTEK Technologies, Inc. is also not in compliance with certain provisions of its bank debt agreement which provides the bank with the right to demand repayment currently. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Carlin, Charron & Rosen, LLP

Glastonbury, Connecticut

March 26, 2008

33

VeruTEK Technologies, Inc.

Consolidated Balance Sheet

December 31, 2007

ASSETS
Current assets:
Cash	$	1,182,875
Accounts receivable		126,043
Other current assets		60,590
Total current assets		1,369,508
Property and equipment, net		321,756
Other assets, net		85,583
Total assets	$	1,776,847
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current portion of long-term debt	$	68,504
Accounts payable		206,730
Accrued payroll and benefits		198,500
Due to officers / directors		600,000
Derivative instrument liability		2,167,000
Other current liabilities		359,957
Total current liabilities		3,600,691
Convertible notes          , net		1,366,140
Long-term debt, less current portion		18,365
Total liabilities		4,985,196
Stockholders' equity (deficiency):
Preferred stock, $.001 par value; 10,000,000 shares
authorized, none issued and outstanding
Common stock, $.001 par value; 150,000,000 shares
authorized, 21,305,373 issued and outstanding		21,305
Additional paid-in capital		6,884,527
Accumulated deficit		(10,114,181	)
Total stockholders' equity (deficiency)		(3,208,349	)
Total liabilities and stockholders' equity (deficiency)	$	1,776,847

The accompanying notes are an integral part of these consolidated financial statements.

34

VeruTEK Technologies, Inc.

Consolidated Statements of Operations

For the Year Ended December 31, 2007 and for the Period from

February 1, 2006 (Inception) to December 31, 2006

	2007			2006
Net revenues	$	616,331		$	1,650,143
Costs and expenses:
Cost of revenues		1,101,303			2,313,609
Selling, general and administration		2,679,316			361,298
Research and development		167,618			3,178,805
Interest expense		677,359			22,580
Derivative instrument expense		1,878,767			-
Total costs and expenses		6,504,363			5,876,292
Loss before income taxes		(5,888,032	)		(4,226,149	)
Provision for income taxes		-			-
Net loss	$	(5,888,032	)	$	(4,226,149	)
Weighted average common shares         outstanding - basic and diluted		18,818,130			14,255,067
Net loss per share - basic and diluted	$	(0.31	)	$	(0.30	)

The accompanying notes are an integral part of these consolidated financial statements.

35

VeruTEK Technologies, Inc.

Consolidated Statement of Changes in Stockholders' Equity (Deficiency)

For the Year Ended December 31, 2007 and the Period from February 1, 2006 (Inception) through December 31, 2006

	Common Stock
	Shares Issued			Amount			Additional Paid-in Capital			Accumulated Deficit			Total
Common Stock issued in connection with
incorporation (February 1, 2006)		15,570,800		$	15,571		$	3,084,435		$	-		$	3,100,006
Stock issued as compensation (Note 9)		116,781			117			36,970			-			37,087
Net loss		-			-			-			(4,226,149	)		(4,226,149	)
Balance, December 31, 2006		15,687,581			15,688			3,121,405			(4,226,149	)		(1,089,056	)
Stock issued as compensation (Note 9)		996,531			996			873,713			-			874,709
Reverse acquisition recapitalization
adjustment, net (Note 2)		2,950,678			2,951			(164,669	)		-			(161,718	)
Conversion of bridge loan to
common stock (Note 7)		750,000			750			599,250			-			600,000
Accrued interest on bridge loan satisfied
with common stock (Note 7)		26,051			26			20,807			-			20,833
Beneficial conversion discount - bridge
loan (Note 7)		-			-			200,345			-			200,345
Issuance of warrants in connection with
bridge loan (Note 7)		-			-			148,567			-			148,567
Beneficial conversion discount -
convertible notes (Note 8)		-			-			151,650			-			151,650
Issuance of common stock and warrants in
connection with private placement, net of
issuance costs of $125,648 (Note 9)		1,373,334			1,373			1,932,980			-			1,934,353
Rescission and cancellation of common
shares (Note 9)		(478,802	)		(479	)		479			-			-
Net loss		-			-			-			(5,888,032	)		(5,888,032	)
Balance, December 31, 2007		21,305,373		$	21,305		$	6,884,527		$	(10,114,181	)	$	(3,208,349	)

The accompanying notes are an integral part of these consolidated financial statements.

36

VeruTEK Technologies, Inc.

Consolidated Statements of Cash Flows

For the Year Ended December 31, 2007 and for the Period from February 1, 2006 (Inception) through December 31, 2006

		2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,888,032	)	$	(4,226,149	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		41,890			25,736
Amortization – debt issuance costs		95,773			-
Amortization of debt discounts – warrants		79,300			-
Amortization of beneficial conversion discount		242,068			-
Non-cash interest expense on warrant issuance		148,567			-
Non-cash interest expense on bridge loan		20,833			-
Loss on disposal of property, plant and equipment		3,913			-
Derivative instrument expense		1,878,767			-
Research and development expense - value of transferred technology		-			3,100,000
Compensation expense due to officers / directors		-			600,000
Compensation expense - common stock issued to employees		874,709			37,087
Changes in operating assets and liabilities, net:
Accounts receivable		94,369			(220,412	)
Other current assets		(40,355	)		-
Other assets, net		(4,000	)		(20,741	)
Accounts payable		55,314			151,416
Accrued payroll and benefits		(4,476	)		202,976
Other current liabilities		312,434			2,885
Net cash used in operating activities		(2,088,926	)		(322,202	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(219,466	)		(123,663	)
Net cash used in investing activities		(219,466	)		(123,663	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock and warrants		2,060,001			6
Proceeds from convertible notes		1,685,000			-
Proceeds from long-term debt - bridge loan		510,000			90,000
Proceeds from long-term debt		-			82,500
Proceeds from (repayment of) revolving loan		(349,407	)		349,407
Payments directly related to recapitalization		(198,568	)		-
Payments for debt issuance costs		(140,000	)		-
Payments directly related to private placement issuance costs		(125,648	)		-
Repayments of long-term debt		(18,630	)		(7,529	)
Net cash provided by financing activities		3,422,748			514,384
NET INCREASE IN CASH		1,114,356			68,519
CASH, beginning of period		68,519			-
CASH, end of period	$	1,182,875		$	68,519
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	111,651		$	22,580
Non-cash investing and financing activities:
Common stock issued upon conversion of bridge loan and accrued interest		620,833			-
Beneficial conversion discount – convertible notes		151,650			-
Discount on bridge loan		148,567			-
Common stock issued to advisors – recapitalization		36,850			-
Property and equipment acquired through the assumption of debt		-			30,528
Property and equipment acquired through capital leases		-			19,638
Fair value of technology contributed as paid-in capital		-			3,100,000

The accompanying notes are an integral part of these consolidated financial statements.

37

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

On May 9, 2007, a Nevada corporation formerly known as Streamscape Minerals, Inc. ("SSMI") and hereinafter referred to as “VeruTEK-Nevada”, entered into and closed a reverse acquisition merger agreement (hereafter defined as the “Merger”) with a Delaware corporation known as VeruTEK Technologies, Inc. ("VeruTEK-Delaware"), and each of VeruTEK-Delaware's shareholders (the "Purchase Agreement"). Pursuant to the Purchase Agreement, VeruTEK-Nevada acquired all of the 21,430 issued and outstanding shares of capital stock of VeruTEK-Delaware from the VeruTEK-Delaware shareholders in exchange for 16,684,112 shares of VeruTEK-Nevada’s common stock (see Note 2).VeruTEK-Delaware was organized as a Delaware corporation on February 1, 2006. VeruTEK-Nevada and its wholly owned subsidiary, VeruTEK-Delaware, are hereinafter referred to as the “Company”.

The Company was formed to develop and commercialize new technologies in the field of environmental remediation. The Company provides technical and consulting services to clients to resolve complex environmental remediation matters at a wide range of waste sites, principally by combining surfactant and oxidant chemistries.

GOING CONCERN / MANAGEMENT’S PLAN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  As shown in the accompanying financial statements, the Company has a working capital deficiency of approximately $2.2 million at December 31, 2007 and has an accumulated deficit of approximately $10.1 million at December 31, 2007.   The working capital deficiency is largely affected by the $2.2 million derivative instrument liability (Note 8) that the Company does not expect to be settled with cash. As is typical with early stage growth companies, these losses are largely a result of business development expenses as well as investments in infrastructure for growing the Company’s business and operations.  The Company is also not in compliance with certain provisions of its term note with its bank which provides the bank with the right to demand repayment.  The Company is pursuing other potential sources of funding with other financial institutions and investors of which there is no guarantee that the Company will be successful in obtaining such financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include adjustments that might result from the outcome of this uncertainty.

Management believes that the Company will be successful in its efforts to adequately meet its capital needs and continue to grow its business.  On January 4, 2007, the Company raised $600,000 through the issuance of convertible debt to accredited investors (Note 7). On May 9, 2007, the Company completed the Merger and raised approximately $1.5 million, net of transaction commissions and expenses, through the issuance of $1.685 million of 6% secured convertible notes and warrants (Note 8).  On October 17, 2007, the Company completed a private placement raising approximately $1.9 million (net of transaction related expenses) in funds from 29 accredited investors (Note 9).

NOTE 2 – REVERSE ACQUISITION MERGER

In connection with the Merger (Note 1), the Company raised approximately $1.5 million, net of approximately $150,000 in transaction costs. The transaction included a share exchange whereby VeruTEK-Delaware and its shareholders exchanged 100% of their 21,430 common shares outstanding for 16,684,112 common shares of VeruTEK-Nevada. Concurrent with the merger, the Company issued 930,944 shares of its common stock to five advisors to the merger and also issued approximately $1.7 million of 6% secured convertible notes and warrants. The notes will be convertible under certain conditions into shares of the Company’s common stock.

38

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 2– REVERSE ACQUISITION MERGER (Continued)

The Company agreed to effect the registration of the shares issuable upon the conversion of the 6% secured convertible notes and warrants under the Securities Act of 1933 pursuant to a registration rights agreement. The registration rights agreement required the Company to file a registration statement and have such registration statement declared effective within 60 and 180 days, respectively, following the May 9, 2007 closing of the Merger.  In the event that the Company failed to file by the required filing deadline or have such registration statement declared effective by the required effective deadline, then the Company would be required to make cash payments to holders of the convertible notes equal to 2% of the purchase price for each 30 day period, prorated for partial periods.  However, the Company was entitled to suspend its filing and effective deadline for a period of 10 consecutive business days under certain circumstances.  The Company did not file its registration statement until July 20, 2007 which was not within the 60 day period allowed under the registration rights agreement. The Company believes it was entitled to suspend the filing of such registration period and, as a result, does not owe a cash penalty in accordance with this provision of the registration rights agreement.

Additionally, the Company did not have the registration statement declared effective until January 18, 2008 which was not within 180 days following the May 9, 2007 closing of the Merger. However, the Company received consents it believes extended this registration deadline from investors comprising approximately 70% of the shares of common stock issuable under the issued and outstanding convertible notes and warrants. Accordingly, the Company has provided an accrued liability of $24,250 for penalties related to those convertible notes for which holders did not provide consents extending this deadline.

Prior to the Merger, VeruTEK-Delaware was a non-reporting, privately held company. The post-acquisition Company is accounted for as a recapitalization of VeruTEK-Delaware using accounting principles applicable to reverse acquisitions with VeruTEK-Delaware being treated as the accounting parent (acquirer) and VeruTEK-Nevada (formerly known as SSMI), the legal parent, being treated as the accounting subsidiary (acquiree). Prior to the consummation of the acquisition on May 9, 2007, SSMI had been an inactive public shell with 2,019,734 shares of common stock outstanding and at the date of the Merger, it had no material assets, liabilities, or net stockholders' equity. VeruTEK-Delaware is regarded as the predecessor entity. In accordance with the provisions governing the accounting for reverse acquisitions, the historical figures presented are those of VeruTEK-Delaware.

The key components of the reverse acquisition recapitalization adjustment were as follows:

	Common Stock						Additional Paid-in
	Shares			Amount			Capital
Public company shares already outstanding on date of Merger (May 9, 2007), par value $.001		2,019,734		$	2,020		$	(2,020	)
Shares issued and cash paid - Merger costs		930,944			931			(162,649	)*
Public company shares issued in a exchange for private company shares,  par value $.001		16,684,112			16,684			(16,684	)
Private company shares exchanged,       par value $.001		(16,684,112	)		(16,684	)		16,684
Reverse acquisition recapitalization  adjustment, net		2,950,678		$	2,951		$	(164,669	)

*Includes cash payments for transaction related costs of $198,568, less $36,850 for stock issued to advisors to the transaction.

39

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 3– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements for the periods prior to the Merger reflect the accounts of VeruTEK-Delaware and for periods subsequent to the Merger, reflect the consolidated accounts of VeruTEK-Nevada and its wholly owned subsidiary, VeruTEK-Delaware, collectively herein referred to as the “Company.” All significant inter-company balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Such principles require the Company to make estimates and assumptions that affect the reported amounts of 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 these estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of bank deposits with original maturities of three months or less. All amounts shown as cash on the December 31, 2007 balance sheet are held as immediately available deposits. There are no restrictions on cash balances shown on the December 31, 2007 consolidated balance sheet.

REVENUE RECOGNITION

The Company generates revenue by providing technical and consulting services related to environmental remediation. Revenues related to technical and consulting services are generally recognized on a time and materials basis in accordance with agreed-upon billing rates and in the period such services were provided. It is the Company’s normal and customary business practice to enter into service agreements that have been approved by authorized representatives of the Company and its customer to be binding. In the absence of an approved service agreement, or approved change order, the Company recognizes revenue only when persuasive evidence of an arrangement exists.

Certain technical services provided by the Company are provided on a fixed price basis and the customer is billed a specific fee upon the completion of the agreed-upon service. For these fixed price contracts, the Company recognizes revenue when applicable tasks are completed in accordance with the completed contract method. The Company bears the risk of cost overruns and inflation with respect to its fixed price contracts.  If circumstances indicate a loss on a fixed price contract, a provision is made at that time for the entire loss.  Revenues related to such fixed price contracts comprised approximately 43% of the Company’s total revenues for the twelve months ended December 31, 2007 and approximately one percent for the period from February 1, 2006 (inception) to December 31, 2006.  At December 31, 2007, the Company has $87,500 of deferred revenue in the form of customer deposits received relating to future services to be provided by the Company. This deferred revenue is included in deposits have been recorded as other current liabilities in the consolidated balance sheet as of December 31, 2007. The deferred revenue will be recognized as revenue  upon completion of the services at a future date.

Deferred revenue is comprised of amounts related to technical and consulting services which have been billed to customers prior to the recognition of revenue.  Deferred costs are comprised of costs incurred prior to the recognition of the related revenue. Deferred revenue at December 31, 2007 amounted to $44,525 and is included in other current liabilities in the consolidated balance sheet. Deferred costs at December 31, 2007 amounted to $37,335 and are included in other current assets in the consolidated balance sheet.

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over asset lives that range from 5 to 7 years. Renewals and improvements that extend the useful lives of assets are capitalized. Capitalized leased assets are depreciated over the estimated useful life of the related equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Leasehold improvements are depreciated over the remaining life of the lease, excluding any renewal options.

40

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 3– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ADVERTISING EXPENSE

The Company expenses advertising costs as incurred. Advertising expense for year ended December 31, 2007 amounted to $68,100. There was no advertising expense for 2006.

DERIVATIVE INSTRUMENT EXPENSE

The Company accounts for derivative instruments in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities, as amended,” which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of the hedging relationship designation. Accounting for changes in the fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At December 31, 2007, the Company did not have any derivative instruments that were designated as hedges.

Derivative instrument expense of $1,878,767 for the year ended December 31, 2007 reflects a non-cash mark-to-market charge for the derivative instrument liability related to warrants issued in conjunction with the May 9, 2007 convertible notes (see Note 8)

FINANCIAL INSTRUMENTS

The carrying amounts for cash, accounts receivable, other current assets, accounts payable, other current liabilities and long term debt approximate their fair value because of the short term maturities of these instruments. The fair value of convertible notes is not determinable because of the lack of any quoted market price or trading activity in the instruments (see Note 8 for a description of these instruments).

Proceeds allocated to the warrants issued on May 9, 2007 in conjunction with the Merger are accounted for as a derivative instrument liability in accordance with EITF Issue 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s own Stock.” The warrants may require cash settlement at fair value in the event of certain circumstances (see Note 8). The warrants are subject to mark-to-market adjustment based on the fair value of the warrants as determined by using the Black-Scholes model.

RECENT ACCOUNTING DEVELOPMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). This statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement does not require any new fair value measurements. The effective date of this statement is for fiscal years beginning after November 15, 2007, but the FASB has partially delayed the effective date for one year for certain fair value measurements when those measurements are used for financial statement items that are not measured at fair value on a recurring basis. The Company is currently evaluating the impact, if any, of the adoption of SFAS 157.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 (“SFAS 159”). This statement permits all entities to choose, at specified election dates, to measure eligible items at fair value (the “fair value option”). A business entity must report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected must be recognized in earnings as incurred and not deferred. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007, but the FASB has partially delayed the effective date for one year for certain fair value measurements when those measurements are used for financial statement items that are not measured at fair value on a recurring basis. The Company is currently evaluating the impact, if any, of the adoption of SFAS 159.

41

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 3– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

On December 4, 2007, the FASB issued SFAS No. 141(R), Business Combinations, and SFAS No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS No. 160). These new standards will significantly change  the financial accounting and reporting of business combination transactions and noncontrolling (or minority) interests in consolidated financial statements. The Company will be required to adopt SFAS No.141(R) and SFAS No. 160 on or after December 15, 2008. The Company has not yet determined the effect, if any, that the adoption of SFAS 141(R) and SFAS No.  160 will have on its consolidated financial statements.

INCOME TAXES

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (“FIN No. 48”). The interpretation contains a two step approach to recognizing and measuring uncertain tax positions accounted for in accordance with FASB Statement No. 109. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company has adopted FIN No. 48 as of January 1, 2007. The adoption of FIN No. 48 did not have any material impact on the Company’s financial statements.

Deferred income taxes are computed in accordance with SFAS No. 109, Accounting for Income Taxes and reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. The Company establishes a valuation allowance if it believes that it is more likely than not that some or all of the deferred tax assets will not be realized (see Note 12).

Prior to the Merger, the Company had elected to be treated as an S corporation under sections of the federal and state income tax laws which provide that, in lieu of federal and state corporate income taxes, all income, deductions, losses and credits pass through to the stockholders for them to report on their personal tax returns. Accordingly, the financial statements do not include any provision for federal or state corporate income taxes for the period prior to the Merger.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. The amount of such costs charged to expense totaled $167,618 and $3,178,805 for the year ended December 31, 2007 and the period from February 1, 2006 (inception) to December 31, 2006, respectively.

SHARE BASED COMPENSATION

The Company applies the provisions of Statement of Financial Accounting Standards No. 123(Revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) to all share based payment awards made to employees and directors. Under SFAS 123(R) the Company is required to record compensation costs for all share based payments based on the grant date fair value.  The Company accounts for common stock issued to employees for services based on the fair value of the common shares issued. Due to the absence of available arms-length transactions with unrelated parties for the period prior to the Merger, the Company utilized a discounted cash flow method to determine the fair value of common stock shares as of the date such shares were granted to employees. Appropriate discount rates were utilized reflecting venture capital discount rates in the start-up or early development stages. The Company utilized a start-up venture capital discount rate of 70% for the period up to and including September 30, 2006. Subsequent to September 30, 2006 through the date of the Merger, the Company adjusted its discount rate to 50% as a result of the successful completion of a pilot remediation project at a client location, thereby substantiating the effectiveness of the Company’s technology and know-how. Subsequent to the Merger, the Company determines the fair value of common stock shares granted to employees using the adjusted close price from an active market.

42

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 3– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Since the Company has not generated any taxable income to date and has not paid any federal or state taxes based on income since inception, it has provided a valuation allowance for the full amount of its net deferred tax assets and, accordingly, no tax benefits related to stock compensation expense have been recorded in its consolidated financial statements.

RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to the current year presentation.

NOTE 4 - -              CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains its cash accounts at high quality financial institutions with balances, at times, in excess of federally insured limits. The Company controls this risk by selecting high quality financial institutions to hold such cash deposits. The Company controls credit risk associated with trade receivables through credit approvals, customer limits and monitoring procedures. The Company has two customers that accounted for approximately 83% of its revenues for the twelve months ended December 31, 2007. The Company records an allowance for doubtful accounts based on the Company’s estimated losses resulting from the inability of its customers to make required payments. The Company did not require an allowance for doubtful accounts as of December 31, 2007.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2007 consists of the following:

Machinery and equipment	$	119,758
Automobiles		30,529
Laboratory equipment		25,231
Office furniture and equipment		64,864
Leasehold improvements		82,055
Construction in process		66,603
		389,040
Less: accumulated depreciation		67,284
Property and equipment, net	$	321,756

Depreciation expense for the year ended December 31, 2007 and for the period from February 1, 2006 (inception) through December 31, 2006 totaled $41,890 and $25,736, respectively.

NOTE 6 - REVOLVING CREDIT FACILITY NOTE

On May 26, 2006, the Company entered into a $350,000 revolving credit facility with a bank. The facility expired on May 25, 2007 and all amounts owed were repaid.

43

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 7 – DEBT

A summary of long-term debt as of December 31, 2007 is as follows:

Term note due on demand (see “Bank Default”), interest at 9.25%, collateralized by substantially all of the assets of the Company and a personal guarantee of certain officers and a director of the Company	$	63,760
Vehicle financing loan due May 9, 2012, interest at 7.99%, collateralized by the vehicle and a personal guarantee of an officer and director.		23,109
		86,869
Less:  current portion		68,504
	$	18,365

At December 31, 2007, the scheduled maturities of long-term debt during the next five fiscal years were as follows.

Year ending December 31:
2008	$	19,954
2009		21,903
2010		24,037
2011		19,382
2012		1,593
Total	$	86,869

BANK DEFAULT

As a result of the Company issuing the convertible notes associated with the Merger, the Company is not in compliance with certain provisions of the Term Note and thus is in default. As a result, the stated interest rates for the Term Note may be increased and repayment of the Term Note may be subject to acceleration. Accordingly, the Company’s bank could elect to increase the stated interest rate for the Term note to 13.25%. Should the Company’s bank choose to accelerate the Term Note, all interest and principal would become due and payable immediately. The Term Note has been classified as a current liability as of December 31, 2007. As of the date of this filing, the Company has not received any notice that the bank has elected to increase the interest rate or accelerate the repayment of the Term Note.

44

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 7 – DEBT (Continued)

BRIDGE LOAN

On January 4, 2007, the Company secured a $600,000 Bridge Loan (the “Bridge Loan”) to support development plans and fund operations. The Bridge Loan had a stated interest rate of 10% which, under the terms of the Bridge Loan, was payable beginning on May 31, 2007. The Bridge Loan was to mature upon the earlier of (a) completion of an equity financing transaction, or (b) May 31, 2008. As a result of the May 9, 2007 Merger (Note 2), the Bridge Loan was converted into 750,000 shares of the Company’s common stock. In addition, as a result of the conversion, accrued interest expense of $20,833 was paid through the issuance of 26,051 shares of the Company’s common stock and the Company accelerated the amortization of the remaining $51,040 of unamortized debt issuance costs. In accordance with the terms of the Bridge Loan, the Company also issued warrants to the holders of the Bridge Loan. The warrants have a 5 year life (expiring in May 9, 2012) and entitle the holders to purchase shares of common stock of the Company equal to the number of shares issued from conversion of the Bridge Loan (776,051 shares) at a price of $1.20 per share. The terms of the warrants do not provide holders with the option to exercise on a cashless basis, nor do they include any requirement to redeem the warrants based on a Black Scholes calculation. In addition, the Bridge Loan warrants specifically contemplate settlement of the warrants in unregistered shares. The Company has accordingly concluded that these warrants meet the tests in EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock, for equity classification.

The Bridge Loan had a beneficial conversion discount because the conversion price of the Bridge Loan was less than the fair value of the Company’s common stock. The value of the beneficial conversion discount and associated warrants was dependent upon the conversion ratio of existing shares of the Company’s common stock to shares of the Company’s common stock after completion of an equity financing transaction. The value of the warrants, and consequently the value of the beneficial conversion discount, could not be determined until a conversion ratio for an equity financing transaction had been established. Accordingly, the total value of the beneficial conversion discount of $200,345 was recognized as interest expense in the second quarter of 2007 as a result of the Merger. The $148,567 allocated to the warrants was based on the fair value of the warrants and was recorded as a charge to interest expense and additional paid-in capital in the second quarter of 2007. The fair value of the warrants was determined by using the Black-Scholes model assuming a risk free interest rate of 4.9%, volatility of 50% and an expected life equal to the May 9, 2012 contractual life of the warrants.

NOTE 8 –            CONVERTIBLE NOTES

On May 9, 2007 the Company issued $1,685,000 of convertible notes (the “Notes”) and related warrants in conjunction with the Merger. The Notes carry a stated interest rate of 6%, mature two years from the date of issuance, and, at the option of the holders, are convertible into common stock of the Company at $1.00 per share. The warrants entitle the holder to purchase the number of shares of the Company’s common stock equal to 50% of the number of shares of common stock into which the Notes are convertible. The warrants have a 5 year life and have an exercise price of $1.20 per share. The holders of the Notes have been granted a security interest in substantially all of the assets of the Company. The Notes contain covenants that limit the ability of the Company to enter into certain transactions and to further encumber the Company’s assets. The covenants include restrictions on incurring additional indebtedness, payment of dividends, distributions of capital stock, repurchases of capital stock and payments to officers or directors other than reasonable compensation and reimbursements. Net proceeds resulting from the Notes and the Merger amounted to approximately $1.5 million. Debt issuance costs attributed to the Notes of $111,850 are being amortized to interest expense over the term of the Notes. The debt issue costs consisted of cash payments totaling $75,000 and shares of common stock issued to advisors that were valued at $36,850. For the year ended December 31, 2007, the Company recorded interest expense of $30,773 related to the amortization of debt issuance costs. Unamortized debt issuance costs as of December 31, 2007 amounted to $81,077 and are included in other assets, net on the consolidated balance sheet.

45

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 8 –             CONVERTIBLE NOTES (Continued)

The Notes contain a beneficial conversion discount of $151,650 because the value allocated to the Notes is less than the fair value of the Company’s common stock. The Company valued the warrants at $288,233 (see below) and  allocated $1,396,767 to the Notes. The beneficial conversion discount will be amortized over the life of the Notes through a charge to interest expense. The convertible notes of $1,685,000 are reflected on the consolidated balance sheet net of the unamortized portion ($208,933) of the $288,233 discount on the convertible debt relating to the warrants and net of the unamortized portion ($109,927) of the beneficial conversion discount of $151,650. The discounts are being amortized to interest expense over the life of the convertible notes. For the year ended December 31, 2007, the Company recorded interest expense of $79,300 related to the warrants, and interest expense of $41,723 related to the beneficial conversion discount.

The $288,233 in proceeds allocated to the warrants was classified as a liability as of the Merger date in accordance with EITF Issue 00-19 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“EITF 00-19”). The warrants may require cash settlement at fair value in the event of certain circumstances, including certain mergers or consolidations, sale of substantially all of the assets of the Company, sale of more than 50% of the outstanding common shares of the Company, or certain other stock purchase or business combinations. Accordingly, the warrants have been accounted for as a derivative instrument liability which is subject to mark-to-market adjustment. As a result, for the year ended December 31, 2007, the Company recorded a pre-tax charge for derivative instrument expense of $1,878,767. The resulting derivative instrument liability was $2,167,000 at December 31, 2007.  The fair value of the warrants was determined by using the Black-Scholes model assuming a risk free interest rate of 3.3%, volatility of 50% and an expected life equal to the May 9, 2012 contractual life of the warrants.

NOTE 9 –            STOCKHOLDERS’ EQUITY

STOCK ISSUANCES

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.001 per share. There were 21,305,373 and 15,687,581 shares issued at December 31, 2007 and 2006, respectively. The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share. There were no shares of preferred stock issued or outstanding as of December 31, 2007.

On October 17, 2007, the Company completed a private placement of investment units to 29 accredited investors at the price of $1.50 per investment unit. Each investment unit is comprised of one common share; a five year non-callable warrant to purchase one common share at an exercise price of $1.80 per share; and a five year non-callable warrant to purchase one common share at an exercise price of $2.10 per share. The Company raised $1,934,353 net of transaction related expenses, primarily legal fees, totaling $125,648 in exchange for 1,373,334 of the aforementioned investment units. There were no underwriting discounts or commissions incurred in the transaction. The securities issued in conjunction with the transaction are not subject to any registration rights. The terms of the warrants do not provide holders with the option to exercise on a cashless basis, nor do they include any requirement to redeem the warrants based on a Black-Scholes calculation. In addition, the warrants specifically contemplate settlement of the warrants in unregistered shares. The Company has accordingly concluded that these warrants meet the tests in EITF 00-19 for equity classification.

46

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 9 –             STOCKHOLDERS’ EQUITY (Continued)

STOCK RESCISSION

On May 9, 2007, the Company issued to John Collins, the Chief Executive Officer of the Company, 1,848,643 shares of the Company’s common stock.  Subsequently, the Company determined that, because such shares of common stock were unregistered, Mr. Collins would be unable to sell a portion of such shares to pay the related income taxes with respect to the issuance of 478,802 of such shares of common stock.  As a result, on December 31, 2007, the Company’s Board of Directors and Mr. Collins agreed to rescind the issuance of such 478,802 shares and Mr. Collins returned the shares to the Company for no consideration and such shares were cancelled on December 31, 2007. The 478,802 shares granted to Mr. Collins were fully vested when granted and compensation expense of $385,605 was recognized in the first quarter 2007 with respect to the 478,802 shares granted.

STOCK BASED COMPENSATION

The Company granted certain key employees and advisors shares of common stock as part of the Company’s offer of employment. The purpose was to enable the Company to retain and motivate such employees. The grants are recognized ratably as compensation expense over the requisite service periods based on the fair value of the grants as of the grant dates. Because grant dates were prior to the Merger and such shares were not publicly traded, fair value of shares at the grant date was determined using a discounted cash flow model. Compensation expense of $874,709  and $37,087 was recognized for the year ended December 31, 2007 and for the period from February 1, 2006 (inception) to December 31, 2006, respectively. Common shares totaling 311,416 will vest at various times through February of 2010. Additional compensation expense for unvested shares amounting to $122,179 will be recognized over the remaining requisite future service periods for each respective grant.

Shares granted as compensation expense are as follows:

Grant Date	Fair Value at Grant Date		Shares Granted as of December 31, 2007		Shares Issued during the period from January 1, 2007 through December 31, 2007		Vested Shares as of December 31, 2007		Unvested Shares as of December 31, 2007
2/13/2006	$	12,700		77,854		38,927		77,854		-
4/17/2006		14,800		77,854		38,927		77,854		-
6/1/2006		15,815		77,854		38,927		77,854		-
2/1/2007		407,550		506,051		506,051		194,635		311,416
2/19/2007		583,110		724,042		724,042		724,042		-
Total	$	1,033,975		1,463,655		1,346,874		1,152,239		311,416

On February 19, 2007, Dr. George Hoag, a founder of the Company and Senior Vice President and Director of Research and Development, returned 350,343 common shares to the Company for no consideration. Dr. Hoag received these shares on February 1, 2006 (inception). These shares were reissued to the parties receiving the 724,042 common shares granted on February 19, 2007. Consequently, the total number of shares issued by the Company for stock compensation for the period from January 1, 2007 through December 31, 2007 was 996,531 shares (1,346,874 shares issued as stock compensation less 350,343 shares returned to the Company by Dr. Hoag).

47

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 9 –             STOCKHOLDERS’ EQUITY (Continued)

WARRANTS

A summary of warrant activity is as follows.

	Warrants		Exercise Price per Warrant		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at January 1, 2007		-	$	-	$	-		-
Issued:
May 9, 2007 in conjunction with
the Bridge Loan (Note 7)		776,051	$	1.20	$	1.20		4.4
May 9, 2007 in conjunction with the
Convertible Notes (Note 8)		842,500	$	1.20	$	1.20		4.4
October 17, 2007 in conjunction with
the sale of equity securities (Note 9)		1,373,334	$	1.80	$	1.80		4.8
October 17, 2007 in conjunction with
the sale of equity securities (Note 9)		1,373,334	$	2.10	$	1.80		4.8
Exercised		-	$	-	$	-		-
Expired		-	$	-	$	-		-
Outstanding at December 31, 2007		4,365,219			$	1.67		4.60

NOTE 10 – OPERATING LEASE COMMITMENTS

The Company leases its facilities and certain office equipment under operating leases which expire in July of 2012 and March of 2010, respectively. The Company has an option to renew its facility lease for an additional 5 years. Future minimum rental commitments under these operating leases are as follows.

Year ending December 31:
2008	$	41,485
2009		42,485
2010		41,184
2011		41,417
2012		24,500
Total minimum lease payments	$	191,071

Rental expenses under operating leases totaled $30,902 and $13,302 for the year ended December 31, 2007 and for the period from February 1, 2006 (inception) through December 31, 2006, respectively.

Real estate taxes, insurance, utilities, repairs and maintenance expenses are generally obligations of the Company, and accordingly, are not included above as part of rental commitments and expenses.

48

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 11 – LOSS PER SHARE

The computation of basic net loss per common share is based on the weighted-average number of common shares outstanding. The shares issuable upon conversion of notes or exercise of warrants have been excluded from the calculation of diluted shares as their effect would be anti-dilutive. Accordingly, basic and fully diluted shares used in the calculation of weighted-average number of common shares outstanding are equal for all periods presented. The weighted average of anti-dilutive common share equivalents excluded from the loss per share calculations for the year ended December 31, 2007 totaled 2,115,077 equivalent shares.

Shares outstanding in all prior periods presented have been revised to reflect the exchange ratio of the May 9, 2007 Merger (Note 2). In accordance with the terms of the Merger, each share of VeruTEK common stock was exchanged for 778.54 shares of the Company’s common stock.

NOTE 12 –                                INCOME TAXES

For the period January 1, 2006 through May 9, 2007, the Company was an S-Corporation under Subchapter S of the Internal Revenue Code.  Under those provisions, the Company did not pay federal or state corporate income taxes on its taxable income.

The provision for income taxes differs from the amount computed by applying the statutory rate as follows:

	2007
Income taxes using U.S. federal statutory rate	$	(2,007,730	)
State income taxes, net of federal benefit		(76,032	)
Valuation allowance		599,572
S Corporation income		432,830
Stock compensation		253,672
Stock based expenses		788,953
Other		8,735
Total	$	-

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2007 are as follows:

Deferred income tax liabilities:
Fixed assets	$	(10,000	)
Deferred income tax assets:
Deferred compensation		297,000
Net operating losses		844,000
		1,141,000
Net deferred income tax assets		1,131,000
Valuation allowance		(1,131,000	)
Net deferred income tax assets/(liabilities)	$	-

As the Company has not achieved profitable operations, management has determined that it is more likely than not that the future benefits will not be realized. Therefore, the Company recorded a valuation allowance for the full amount of the deferred tax assets.

As of December 31, 2007, the Company had net operating loss carry-forwards for federal and state income tax purposes of approximately $2,000,000 which is available to offset future federal taxable income through 2027.

49

VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 12 –          INCOME TAXES (Continued)

The Company has a tax benefit of approximately $382,000 related to the grant of common stock to certain key employees and advisors.  Pursuant to SFAS No. 123 (R), the benefit will be recognized and recorded to APIC when the benefit is realized through the reduction of taxes payable.

The Company complies with the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company's management has determined that the Company has no uncertain tax positions requiring recognition under FIN No. 48.

The Company is subject to U.S. federal income tax as well as income tax of certain state jurisdictions. The Company has not been audited by the U.S. Internal Revenue Service or any states in connection with income taxes. The periods from February 1, 2006 (inception) to December 31, 2006, January 1, 2007 to May 9, 2007 and May 10, 2007 to December 31, 2007 remain open to examination by the U.S. Internal Revenue Service and state authorities.

We recognize interest accrued related to unrecognized tax benefits and penalties, if incurred, as a component of income tax expense.

NOTE 13 –          DUE TO OFFICERS / DIRECTORS

The Company has employment agreements dated May 4, 2007 with Mr. John Collins, President and Chief Executive Officer (Mr. Collins) and Mr. George Hoag, Senior Vice President, Research and Development (Mr. Hoag) (collectively the “Agreements”). The agreements expire on December 31, 2016. Mr. Collins’ agreement includes a base salary of $250,000 per annum and Mr. Hoag’s agreement includes a base salary of $350,000 per annum. Mr. Collins and Mr. Hoag are also owed $300,000 for compensation earned in 2006, payable at a future unspecified date and subject to the approval of convertible note holders under the terms of the Merger. These amounts totaling $600,000 are included in due to officers/directors in the accompanying balance sheet. 

NOTE 14 - -           EMPLOYEE RETIREMENT PLAN

The Company offers certain employees the opportunity to contribute to a 401(k) plan that is administered by a third party. At a future date, the Company will match 100% of the first $5,000 contributed by such employees and 25% of additional contributions made by such employees up to a maximum additional contribution of $2,500. As of December 31, 2007, the Company has not funded the matching contributions and, as a result, has recorded $72,983 in accrued payroll and benefits in the accompanying balance sheet. Expenses related to such matching contributions totaled $44,689 and $28,294 for the year ended December 31, 2007 and for the period from February 1, 2006 (inception) through December 31, 2006, respectively.

NOTE 15 - -           CONTRIBUTED TECHNOLOGY

Effective February 1, 2006, Mr. Collins and Mr. Hoag transferred proprietary technology and “know-how” to the Company. In accordance with SFAS No. 2, “Accounting for Research and Development Costs,” the fair value of the transferred technology at February 1, 2006 (inception) of $3,100,000 was immediately recognized as research and development expense and additional paid-in capital.

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VeruTEK Technologies, Inc.

Notes to Consolidated Financial Statements

NOTE 16 - -  RELATED PARTIES

Certain officers and directors have provided personal guarantees in connection with certain of the Company’s financing transactions.

Douglas Anderson, Mark Ain, and Carlos Naudon, each a director of the Company, purchased investment units issued as part of the October 17, 2007 sale of equity securities. Douglas Anderson purchased 200,000 investment units, Mark Ain purchased 133,000 investment units and Carlos Naudon purchased 134,000 investment units.  Each investment unit is comprised of one Common Share; a five year non-callable warrant to purchase one Common Share at an exercise price of $1.80 per share; and a five year non-callable warrant to purchase one Common Share at an exercise price of $2.10 per share (See Note 9).

During 2006, Mr. Peter G. Perakos, a former director of the Company, arranged for certain legal services that were provided to the Company by a third party and for the payment of certain filing fees on behalf of the Company. Mr. Perakos was reimbursed $15,552 for services arranged and fees paid on behalf of the Company.

During 2006, Mr. Perakos and Mr. Hoag provided working capital loans to the Company. All such loans were repaid during 2006. 

NOTE 17 –          SUBSEQUENT EVENT

On March 3, 2008, the Company and Keyspan Corporate Services LLC (“Keyspan”) entered into an agreement, dated as of February 22, 2008, (the “Agreement”) pursuant to which the Company agreed to provide Keyspan with professional services for the purpose of implementing the Company’s Surfactant Enhanced In-Situ Chemical Oxidation (S-ISCO) remedial measures at Operable Unit number 4 (“OU-4”) Cesspool area of the Bay Shore former manufactured gas plant (MGP) site in Bay Shore, New York.  The Company’s services will be performed in accordance with the New York State Department of Environmental Conservation approved Bay shore/Brightwaters Former MGP Site OU-4, Former Cesspool, S-ISCO Work Plan, dated February 19, 2008.  The Company’s work under this Agreement will focus on the Company’s implementation of S-ISCO at the former OU-4 cesspool area to remediate the MGP-related impacts.  The Agreement contains customary terms and conditions as applied to independent contractors of professional services, including, but not limited to, warranties by the Company regarding the performance of its services in a workmanlike and professional manner, covenants regarding the Company’s compliance with applicable law, indemnification of Keyspan by the Company with respect to, among other things, materials, goods, work and services provided by the Company pursuant to the Agreement, and non-disclosure obligations under the Agreement.  The term of the Agreement will remain in effect until December 31, 2009, unless extended or earlier terminated pursuant to the Agreement’s terms.  The Agreement may be terminated in connection with certain specified events of default, including, but not limited to, any failure by the Company to perform any material covenant for period of thirty (30) days after notice of such failure and any breach by the Company of its non-disclosure obligations under the Agreement.  Keyspan may also terminate the Agreement for convenience upon ten (10) days prior written notice.

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Item 8.   Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

On July 18, 2007 (the “Dismissal Date”), we advised Manning Elliot LLP (the “Former Auditor”) that it was dismissed as our independent registered public accounting firm. The decision to dismiss the Former Auditor as the independent registered public accounting firm was approved by our Board of Directors on July 18, 2007. Except as noted in the paragraph immediately below, the report of the Former Auditor on the financial statements of Streamscape Minerals, Inc. ("Streamscape") for the Fiscal Years ended May 31, 2006 and May 31, 2005 ("Fiscal Years") did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.

The reports of the Former Auditor on Streamscape Minerals, Inc. financial statements as of and for the Fiscal Years contained an explanatory paragraph which noted that there was substantial doubt as to Streamscape's ability to continue as a going concern as Streamscape has generated no revenues and has accumulated losses from operations since inception.

During the Fiscal Years and through the Dismissal Date, we have not had any disagreements with the Former Auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the Former Auditor’s satisfaction, would have caused them to make reference thereto in their reports on our financial statements for such period.

During the Fiscal Year and through the Dismissal, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-B.

New independent registered public accounting firm

On July 18 , 2007 (the “Engagement Date”), we engaged Carlin, Charron & Rosen, LLP (“New Auditor”) as our independent registered public accounting firm for our fiscal year ended December 31, 2007. The decision to engage the New Auditor as our independent registered public accounting firm was approved by our Board of Directors.

During the two most recent fiscal years and through the Engagement Date, we have not consulted with the New Auditor regarding either:

1.

the application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report nor oral advice was provided that the New Auditor concluded was an important factor considered by our Company in reaching a decision as to the accounting, auditing or financial reporting issue; or

2.

any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-B and the related instruction to Item 304 of Regulation S-B, or a reportable event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-B.

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Item 8A(T).   Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Report of Management on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).

The internal control over financial reporting at the Company was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that:

·   pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·   provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;

·   provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and

·   provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, the Company’s management determined that, as of December 31, 2007, the Company maintained effective internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors.

This annual report on Form 10-KSB does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report on Form 10-KSB.

Item 8B.   Other Information

None.

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PART III

Item 9.   Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act

Executive Officers and Directors

Below are the names and certain information regarding our executive officers and directors following the acquisition of VeruTEK-Delaware.

			Employed	Director	Term
Name	Age	Position with Company	Since	Since	Expires
George Hoag	54	Senior Vice President and Director of Research and Development	2/1/2006	NA	NA
John Collins	48	President, Chief Executive Officer, and Director	2/1/2006	5/9/2007	2008
Michael Vagnini	51	Senior Vice President and Chief Financial Officer	2/5/2007	NA	NA
Douglas Anderson	58	Director	NA	10/12/2007	2008

Mark Ain 64 Director NA 10/12/2007 2008

Carlos Naudon 57 Director NA 10/12/2007 2008

Officers are elected annually by the Board of Directors (subject to the terms of any employment agreement), at its annual meeting, to hold such office until an officer’s successor has been duly appointed and qualified, unless an officer sooner dies, resigns or is removed by the Board.

Background of Executive Officers and Directors

John Collins serves as President, Chief Executive Officer and Director. Dr. Collins received his Ph.D. in Soil Physical Chemistry from the University of California (Riverside) in 1988, his MS from the University of Connecticut in 1985 and his BS from McGill University in 1980. In his 20-year career, he has managed regional offices for several large environmental consulting firms and has consulted to Department of Defense/Energy/EPA and Fortune 500 companies on environmental risk, remediation, insurance cost recovery and liability. Dr. Collins is a well-known proponent of green technologies in solving the worldwide legacy of industrial contamination. Since 1997, Mr. Collins has served as an environmental consultant for various clients providing ecological risk assessment. From 1991 to 1997, Mr. Collins served as a member of the U.S. Environmental Protection Agency - Hanford Environmental Restoration Project where he advised EPA managers on human health and ecological risk assessment issues at the Hanford sites.

George Hoag serves as Senior Vice President and Director of Research and Development. Dr. Hoag has served in this role since January, 2007. Dr. Hoag also served as President and Chief Executive officer of the Company from its inception (February 1, 2006) through January, 2007. Dr. Hoag was a director of the Company from its inception (February 1, 2006 through October 12, 2007. Dr. Hoag received his Ph.D. in Environmental Engineering in 1983, his MS from the University of Lowell in 1980 and his BA from the University of Colorado in 1976. He founded and directed the Environmental Research Institute at the University of Connecticut until 2002 and served as a Professor in Civil and Environmental Engineering through 2003. He has been a manager of Hoag Environmental Systems, LLC, a sole proprietorship, since 1998. Dr. Hoag has over 200 peer- reviewed scientific papers, 4 patents and is considered one of the fathers of In Situ Chemical Oxidation (ISCO), Soil Vapor Extraction and other environmental remediation methods.

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Michael Vagnini serves as Chief Financial Officer and Senior Vice President. Mr. Vagnini worked for Chemtura Corporation (formerly Crompton Corporation and Uniroyal Chemical Corporation) for 27 years serving finally as Senior Vice President and Controller. Previously, he was CFO of Uniroyal Chemical Canada Ltd. from 1986 through 1994. Mr. Vagnini received his BS - Accounting from the University of Connecticut in 1978 and his MBA - Finance from the University of Connecticut in 1980.

Douglas Anderson serves as the Chairman of the Board.  Mr. Anderson is the former Chairman, CEO and President of Open Solutions, Inc. (OSI), a leading provider of e-business and software applications for community financial institutions. OSI was acquired in January 2007 by private equity firms (The Carlyle Group and Providence Equity Partners). In addition, Mr. Anderson was President of Manchester Savings Bank before it was sold to New Alliance Bank.

Mark Ain serves as a director.  Mr. Ain founded Kronic in 1977 and served as Kronos Incorporate’s CEO through 2005 when it was acquired by Hellman & Friedman Capital Partners, a private equity firm.  Mr. Ain has a BS in electrical engineering from MIT, and an MBA from the Simon School at the University of Rochester.  Mr. Ain is also a director for several public and non-profit companies including KVH Industries, LTX Corporation, Mass. High Tech Council, National Board of American Electronics Association (AeA), North End Technologies, LLC, SpaceClaim Corporation, Walker Home & School, YMCA of Boston; Board of Trustee member, University of Rochester, and Simon School Executive Advisory Committee, University of Rochester.

Carlos Naudon serves as a director.  Mr. Naudon has served as the President and CEO of Banking Spectrum Inc. and partner of Allister & Naudon, counselors at law, both since 1984.  Mr. Naudon received his Bachelors in economics and computer science from the University of Maryland in 1972, his  MBA (Accounting, Finance and Operations Management) in 1974 from the University of  Rochester and his law degree from Brooklyn Law School in 1981. Mr. Naudon is a retired Certified Public Accountant.

Code of Ethics

We adopted a Code of Ethics and Business Conduct for Officers, Directors and Employees that applies to all of the officers, directors and employees of our Company, a copy of which is incorporated by reference as an exhibit to this Annual Report on Form 10-KSB.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of the Company’s Common Stock, to file reports of ownership and changes in ownership of the Company’s Common Stock with the Securities and Exchange Commission.  Based on a review of the copies of such reports, the Company believes that during the fiscal year ending December 31, 2007 its executive officers, directors and greater than ten percent stockholders filed on a timely basis all reports due under Section 16(a) of the Exchange Act, with the exception of the following:  John Collins, President and Chief Executive Officer, inadvertently filed late a Form 3 for May 2007 reporting his becoming an officer, director and ten percent owner of the Company; George Hoag, Senior Vice President and Director of Research and Development, inadvertently filed late a Form 3 for May 2007 reporting his becoming an executive officer and ten percent owner of the Company; and Michael Vagnini, Senior Vice President and Chief Financial Officer, inadvertently filed late a Form 3 for May 2007 reporting his becoming an executive officer of the Company.

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Item 10.   Executive Compensation

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the annual and long-term compensation earned by the Company’s Chief Executive Officer and the two other most highly compensated executive officers who served during the year ended December 31, 2007, and whose annual salary and bonus during the fiscal year ended December 31, 2007 exceeded $100,000 (the “Named Executive Officers”).  There were no other executive officers of the Company. Each became an executive officer of our Company upon the acquisition of VeruTEK-Delaware.

Name and Principal Position   Year   Salary   Bonus   Awards Total

Name and Principal Position	Year			Salary		Bonus and Other				Stock   Awards				Total
George Hoag (1)	2006			$	238,716	$	-			$	-			$	238,716
Senior Vice President and Director	2007			$	371,250	$	5,250	(3	)	$	-			$	376,500
of Research and Development
John Collins (1)	2006			$	161,419	$	-			$	-			$	161,419
President and Chief Executive Officer	2007			$	256,863	$	-			$	-			$	256,863
Michael Vagnini (2)			-	$	-	$	-			$	-			$	-
Chief Financial Officer and Senior		2007		$	148,037	$	-			$	675,225	(4	)	$	823,262
Vice President

(1) The documented compensation for Hoag and Collins reflects their employment agreements for 2006 for VeruTEK-Delaware. However, Hoag and Collins were awarded $300,000 each in deferred compensation under their new employment agreements with our company in respect of fiscal year 2006. These amounts are included in due to officers / directors in the accompanying balance sheet included herein (See Note 13).

(2)	Mr. Vagnini commenced employment with our Company in February of 2007.
(3)	Mr. Hoag received an automobile allowance of $5,250.
(4)	Mr. Vagnini was granted 506,051 common shares of the Company’s common stock in accordance with the terms of his employment agreement of which 194,635 have vested as of December 31, 2007. The value of such vested shares for the purposes of determining Mr. Vagnini’s compensation was based on the publicly traded market price of the common stock as published in the OTC Bulletin Board under the symbol “VTKT”  on the dates such shares vested. (See Note 9 to the consolidated financial statements for a further discussion of share based compensation.)

Except as set forth in the table above, there has been no other compensation paid to the Named Executive Officers for the periods set forth above.

We have employment agreements (the “Agreements”) with Mr. John Collins, President and Chief Executive Officer (Mr. Collins), Mr. George Hoag, Senior Vice President, Research and Development (Mr. Hoag) and Mr. Michael Vagnini, Senior Vice President and Chief Financial Officer. The Agreements for Mr. Collins and Mr. Hoag expire on December 31, 2016, and the Agreement for Mr. Vagnini is an “at-will” agreement. Mr. Collins’ agreement includes a base salary of $250,000, Mr. Hoag’s agreement includes a base salary of $350,000 and Mr. Vagnini’s agreement includes a base salary of $200,000. The Agreements include the following benefits and payments:

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a. annual incentive payments to a maximum of 50% of their respective base salaries, at the discretion of the Board of Directors;

b. participation in any future stock option program offered by the Company if they are then the owner of less than 10% of the total equity interest in the company;

c.	participation in a profit sharing plan if approved and implemented by the Board of Directors;
d.	twenty days of paid vacation annually; and
e.	an automobile allowance of  $750 per month for Mr. Hoag

f severance in the event of a termination (or effective termination) that is not for cause in the amount of one year’s salary that coincides with a like term of a non-compete agreement for Mr. Collins and Mr. Hoag and 90 days for Mr. Vagnini.

To date, Mr. Collins and Mr. Hoag have not received approximately $300,000 each in compensation due to them under their employment agreements. The amounts payable to Mr. Collins and Mr. Hoag with respect to deferred compensation are included in due to officers/directors in the accompanying balance sheet (see Note 13).

Each of the above named executives is eligible to participate in the Company’s 401(k) retirement plan (see Note 14 to the accompanying consolidated financial statements). As of December 31, 2007, the Company has not funded any matching contributions. With respect to Mr. Collins, the Company has not matched $7,500 of contributions related to 2007 and $7,500 related to 2006. With respect to Mr. Hoag and Mr. Vagnini, there are no matching contributions due.

We expect to approve and implement a stock option plan in the near future. The purpose of such plan will be to enable us to hire, retain and motivate employees. The plan will be limited to 10% of the overall equity of our Company and shall be subject to customary grant agreements and vesting schedules.

Equity Awards Outstanding

There were no options granted to the Named Executive Officers during the year ended December 31, 2007.

The Named Executive Officers did not hold any stock options at December 31, 2007.

Mr. Vagnini was granted 506,051 shares of restricted common stock in accordance with the terms of his employment agreement. As of December 31, 2007, 194,635 shares have vested. Mr. Vagnini would forfeit the 311,416 unvested shares should his employment with the Company terminate. Mr. Vagnini will have 77,854 common shares vesting on February 5, 2008, 116,781 vesting on February 5, 2009 and 116,781 vesting on February 5, 2010. The value of Mr. Vagnini’s unvested shares at December 31, 2007 was $1,089,956 based on the publicly traded market price of the common stock as published in the OTC Bulletin Board under the symbol “VTKT” as of that date. (See Note 9 to the consolidated financial statements for further discussion of assumptions used in valuing common stock grants.)

The Company expects to grant the Named Executive Officers common stock, restricted common stock or stock option awards pursuant to a proposed stock incentive plan that the Company expects to present to its shareholders for approval during 2008. Only the Named Executive Officers who hold less than 10% of stock in our Company will be able to participate in any stock incentive plan.

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Termination Payments

John Collins and George Hoag have entered into an Employment Agreement where the Employee may terminate his employment thereunder for Good Reason. "Good Reason" means (i) a material diminution of Employee's employment duties without Employee's consent, which consent shall not be unreasonably withheld; or (ii) a material and persistent breach by the Company of Section 3 of the Employment Agreement (Compensation Section). Employee must provide the Corporation thirty (30) days prior written notice of his intention to resign for Good Reason which states his intention to resign and sets forth the reasons therefore, and any resignation without delivery of such notice shall be considered to be a resignation for other than Good Reason. In the event that Employee terminates his employment for Good Reason, Employee shall be entitled to (i) payment of Employee's then- current accrued, unpaid Base Compensation and accrued, unused vacation, each prorated through the date of termination, and (ii) an amount in respect of individual severance pay equal to the then current full year base compensation plus bonus compensation. During the thirty (30) day period following the delivery of such notice, Employee shall reasonably cooperate with the Corporation in locating and training Employee's successor and arranging for an orderly transference of his responsibilities. In addition, the Company may terminate Employee’s employment without Cause upon fourteen (14) days written notice. In the event that Employee is terminated without Cause, Employee shall be entitled to (i) payment of Employee’s then-current accrued, unpaid Base Compensation and accrued, unused vacation, each prorated through the date of termination, and (ii) an amount in respect of individual severance pay equal to the then current full year Base Compensation plus Bonus Compensation. During the fourteen (14) day period following the delivery of such notice, Employee shall reasonably cooperate with the Corporation in arranging for an orderly transference of his responsibilities. “Cause” shall mean Employee’s: (i) conviction of, or indictment for, criminal negligence or criminal acts in the work place or conviction of a felony, (ii) violation of the Corporation’s material policies or procedures that have been made known to Employee, or violation by Employee on Corporation premises of any law or material regulation, (iii) material breach or violation of this Agreement, (iv) commission of any act of theft, fraud, dishonesty, or falsification of any employment or Corporation records, (v) appropriation of a business opportunity or transaction in contravention of Employee’s duties to the Corporation, (vi) any improper action by Employee which has a detrimental effect on the Corporation’s reputation or business, (vii) failure to perform the duties assigned or requested by Employee’s superiors, or (viii) gross negligence, incompetence or willful misconduct by Employee in the performance of Employee’s duties.

Michael Vagnini has similar termination payments; however, his severance pay is for a period of up to ninety (90) days.

Pension and Nonqualified Deferred Compensation

We do not presently have a pension plan or any nonqualified deferred compensation plans.

Director Compensation

During the year ended December 31, 2006, the Directors of VeruTEK Delaware received no compensation.

Director compensation for the year ended December 31, 2007 is as follows.

Director	Fee Paid for Services as a Director		Dollar Amount of Stock Awards		Dollar Amount of Other Stock Awarded			Total
Douglas Anderson	$	150,000	$	-	$	9,135	(1)	$	159,135
Mark Ain	$	100,000	$	-	$	-		$	100,000
Carlos Naudon	$	100,000	$	-	$	-		$	100,000

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(1) Mr. Anderson was granted and received 11,678 common shares of the Company prior to his appointment as a director of the Company. Mr. Anderson’s shares were granted and issued prior to the shares of the Company being publicly traded and accordingly have been valued for compensation purposes as of the May 7, 2007 issue date using a discounted cash flow model. A discounted cash flow model has also been used to determine the value of the shares awarded at the grant date, February 19, 2007, in accordance with SFAS 123(revised 2004), “Share Based Payments.” The value of shares awarded at the February 19, 2007 grant date and reflected as compensation expense for the twelve-month period ended December 31, 2007 was approximately $9,000.

During 2007, the Board of Directors, then composed of the Company’s two largest shareholders and senior executives, determined that it would be in the Company’s best interest to have a board of directors composed largely of independent, non-employee directors.  The Board of Directors also determined that, although it would be preferable for director compensation be at least partly equity based, the Company did not have the requisite approvals to issue equity as director compensation.

Effective October 12, 2007, the Board of Directors determined that it is advisable and in the best interest of the Company to establish the compensation of each individual who is retained as a director of the Company for services rendered as a non-employee director of the Company. The Board authorized by resolution of the Company to pay a director for services as a non-employee director of the Company the following: (1) for fiscal year 2007, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $24,000 for services as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or committee meetings, all of which aggregate amounts (less such deductions as shall be required to be withheld by applicable laws and regulations) shall be payable in one lump sum as soon as reasonably practicable after such individual becomes a member of the Board, and (2) for fiscal year 2008, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $24,000 for services as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or committee meetings, all of which aggregate amounts (less such deductions as shall be required to be withheld by applicable laws and regulations) shall be payable in one lump sum as soon as reasonably practicable after January 1, 2008. Such stipends, fees and the composition of compensation are subject to review of the Board from time to time. As of this date, payments to directors for fiscal year 2008 have not been made.

Effective October 12, 2007, the Board of Directors authorized by resolution of the Company to pay the Chair of the Board of the Company, the following: (1) for fiscal year 2007, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $74,000 for all services to be rendered as Chair of the Board and for all services rendered as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or Board committee meetings, all of which aggregate amounts (less such deductions as shall be required to be withheld by applicable laws and regulations) shall be payable in one lump sum as soon as reasonably practicable after being appointed as Chair of the Board, and (2) for fiscal year 2008, an aggregate stipend of $60,000 for all services to be rendered as a director of the Company, an aggregate stipend of $74,000 for all services rendered as chair of such committee(s) of the Board as the Board may from time to time request, and aggregate fees of $16,000 for attendance (either in person or by telephone) at Board and/or Board committee meetings, all of which aggregate amounts (less such deductions as shall be required to be withheld by applicable laws and regulations) shall be payable in one lump sum as soon as reasonably practicable after January 1, 2008. Such stipends, fees and the composition of compensation are subject to review of the Board from time to time. As of this date, the payment to Mr. Anderson for fiscal year 2008 has not been made.

Indemnification of Directors and Officers

Under Section 78.138 of the Nevada Revised Statutes (“NRS”), a director or officer of a corporation is generally not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer, unless it is proven that (i) his or her act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (ii) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law.

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The Company’s Articles of Incorporation, as amended, provide that no director or officer of the Company shall be personally liable to the Company or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer, except (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of the law, or (ii) the payment of dividends in violation of Section 78.300 of the NRS.

The Company’s directors and officers may be indemnified as provided by the NRS and the Company’s Bylaws (the “Bylaws”).

Under NRS Section 78.7502, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding if he or she is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

In addition, under NRS Section 78.7502, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he or she is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation.

Under NRS Section 78.7502, to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, the corporation shall indemnify him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense.

Under NRS Section 78.751, any discretionary indemnification pursuant to NRS Section 78.7502, unless ordered by a court, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances.  The determination must be made (i) by the stockholders, (ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, (iii) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.  Notwithstanding the foregoing, the articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation.

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The Bylaws provide that the Company must indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding, in each case to the fullest extent permissible under NRS Sections 78.7502 or 78.751, as amended from time to time, or the indemnification provisions of any successor statutes, if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful.

In addition, the Bylaws provide that the Company must indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by such person in connection with the defense or settlement of the action or suit if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, provided that no indemnification shall be made with respect to any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

The Bylaws also provide that to the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, the Company must indemnify such person against expenses, including attorneys’ fees, actually and reasonably incurred by such person in connection with the defense.

In addition, the Bylaws provide that expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding referred to above must be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the Company.

The Bylaws provide the indemnification provisions set forth therein must be liberally construed in favor of indemnification and the payment of expenses incurred in connection with a proceeding in advance of its final disposition and there shall be a rebuttable presumption that a claimant under the indemnification provisions set forth in the Bylaws is entitled to such indemnification and the Company shall bear the burden of proving by a preponderance of the evidence that such claimant is not so entitled to indemnification.

The Company has no agreements with any of its directors or officers providing for indemnification of any such persons with respect to liability arising out of their capacity or status as officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

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Item 11.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information, as of January 15, 2008 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of our executive officers and directors; and (iii) our directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.

Name of Beneficial Owner (1)	Common Stock Beneficially Owned			Percentage of Common Stock (2)
George Hoag*	9,913,539		(5)	46.53%
John Collins*		3,295,949	(6)	15.47 %
Michael Vagnini*(3)		506,051		2.38%
Douglas Anderson*		611,678	(7)	2.82%
Mark Ain*		399,000	(8)	1.85%
Carlos Naudon*		410,000	(9)	1.90%
Peter Perakos		1,716,681	(10)	8.06 %
Hoag Environmental LP		2,945,995		13.83 %
Collins Family LP		1,926,108		9.04%
Nite Capital, L.P.(4)		2,088,275		9.40 %
Allister & Naudon		120,000	(11)	0.56%
All officers and directors as a group ( persons)		15,136,218		68.06%

*Executive officer and/or director of our company.

(1)	Except as otherwise indicated, the address of each beneficial owner is c/o VeruTEK Technologies, Inc.,   65 West Dudley Town Rd., Suite 100, Bloomfield, CT 06002.
(2)	Applicable percentage ownership is based on 21,305,373 shares of common stock outstanding as of January 15, 2008, together with securities exercisable or convertible into shares of common stock within 60 days of January 15, 2008 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of January 15, 2008 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(3)	The shares held by Mr. Vagnini are subject to reverse vesting in the case he terminates his employment with the Company prior to a certain date.  See “Item 10. Executive Compensation – Equity Awards Outstanding.”
(4)	Includes (i) 600,000 shares issuable upon the conversion of the convertible Notes and (ii) 300,000 shares issuable upon the exercise of the Common Stock Purchase Warrants. Keith Goodman has voting control and investment discretion over the shares of common stock held by the shareholder. The shareholder contractually agreed to restrict its ability to convert its securities and receive shares of our common stock such that the number of shares of our common stock held by it and its affiliates after such conversion does not exceed 9.9% of our then issued and outstanding shares of common stock.
(5)	Includes 6,967,544 shares of common stock held by George Hoag and 2,945,995 shares of common stock held by Hoag Environmental, LP.
(6)	Includes 1,369,841 shares of common stock held by John Collins and 1,926,108 shares of common stock held by Collins Family LP.
(7)	Includes (i) 200,000 warrants to purchase shares of common stock at a price of $1.80 per share and (ii) 200,000 warrants to purchase shares of common stock at a price of $2.10 per share.
(8)	Includes (i) 133,000 warrants to purchase shares of common stock at a price of $1.80 per share and (ii) 133,000 warrants to purchase shares of common stock at a price of $2.10 per share.
(9)	Includes (i) 40,000 shares of common stock held by Allister & Naudon, (ii) 94,000 warrants to purchase shares of common stock at a price of $1.80 per share held by Carlos Naudon Dynasty Trust, (iii) 40,000 warrants held by Allister & Naudon to purchase shares of common stock at a price of $1.80 per share, (iv) 94,000 warrants to purchase shares of common stock at a price of $2.10 per share held by Carlos Naudon Dynasty Trust and (v) 40,000 warrants held by Allister & Naudon to purchase shares of common stock at a price of $2.10 per share.
(10)	Includes 1,278,363 shares of common stock held by Peter Perakos and 438,318 shares of common stock held by Perakos Environmental, LP.
(11)	Includes (i) 40,000 warrants to purchase shares of common stock at a price of $1.80 per share and (ii) 40,000 warrants to purchase shares of common stock at a price of $2.10 per share.

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Item 12.   Certain Relationships and Related Transactions and Director Independence

Effective October 17, 2007, we completed a private placement of investment units to accredited investors consisting of investment units at the price of $1.50 per investment unit. Each investment unit is comprised of one (1) Common Share, a five year non-callable warrant to purchase one Common Share at an exercise price of $1.80 per share and a five year non-callable warrant to purchase one Common Share at an exercise price of $2.10 per share (the “Investor Warrants”) (the “Offering Round”). The Company raised in the Offering Round approximately $1.9 million (net of $125,648 transaction related expenses) from 29 accredited investors, who were issued approximately 1,370,000 investment units. No underwriting discounts or commissions were applicable to this Offering Round.  Douglas Anderson, Mark Ain, and Carlos Naudon (each a director of our Company) purchased shares of common stock in our Company and were issued warrants.

Director Independence

As noted above, the Company’s common stock is quoted on the OTC Bulletin Board.  Since the OTC Bulletin Board does not have its own rules for director independence, the Company intends to use the definition of independence as established by The NASDAQ Stock Market (“NASDAQ”), under its Marketplace Rule 4200(a)(15).  The Company  believes  that Douglas Anderson, Mark Ain, and Carlos Naudon are independent in accordance with the definition of independent director set forth in NASDAQ Marketplace Rule 4200(a)(15).  Conversely, because a director is not considered to be independent if he or she is also an executive officer or employee of the Company under NASDAQ Marketplace Rule 4200(a)(15), the Company does not consider John Collins, who is Chief Executive Officer and President of the Company, to be an independent director.

In addition, during fiscal year 2007, Mr. Peter Keller and Mr. Ezio Montagliani served as employee-directors of the Company until May 9, 2007 and as directors of the Company until June 5, 2007. Mr. George Hoag served as an employee-director of the Company from June 5, 2007 until October 12, 2007.

Audit Committee Financial Expert

At least one member of the Company’s Audit Committee is a financial expert.  The member serving as the Audit Committee’s financial expert is Mr. Carlos Naudon.  The Company believes that Mr. Naudon is independent in accordance with NASDAQ Marketplace Rule 4200(a)(15), as noted above.

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 Item 13.   Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Exchange (1)
3.1	Articles of Incorporation (2)
3.2	Certificate of Amendment to Articles of Incorporation (3)
3.3	Bylaws (4)
4.1	Securities Purchase Agreement (1)
4.2	Form of Secured Convertible Note (1)
4.3	Form of Common Stock Purchase Warrant (1)
4.4	Form of Registration Rights Agreement (1)
4.5	Form of Security Agreement (5)
10.1	Employment Agreement - George Hoag (1)
10.2	Employment Agreement - John Collins (1)
10.3	Employment Agreement - Michael Vagnini (1)
10.4*	Lease of offices and facilities dated June 29, 2007, between the Company and Wales Realty, LLC
10.5*	Agreement dated as of February 22, 2008, between the Company and Keyspan Corporate Services LLC
14.1	Code of Ethics (6)
16.1	Letter from Manning Elliot LP (7)
21.1	List of Subsidiaries of the Company (5)
31.1*	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2*	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)   Incorporated by reference to the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission on May 15, 2007.

(2)   Incorporated by reference to the Company’s SB-2 Registration Statement filed with the Securities and Exchange Commission on December 16, 2005.

(3)   Incorporated by reference to the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission on May 10, 2007.

(4)   Incorporated by reference to the Company’s Form 8-K Current Report filed with the Securities and Exchange Commission on September 28, 2007.

(5)   Incorporated by reference to the Company’s Form SB-2 Registration Statement filed with the Securities and Exchange Commission on July 20, 2007.

(6)   Incorporated by reference to the Company’s Form SB-2 Registration Statement filed with the Securities and Exchange Commission on December 14, 2007.

(7)   Incorporated by reference to the Company’s Form 8K/A Current Report filed with the Securities and Exchange Commission on September 11, 2007.

* Filed herewith

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Item 14.   Principal Accountant Fees and Services

The following table presents fees for professional audit services rendered by Carlin, Charron & Rosen, LLP for the audit of the Company’s annual financial statements for the years ended December 31, 2007 and 2006, respectively, and fees billed for other services rendered by Carlin, Charron & Rosen, LLP.

	Year Ended December 31, 2007		Year Ended December 31, 2006
Audit Fees (1)	$	82,820	$	64,700
Audit Related Fees (2)	$	89,595	$	-
Tax Services (3)	$	470	$	-
All Other Fees		-	$	-

(1)   Audit fees consist of fees for professional services rendered for the audit of the Company’s consolidated financial statements and review of consolidated financial statement included in the Company’s quarterly reports.

(2)   Audit related fees are principally for professional services rendered in connection with accounting consultations related to the Company’s SB-2 filing and other matters.

(3)   Tax service fees are related to consultation on the tax compliance matters.

The Audit Committee charter provides that the Audit Committee will review and approve fees paid to the independent auditors, including audit fees and all other consulting services. Non-audit services, other than de minimus amounts, will be approved by the Audit Committee or the Audit Committee Chairman beginning with the 2007 year-end audit and 2008 fiscal year. The Audit Committee and its charter were established subsequent to the engagement of Carlin, Charron & Rosen, LLP for the audit of the 2006 fiscal year and all interim services provided during 2007. Accordingly, only those services related to the 2007 fiscal year-end audit have been approved by the Audit Committee. The approved Audit Fees of $65,000 for the fiscal year-end 2007 audit represent 78% of the total $82,820 in Audit Fees incurred for the year ended December 31, 2007.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VERUTEK TECHNOLOGIES, INC.
By:	/s/ John Collins	Date: March 26, 2008
	John Collins
	Chief Executive Officer and Director

By:	/s/ Michael Vagnini	Date: March 26, 2008
	Michael Vagnini
	Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ John Collins	President, Chief Executive Officer and Director	March  26, 2008
John Collins	(Principal Executive Officer)
/s/ George Hoag	Senior Vice President and Director of Research and Development	March  26, 2008
George Hoag
/s/ Michael Vagnini	Senior Vice President and Chief Financial Officer	March  26, 2008
Michael Vagnini	(Principal Financial and Accounting Officer)

/s/ Douglas Anderson	Chairman of the Board	March  26, 2008
Douglas Anderson

/s/ Mark Ain	Director	March  26, 2008
Mark Ain

/s/ Carlos Naudon	Director	March  26, 2008
Carlos Naudon

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, John Collins, President and Chief Executive Officer of VeruTEK Technologies, Inc., certify that:

1. I have reviewed this report on Form 10-KSB of VeruTEK Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

a) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting

Date: March 26, 2008

/s/ John Collins

John Collins, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of VeruTEK Technologies, Inc. (the “Company”) on Form 10-KSB for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 26, 2008

/s/ John Collins

John Collins, President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of VeruTEK Technologies, Inc. (the “Company”) on Form 10-KSB for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 26, 2007

/s/ Michael Vagnini

Michael Vagnini, Senior Vice President and

Chief Financial Officer

(Principal Financial Officer)

EX-10.4

Exhibit 10.4

LEASE

THIS LEASE made this 29th day of June, 2007 by and between WALES REALTY, LLC, a Connecticut Limited Liability Company with a principal place of business located at 275 New State Road, in the Town of Manchester County of Hartford, State of Connecticut, (hereinafter referred to a "Landlord"), and VeruTEK TECHNOLOGIES, INC. a Connecticut corporation with a place of business located at 65 West Dudley Town Road, in the Town of Bloomfield, County of Hartford, State of Connecticut (hereinafter referred to as "Tenant");

WITNESS ETH:

1.      Lease of Premises - For and in consideration of the rents herein reserved, and the covenants and conditions herein contained, the Landlord hereby leases to the Tenant and the Tenant hereby hires from the Landlord, that certain tract of land situated in Bloomfield, Connecticut (hereinafter, "Land") consisting of approximately 2.0 acres, as further described in Exhibit A which is attached hereto, together with all improvements thereon (hereinafter, "Building"). The Building is further described as a free standing building containing approximately 24,000 square feet having a street address of 65 West Dudley Town Road. The Tenant hereby hires from the Landlord and Landlord leases to Tenant a 8,800 square feet portion of the Building as per the attached plan (hereinafter, "Improvements"). The Land and Improvements are sometimes collectively referred to in this Lease as the "Premises." In addition, Tenant shall have use of twenty five (25) parking spaces.

2.            Use of Premises - The Tenant shall use and occupy the Improvements for office, laboratory and manufacturing operations, only and for no other purpose without the prior written consent of the Landlord which consent shall not be unreasonably withheld or delayed. The Tenant hereby warrants that no toxic or hazardous materials shall be stored, utilized or disposed of on the Premises in excess of amounts permitted under applicable law. In the event of any such storage, use or disposal, Tenant shall be liable for any costs reasonably incurred by the Landlord in connection with, or arising out of, the storage, use or disposal of said toxic or hazardous materials. The term "toxic or hazardous materials" shall be as defined by applicable State and Federal laws and regulations. Landlord acknowledges that Tenant's operation on the Premises will require the use of certain materials which may be considered "toxic or hazardous materials" under applicable law. Landlord hereby consents to the use of such materials, provided that all such materials are used, stored and disposed of in accordance with the requirements of applicable laws.

3. Term of Lease - The term of this lease shall be for a period of five (5) years, commencing on August 1, 2007 (the "Commencement Date") and ending July 31, 2012. From the date of mutual execution of this Lease, through the Commencement Date, the Landlord shall permit the Tenant to have access to the Premises for the purpose of permitting the Tenant and its agents and contractors to make alterations to the Improvements so that the Premises, as of the Commencement Date will be fit for the conduct of the Tenant's business thereon. During the period prior to the Commencement Date, the Landlord and the Tenant will cooperate and coordinate with one another so that the work for which they are each responsible for prior to the Commencement Date can be done in as efficient and expeditious manner as possible.

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4.      Base Rent -The Tenant agrees to pay the Landlord as rent, without rights of set off, deduction, or necessity for demand, for each of the years as follows. The first month's rent shall be paid prior to the Tenant obtaining possession of the Premises.

YEAR	YEARLY RENT	MONTHLY RENT
Commencement Date –July 31, 2008	$38,000.00	$3,166.67
August 1, 2008 – July 31, 2009	$39,000.00	$3,250.00
August 1, 2008 – July 31, 2010	$40,000.00	$3,333.33
August 1, 2008                                July 31, 2011	$41,000.00	$3,416.67
August 1, 2008 – July 31, 2012	$42,000.00	$3,500.00

The foregoing rent is allocated as follows:

$3,166.67 base rent adjusted as provided above

$ 833.33 initial estimated additional rent due under Paragraph 33 until such time as adjusted pursuant to Paragraph 33.

The foregoing rent shall be payable in equal monthly installments in advance, commencing on the first day of the first full calendar month following the Commencement Date and on the first day of each and every calendar month thereafter. If the Commencement Date is not the first day of the month, rent for the initial partial month shall be pro-rated based upon the actual number of days in such month and the number of days from the Commencement Date until the last day of such month. In the event said rent is not actually received by the Landlord within ten (10) days, the Tenant shall be responsible for a late charge of $10.00 per day for every day that said rent is late beyond the ten (10) days up to a maximum charge of $150.00. Said late charges shall be considered liquidated damages for said late payment, but shall in no event affect any other damages to which the Landlord may be entitled as a result of the Tenant's late payment, i.e. back rent, unpaid charges, costs of collection, etc. In the event that the Landlord elects to terminate this lease the Tenant's liability for said late charge payment shall cease on the date of said election but the Tenant shall be liable for damages in accordance with Paragraph 11 hereof following the date of said election to terminate. The first installment of rent shall be paid prior to the Tenant taking possession of the Premises.

5.            Assignment and Subletting - The Tenant agrees not to assign this lease or any interest therein or sublet the Premises or any portion thereof, without the prior written approval of Landlord, which approval shall not be unreasonably withheld or delayed, but notwithstanding any assignment or subleasing, Tenant shall remain liable for all the terms, covenants, and conditions of this lease. If the Tenant is a corporation, a transfer of 50% or more of the Tenant's stock shall be considered to be an assignment or sublet for purposes of this Paragraph. Any such sublet or assignment shall be subject to the terms and provisions of this lease and the termination or other expiration of this lease shall terminate any such sublease or assignment.

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6.            Indemnity - The Tenant agrees to indemnify and save Landlord harmless against and from any and all claims, damages, costs and expenses, including reasonable attorney's fees, arising from the conduct or management of the business conducted by the Tenant in the leased Premises, or from any breach or default on the part of the Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant to the terms of this lease, or from any act or negligence of the Tenant, its agents, contractors, servants, employees, subleases, concessionaires or licensees in or about the leased Premises. In case any action or proceeding be brought against the Landlord by reason of any such claim, Tenant, upon notice from Landlord, covenants to defend such action or proceeding and reimburse the Landlord for its reasonable expenses in connection therewith,

7.            Limitation of Landlord's Liability - The Landlord shall not be liable for:

(a)Loss of or damage to any property of the Tenant or of any other person entrusted to the Tenant;

(b)Loss of or damage to any property of the Tenant or of any person by theft or otherwise;

(c)Any injury or damage to any person or property resulting from fire, explosion, falling plaster, steam, gas, electricity, dust, water or snow or leaks from any part of the building or from the pipes, appliances or plumbing system or any other place or by dampness or from any other cause whatsoever;

(d)Any damage caused by other occupants or persons in the building leased to Tenant; or

(e)Any latent defects in the building;

(f)Any interruption of services, utilities, or similar items to be provided for by the Landlord pursuant to this lease.

The foregoing provisions of this Paragraph 7 shall not excuse Landlord from its own negligence or willful misconduct or the negligence or willful misconduct of its employees, agents and contractors. Landlord shall indemnify, defend and save Tenant harmless from any and all claims, damages, losses costs and expenses resulting from the negligence and/or willful misconduct and acts of Landlord, its employees, agents and contractors on or about the Premises,

8. Insurance - The Tenant shall keep in force during the term of this lease public liability insurance with recognized companies licensed in the State of Connecticut with liability limits of not less than $1,000,000.00 for bodily injury and other casualty and arising out of the occupancy, maintenance and use of the Premises and $1,000,000.00 for contents/personal property damage.

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In the event that Tenant wishes to maintain contents/personal property limits at an amount less than $1,000,000, Tenant shall provide sufficient proof of adequate coverage and shall make no claim against Landlord in the event that said coverage is insufficient.. Tenant will name the Landlord as an additional insured on all policies of insurance, and will furnish the Landlord with a copy of the policy or policies within ten (10) days of the execution of this lease and further proof of said insurance as the Landlord may require. Neither party shall be liable for damages covered by insurance.

Throughout the term of this Lease, Landlord shall maintain a policy of fire and extended casualty insurance covering the Premises in an amount equal to the full replacement cost of the Premises and liability coverage with respect to the Premises with limits of not less that $1,000,000.00 for bodily injury and $1,000,000.00 for property damage with the Tenant named as an additional insured thereunder. All such insurance shall be issued by recognized companies licensed in the State of Connecticut. Tenant shall be responsible for payment of its proportionate share as provided in Paragraph 33.

Landlord and Tenant each hereby waives on behalf of all insurers under all policies of insurance (casualty or liability) carried by either covering the Premises or any part thereof or any operations or activities thereon, all rights of subrogation which any insurer might otherwise have, if at all, to any claims of Landlord or Tenant against the other.

9.      Compliance With Law - Tenant agrees to comply and operate its business in accordance with all statutes, laws, ordinances, regulations and rules of the United States, the State of Connecticut, the town in which the Premises are located and any other governmental subdivisions claiming jurisdiction so far as the Premises are or may be concerned.

10.            Subordination to Mortgages - This lease shall not take precedence over any mortgage with any individual, savings bank, commercial bank or insurance company or other recognized lending institution, which may be placed, or arranged upon the Premises, but any mortgage so placed or arranged at all times after the execution hereof until the end of the term of this lease shall be prior to any rights the Tenant may have in the Premises by reason of this lease, to the same effect as though said mortgage had been executed before this lease and recorded within a reasonable time thereafter, provided that no such subordination shall occur unless the lender in question delivers to Tenant an agreement in form and substance reasonably satisfactorily to Tenant pursuant to which such lender agrees not to name Tenant as a defendant in a foreclosure action or disturb Tenant in its enjoyment of the Premises and recognizing the rights of Tenant under this Lease, so long as Tenant is not in default hereunder.

11. Default - If default be made in the payment of rent herein reserved or any part thereof for ten (10) days after written notice from Landlord or if default be made in any of the other covenants and agreements herein contained to be kept by the Tenant which default (other than nonpayment of rent) is not cured within thirty (30) days following notice to the Tenant, provided however, if such default cannot reasonably be cured within thirty (30) days, Tenant shall not be in default hereunder as long as Tenant commences such cure within such thirty (30) day period, or if the Tenant shall make an assignment for the benefit of creditors, or if a receiver or trustee of the Tenant's property shall be appointed which is not removed within sixty (60) days, then it shall be lawful for the Landlord at the Landlord's election to declare said term ended and to re-enter the Premises or any part thereof without such re-entry working a forfeiture of rents to become due hereunder, either with or without process of law, and to expel, remove, and put out the Tenant or any person or persons occupying the same, using such force as may be necessary so as to repossess and enjoy the demised Premises as before this demise, without prejudice to any remedies which the Landlord might otherwise have.

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(a)In the event that this lease is terminated, the Landlord shall make reasonable effort to re-let the Premises, but shall have the sole authority to determine and receive the rent therefore, applying the same to the payment of the rent due by these presents, including reasonable expenses of re-rental such as advertising, rental commission, decorating and repairs and, if the full rental herein provided shall not be realized by the Landlord over and above such expenses of reletting, the said Tenant shall pay any deficiency in all events and shall remain liable for failure to comply with all the other terms, covenants and conditions of this lease. Said deficiency shall be computed by subtracting the amount of rent that the Landlord is scheduled to receive from any re-rental from the amount of rent that the Tenant would have paid throughout the term of this lease. The Landlord shall compute the amount of said damages and shall render a statement to the Tenant for said amount. The Tenant shall each month make a payment equal to the difference between the rent due under this Lease and the rent due under such sublease for such month. In addition to the foregoing, the Tenant shall be liable for all other damages suffered by the Landlord in the event of a breach of this lease.

(b)The Landlord shall have, in addition to the rights and remedies of the Landlord enumerated in this lease (which shall be cumulative), such other rights and remedies as may be allowed by law or in equity. If the Landlord engages the services of an attorney-at-law after a default as aforesaid, the Tenant shall reimburse the Landlord for the actual amount of costs reasonably incurred plus a reasonable attorney's fee. In the event there are any sums due the Landlord by the Tenant following said breach, and said sums are not paid within thirty (30) days after the time they become due, the Tenant shall pay to the Landlord interest on said sums at the rate of one percent (1%) per month.

12. Alterations -

(a) The Tenant may, at its own expense, make improvements to the property as it may deem necessary or expedient in the operation of the leased property, provided the Tenant, without the written consent of the Landlord, shall not tear down or materially demolish any of the improvements on the leased property, or make any material changes or alterations in such improvements without the prior consent of the Landlord, which consent shall not be unreasonably withheld or delayed. Tenant shall not make any change in or alteration to the leased property which would violate the terms of any mortgage on the leased property, or of any policy of insurance in force with respect to the leased property.

Landlord hereby acknowledges that Tenant has informed Landlord of its plans for alteration as set forth in Schedule 12, attached hereto, to be made to the Premises by Tenant at a future date and Landlord consents to such alterations.

(b) Subject to the foregoing, the Tenant shall have the right to make changes or alterations to the building on the leased property so long as:

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(i)No change or alteration shall at any time be made which shall impair the structural soundness or diminish the value of the building on the leased property.

(ii)Before commencing any changes or alterations the Tenant shall procure and deliver to the Landlord the written consent of the mortgagee to which the lease is subordinate and Landlord shall assist Tenant in procuring such consent.

(iii)No change or alteration shall be undertaken until the Tenant shall have procured and paid for all required municipal and other governmental permits and authorizations of the various municipal departments and governmental subdivisions having jurisdiction.

(iv)All work done in connection with any change or alteration shall be done in a good and workmanlike manner and in compliance with the building and zoning laws, and with all other laws, ordinances, orders, rules, regulations, and requirements of all Federal, State, and municipal governments in the appropriate departments, commissions, boards, and their officers thereof, and in accordance with the orders, rules, and regulations of the Board of Fire Underwriters or any other body now or hereafter constituted exercising similar functions, and the Tenant shall procure certificates of occupancy and other certificates required by law.

(v) At all times when any change or alteration is in progress, there shall be maintained, at the Tenant's expense, Workers Compensation Insurance in accordance with the law covering all persons employed in connection with the change or alteration, and general liability insurance for the mutual benefit of the Tenant and the Landlord expressly covering the additional hazards due to the change or alteration.

(c) The Landlord and Tenant agree to make the improvements to the Premises as set forth in Schedule 12 prior to or in a reasonable time after the Commencement Date. Landlord and Tenant agree that Landlord shall contribute the reasonable cost of said improvements up to a maximum amount of Ninety Thousand ($90,000) Dollars which improvements do not include the construction of the laboratory. Payments of Landlord's payment shall be made by Landlord directly to the provider of goods and/or services within thirty (30) days and shall be conditioned upon the delivery of a mechanic's lien waiver.

13. Non-Waiver - The failure of the Tenant to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this lease shall not (notwithstanding any former waiver) prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation. The receipt by the Landlord of rent with knowledge of the breach of any covenant or condition of this lease shall not be deemed a waiver of such breach. It is further agreed that in the event any such rental payment is made by the Tenant after written notice of a breach of any portion of this agreement was given Tenant by Landlord, all rental monies forwarded to Landlord after Tenant's receipt of said notice, shall be accepted by the Landlord only as compensation for reasonable use and occupancy of the demised Premises. No provision of this lease shall be deemed to have been waived by the Landlord unless such waiver be in writing signed by the Landlord. No payment by the Tenant or receipt by the Landlord of a lesser amount than the rent due under this lease shall be deemed to be other than on account of the earliest stipulated rent or shall any endorsement or statement on any check or on any letter or document accompanying any such check or payment be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord's rights to recover the balance of such payment or to pursue any other remedy in this lease provided.

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14.            Entire Agreement - This lease contains the entire agreement between the parties, and any executory agreement hereafter made shall be ineffective to change, modify, discharge, or affect an abandonment of it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.

15.            Notice - Whenever, under the terms of this lease, notice is required to be given or a bill is required to be sent by either party to the other, notice shall be deemed to be given as of the date of mailing by certified or registered mail, return receipt requested or as of the date of receipt of such mail by overnight mail,

to the Landlord at:

P.O. Box 8383

Manchester, Connecticut 06040

with a copy to:

Fatima T. Lobo, Esq.

Lobo & Associates, LLC Manchester, CT 06042-1975 Tel. (860) 645-0006

Fax. (860) 645-1110

to the Tenant at the address at the following address:

VeruTEK Technologies, Inc. 65 West Dudley Town Road Bloomfield, CT 06002

with a copy to:

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16.            Recording - The Tenant agrees not to record this lease and in the event of such recording, this lease shall be at the option of the Landlord void. Either party to this lease may, upon notice from the other party, request that a notice of lease be filed in accordance with the Connecticut Statutes relating to Notices of Lease, which notice of lease may be recorded by Landlord or Tenant.

17.            Condemnation - If at any time during the term of this lease the Premises shall be taken or appropriated by virtue of eminent domain or similar proceedings or be condemned by any public or quasi-public use which shall prevent normal occupancy and use by the Tenant, the Tenant shall not share in the damages or awards paid in respect to the taking or appropriation of its leasehold interest. If a condemnation results in the taking of the whole or substantially whole Premises, this Lease shall terminate as of the date of such taking. If less that the entire Premises is taken and the portion remaining is not sufficient, in the Tenant's reasonable discretion, for the conduct of its business thereon, or materially reduces the amount of parking available at the Premises or adversely affects street access to the Premises, then Tenant may terminate this Lease as of the date of such taking by written notice to Landlord. If Tenant does not terminate this Lease, then, Landlord shall use commercially reasonable efforts to restore the Premises to the condition that existed prior to such taking and, from and after the date of such taking, rent due under this Lease shall be abated on a proportional basis in relation to the portion subject to such taking.

18. Destruction of Premises - In case of the total destruction of the Premises by fire, the elements, external violence or other casualty, then and thenceforth this lease shall cease and come to an end at the option of either Landlord or Tenant by written notice to the other delivered within thirty (30) days after the occurrence of such casualty. If neither party elects to terminate this Lease, then Landlord shall at its sole expense rebuild the Premises to substantially the same condition as existed prior to such casualty. The Tenant's liability for rent during the period of rebuilding shall cease. In the event the Landlord rebuilds the Premises, then said rebuilding shall be substantially completed within 6 months of the date of the casualty. In case the Premises shall be partially damaged by fire, the elements, external violence or other casualty, the same shall be repaired as speedily as practicable by the Landlord. Should such damage be so extensive as to render the Premises untenantable, the Landlord may, by giving notice to the Tenant within thirty (30) days of such damage, terminate this lease. If the Landlord does not give such notice, then the Landlord shall repair and/or rebuild said Premises as soon as is reasonably possible. In the event the Premises are not substantially rebuilt or repaired within ninety (90) days of such damage, then the Tenant may, by notice to the Landlord, terminate this lease upon ten (10) days written notice of Landlord's failure to make said repairs within the 90-day period. If the damage materially interferes with the Tenant's use of the property, Tenant shall have an abatement or an apportionment of the rent until the damage has been repaired or until this lease has been terminated pursuant to the terms hereof. If the Premises are damaged such that they are untenantable during the last six (6) months of this lease or during the last six (6) months of the first renewal option, this lease shall terminate unless within thirty (30) days of such damage, Tenant exercises the option to renew this lease.

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19.            Quiet Enjoyment - The Landlord covenants that so long as the Tenant is in possession, the Tenant shall not be disturbed in the enjoyment of the Premises by the Landlord or by anyone claiming by or under the Landlord.

20.            Right of Entry - The Landlord, its agents, employees, prospective purchasers, prospective mortgagees and prospective lessees, may from time to time enter the Premises during the term of this lease at reasonable business hours and may further make such repairs as they are required to make under the terms of this lease provided that they do not unreasonably interfere with the Tenant's business. Lessor or his agents may enter upon the Premises at other than reasonable business hours to make emergency repairs, provided however, that whenever possible, Landlord shall refrain from entering the Premises unaccompanied by a representative of Tenant. In the case of an emergency, prior to entering the Premises, the Landlord shall call one or more members (up to a maximum of four), of the Tenant's "Emergency Response Team", the members of which shall be designated in a written notice delivered to Landlord contemporaneously with execution of this Lease and updated in writing by Tenant from time to time thereafter.

21.            Transfer by Landlord - The term "Landlord" as used in this lease means only the owner or the mortgagee in possession for the time being of the land and building (or the owner of a lease subject to this lease of the building or of the land and building) which constitutes the Premises, so that in the event of any sale or sales of said land and building, or in the event of a lease subject to this lease of the building or of the land and building, the said Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations hereunder, except obligations existing under claims then existing and accrued; and it shall be deemed and construed without further agreement between the parties and the purchaser at any such sale, or the said Tenant of the building or of the land and building, that such purchaser or such Tenant of the building of the land and building, has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder. It is agreed that no such sale or lease shall be made unless such purchaser or lessee expressly assumes and agrees to carry out all of the covenants and obligations of the Landlord hereunder.

22.            Responsibility for Repairs - Landlord will deliver the Premises with all structural, mechanical, air conditioning as set forth Schedule 12 heating, electrical and plumbing systems in good working order. Landlord hereby warrants toTenant that as of the Commencement Date the Premises shall be in good order and condition and in compliance with all applicable laws and regulations. The Landlord agrees that during the term of the lease, the Landlord will at its sole cost and expense make all necessary repairs to the exterior and to the structure of the building, (including without limitation, the roof, subfloor and load bearing walls and including periodic repaving and restriping of the parking lot and entrance drives in order to maintain them in good appearance and condition consistent with other first class office/industrial buildings in the area). Tenant shall be responsible for all other repairs including but not limited to repairs and maintenance of the heating, air conditioning, electrical and plumbing systems. Tenant's obligations shall not include any major repairs that would be considered capital improvements under Generally Accepted Accounting Principles.

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23. Utilities -

The Tenant agrees to be solely responsible for the following:

(a)Telephone services; and

(b)Dumpster and rubbish removal;

The Landlord and Tenant agree that the gas and electricity shall not be separately metered for Tenant and Visonic, Inc. (hereinafter, "Visonic"). The Tenant shall pay such amount which is in excess of Visonic's use. Visonic's use shall be established by taking the average kilowatt hours and units of gas for the prior twelve (12) months. In the event that the Visonic lease terminates prior to the Tenant's lease, Landlord shall be responsible for usage in excess of Tenant's usage based on an average kilowatt hours and units of gas for the twelve (12) months preceding the end of Visonic's lease. In the event that gas and/or electricity become individually metered, then Tenant shall be responsible only for its usage. In the event that a new tenant leases the Visonic location and Tenant's usage based on kilowatt hours varies by ten per cent (10%) or more, then the Landlord and Tenant shall equitably adjust the allocation hereof. In the event that Tenant changes it use or intensifies its us of the Premises, then the Landlord and Tenant shall equitably adjust the allocation hereof.

All other utilities which are not separately metered shall be paid by Tenant as set forth in Paragraph 33.

24. Mechanic's Liens - The Tenant shall not suffer or permit any mechanic's or materialman's lien to be filed against the Premises or any part thereof by reason of work, labor, services or materials performed or supplied on its order. If any such mechanic's or materialman's liens shall be filed against the Premises, the Tenant shall cause the same to be discharged of record within ninety (90) days of recording. If Tenant cannot discharge such lien within such period then in addition to all other rights and remedies of Landlord, the Landlord may discharge the same by paying the amount claimed to be due without inquiry into the validity of such claim. Such amount paid by the Landlord in procuring the discharge of such lien and all reasonable expenses in connection with such discharge shall be paid as additional rent by the Tenant to the Landlord within five (5) days of the date of a bill therefore sent by the Landlord to the Tenant.

25.           Signs - The Tenant may erect on the exterior of the Premises and/or on the land surrounding the building such signs as the Tenant may desire providing such permission of the Zoning authorities of the town in which the Premises are located be obtained by Tenant for the erection of any such signs and that said signs be erected at Tenant's sole cost and expense.

26.           Nonrecourse as to Landlord - Notwithstanding anything to the contrary set forth in this lease, it is specifically understood and agreed by Tenant than there shall be no personal liability on the part of the Landlord, with respect to any of the terms, covenants and conditions of this lease (except liability under Paragraph 7 of this Lease), and the Tenant shall look solely to the equity, if any, of the Landlord in the Premises for the satisfaction of each and every remedy of the Tenant in the event of any breach by the Landlord of any of the terms, covenants and conditions of this lease to be performed by the Landlord, except under Paragraph 7.

27. Security Deposit - Landlord and Tenant agree to pay Four Thousand ($4,000) as a security deposit shall be paid by Landlord.

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28.            Termination of Lease - Upon termination of this lease, for any reason, the Tenant shall surrender the leased Premises to the Landlord. At that time, the Tenant shall surrender the leased Premises to the Landlord in the same condition it was in at the commencement of the term, reasonable wear and tear excepted. The premises shall be "broom clean" upon surrender. Upon expiration of the lease, any option term or extensions, Tenant will not be responsible for the removal of any improvements it has made to the Premises if such improvements have been made with the approval of the Landlord.

In the event the Tenant continues in possession after the termination of this lease, said continuation of possession shall not constitute a new term, but shall be a month-to-month tenancy only with all of the other terms and conditions of the lease binding upon the Tenant except that the rent or use and occupancy charge, as the case may be, shall then be 150% of the then monthly rental payment.

29.            Captions - The captions used in this lease are inserted only as a matter of convenience and in no way define, limit or describe the scope of the lease nor the paragraph in front of which it appears.

30.            Force Majeure - Neither Landlord nor Tenant shall be required to perform any term, condition or covenant in this Lease so long as such performance is delayed or prevented by force majeure, which shall mean acts of God, strikes, lockouts, material or labor restriction by any governmental authority, civil riot, floors, financing, and any other cause not reasonably within the control of such party, and which by the exercise of due diligence Landlord is unable, wholly or in part, to prevent or overcome.

31.            Binding Effect - This lease shall be binding upon the Landlord and Tenant, and their respective successors, and assigns.

32.            Invalidity of Particular Provision - If any term or provision of this lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this lease shall not be affected thereby and each term and provision of this lease shall be valid and enforceable to the fullest extent permitted by law.

33.            Additional Rent: Taxes, Master Insurance and Maintenance Charges- As additional rent, Tenant shall pay, on an annual basis, monthly in arrears (together with the base rent as set forth in paragraph 4 herein) its proportionate share of all insurance costs, real property taxes and Common Area Charges on the property in which the Premises are located (all of which is collectively defined as the "Total Common Areas Charges". The proportionate share of Total Common Area Charges shall be determined by the use of a fraction, the numerator of which is the number of square feet of floor space in the leased Premises and whose denominator is the aggregate number of square feet of all floor space of the building within which the Premises are located. Such fraction is 36.67%.

"Taxes", as used herein, shall mean all taxes, duties, assessments, or sewer liens or other charges relating to the Premises or the rental thereon, or any charge levied in lieu of the foregoing taxes, duties, assessments, or sewer liens levied or imposed against the land and buildings or rent paid thereon of which the leased Premises form a part whether said sums are payable to the Town in which the Premises are located or to any other governmental taxing authority having jurisdiction of the leased Premises.

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Said taxes and insurance shall be determined upon receipt of a bill by the Landlord and shall be amortized monthly over the year following the receipt of said bill. If said bill is received after the commencement of a lease year, the Tenant shall make up any difference, within 30 days, between the amortized amount for the next year and the then current tax installment for the prior months.

During the first lease year and until first day of the second month immediately following the end of the Landlords fiscal year, the Tenant's monthly pro-rata share of the Total Common Area Charges, as defined herein, shall be based on:

a.   the Total Common Area Charges incurred by the Landlord in the last full fiscal year prior to the commencement of the lease, multiplied by

b.	36.67%, and further multiplied by
c.	one twelfth (1/12th).

Thereafter, and commencing on the first day of the second month immediately following the end of the Landlords fiscal year, the Tenant's pro-rata share of Total Common Area Charges, shall be recomputed based on the Total Common Area Charges incurred by the Landlord in the immediate preceding fiscal year. Tenant shall pay Landlord one twelfth (1/12th) of the Tenant's 36.67% proportionate share of the amount so determined, rounded to the nearest dollar, on the first day of each calendar month during such Lease Year. Landlord's and Tenant's obligations hereunder shall survive the expiration of this Lease. Said adjustments shall be made on or about January 1 of each year.

Within ninety (90) days after the end of each fiscal year, Landlord shall furnish Tenant a statement in reasonable detail of the actual Common Area Charges for such fiscal year prepared in accordance with sound accounting practices by Landlord's accountant. If the Tenant does not object, in writing by certified mail, return receipt requested, to said accountant's determination of its share of the common charges, said charges be deemed accepted by the Tenant. If the Tenants so objects, any dispute shall be settled within 60 days by binding arbitration by an arbitrator selected by the Tenant from a list of three independent accountants selected by the Landlord. Pending said arbitration the Tenant shall continue to pay said additional rent, subject to adjustment by the arbitrators.

As provided herein, Tenant shall pay, on a monthly basis, (together with the base rent as set forth in paragraph 4 herein) Tenant's share of the Maintenance Charges. For the purposes of this Lease, the term Maintenance Charges shall mean all out-of-pocket amounts actually paid or incurred by Landlord or its designee which are reasonable and customary for properties similar to the Premises to perform Landlord's obligations under Paragraphs 23(a) and (b) of this Lease.

For the purposes of this Lease, the term Common Area Charges shall mean all amounts paid or incurred by Landlord or its designee to operate, maintain and repair the Common Areas (and any common improvements therein, thereon or thereunder), including but not limited to, water, sewer charges, cleaning, snow and ice removal, lighting, maintaining and repairing exterior of the building; landscaping; water and sewerage charges related to the Common Areas; premiums for liability, fire (including all extended coverages and endorsements) and workmen's compensation insurance related to the Common Areas, sales and use taxes on material, equipment, supplies and services purchased to operate and maintain the Common Areas; fees for required licenses and permits, supplies, policing, security and traffic control of the Common Areas and affording protection thereto against fire to the extent that such fire protection is furnished by Landlord; annual costs relating to the sprinkler system, e.g., stand-by water charge and alarm system, repair and maintenance of the common areas.

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Landlord shall not charge Tenant, at any time during the lease or option periods, for any improvements to the building common areas necessary to make the property adhere to current ADEA regulations and specifications.

To the best of Landlord's actual knowledge, the Premises are in compliance with all environmental laws, regulations, orders, etc.

Common Area Charges shall not include any major repairs that would be considered capital improvements under Generally Accepted Accounting Principles.

34.            Option to Renew - The Tenant shall have the option to renew this lease for one term of five (5) years, upon the same terms and conditions as provided herein, except that the base rent shall be adjusted upwards only as provided herein.

Said option shall be exercised by Tenant giving notice in writing, pursuant to this agreement, to Landlord at least six (6) months before the expiration of the initial term. It shall be a condition of the exercise of the foregoing option that at the time of the exercise of said option, Tenant shall not be in default under any of the terms of this lease.

Commencing with the rent due August 1, 2009 and each August 1st thereafter, the monthly payments of rent shall be adjusted by any increase in the Index (as defined herein). Such increase shall be determined by multiplying the base rent of $3,166.67 as set forth in Paragraph 4 herein by a fraction, the numerator of which is the last Index published for the month immediately preceding the anniversary date of this Lease (i.e. July), and any renewal thereof, and the denominator of which is the last Index published for the month prior to the initial term of the Lease as set forth in Paragraph 3. In the event that, in any year, said fraction indicates a negative adjustment, there shall be no decrease in the monthly rent.

As used herein, "Index" means the Consumer Price Index for All Urban Consumers (1982-84=100) as promulgated by the Bureau of Labor Statistics of the United States Department of Labor (currently found at www.bls.gov); or, if that Consumer Price Index ceases to be published, any successor similar publication (using any appropriate conversion factor therein provided) or if there is no such successor, then any comparable index selected by the Landlord that is in general use as a mechanism for measuring changes in purchasing power.

35.            Consent - If any provision of this lease requires the consent of the Landlord or the Tenant, such consent shall not be unreasonably withheld.

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IN WITNESS WHEREOF, the parties have set their hands and seals the day and year first above written.

Signed, Sealed and Delivered in the Presence of	LANDLORD,
	By
	Wales Realty, LLC
	Roger W. Talbot, Sr, Member
	TENANT
	VeruTEK Technologies, Inc.
	By John Collins
	Its President and CEO

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EXHIBIT A

Page 1 of 2

15

EXHIBIT A

Page 2 of 2

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Schedule 12

Improvements subject to $90,000 Landlord contribution per paragraph 12 (c)

Heating and Air Conditioning Replace 3 units

Electrical

As necessary to support separation from other Tennant Disconect fire and burglar system - Visonic responsibility Install exit signs and lighting as required

Stairways

Requires a second staircase to be added.

Walls

Add a wall to divide warehouse area

First and second floor separation partitions

Restrooms

Add handicapped compliant restroom on first floor.

Other

Paint, prime and repair 1st and 2nd floor officces as necessary

Repair all doors to ensure they close properly / weather stip if necessary Replace existing fl000ring and install new as necessary

Replace damaged or mismatched ceiling tiles as necessary

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18

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EX-10.5

Exhibit 10.5

AGREEMENT

BETWEEN

KEYSPAN CORPORATE SERVICES LLC

AND

VERUTEK TECHNOLOGIES, INC.

February 22, 2008

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TABLE OF CONTENTS

Article		Page
ARTICLE 1	– DEFINITIONS	1
ARTICLE 2	– PERFORMANCE AND SCOPE OF WORK	2
ARTICLE 3	– PERIOD OF PERFORMANCE	2
ARTICLE 4	– PAYMENT	2
ARTICLE 5	–  OMISSION TO POINT OUT ERRORS, VARIATIONS AND DEFECTS	3
ARTICLE 6	–  WARRANTY AND ACCEPTANCE	3
ARTICLE 7	–  SERVICES BY OTHERS	4
ARTICLE 8	–  COMPANY'S RESPONSIBILITIES	4
ARTICLE 9	– INSURANCE	4
ARTICLE 10	– INDEMNIFICATION	5
ARTICLE 11	– COMPLIANCE	6
ARTICLE 12	–  LIMITATION OF LIABILITY	7
ARTICLE 13	–  EVENT OF DEFAULT	7
ARTICLE 14	– TERMINATION	7
ARTICLE 15	– SUBCONTRACTORS	8
ARTICLE 16	–  NOTICES/COMPANY CONTACTS	8
ARTICLE 17	– AUDITS	9
ARTICLE 18	– TAXES	9
ARTICLE 19	– GRATUITIES	9
ARTICLE 20	–  NON DISCLOSURE	9
ARTICLE 21	–  FORCE MAJEURE	10
ARTICLE 22	–  INDEPENDENT CONTRACTOR	10
ARTICLE 23	–  ARTICLE TITLES	10
ARTICLE 24	–  GOVERNING LAW	11
ARTICLE 25	– ASSIGNMENT	11
ARTICLE 26	–  BINDING EFFECT	11
ARTICLE 27	– SEVERABILITY	11
ARTICLE 28	– COUNTERPARTS	11
ARTICLE 29	–  ENTIRE AGREEMENT	11
ARTICLE 30	– WAIVER	11
ARTICLE 31	–  PROVISIONS REQUIRED BY LAW DEEMED INSERTED	11
ARTICLE 32	–  DISPUTE RESOLUTION	12
ARTICLE 33	–  E-COMMERCE	12
ARTICLE 34	–  HAZARDOUS MATERIALS	12
ARTICLE 35	–  REUSE OF DOCUMENTS	13
ARTICLE 36	–  THIRD PARTY BENEFICIARY	13
ARTICLE 37	–  PARTIALLY COMPLETED SERVICES	13
ARTICLE 38	–  ELECTRONIC MEDIA	13
ARTICLE 39	–  REMOVAL OF ENGINEER'S EMPLOYEES	13
ARTICLE 40	–  NON-EXCLUSIVE AGREEMENT	14
ARTICLE 41	–  CONFLICT OF INTEREST	14
ARTICLE 42	– WORK IN HARMONY	14

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THIS AGREEMENT (the "Agreement"), made as of the 22nd day of February 2008, is between KEYSPAN CORPORATE SERVICES LLC (the "Company" or "KeySpan"), a New York limited liability company, with offices at 175 East Old Country Road, Hicksville, New York 11801 and VeruTEK Technologies, Inc., a with offices at 65 West Dudley Town Road, Bloomfield, CT 06002 ("Contractor"). The Company and the Contractor are individually referred to herein as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, KeySpan desires to contract for professional services as specified in this Agreement, the Work Plan, the Scope of Work and the Proposal (each as defined below); and

WHEREAS, the Contractor is engaged in the business of providing professional services, has the experience, expertise, personnel and professional certification necessary to provide such services and desires to perform such services as specified in this Agreement, the Work Plan, the Scope of Work and the Proposal (each as defined below).

NOW, THEREFORE, in consideration of the mutual covenants set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Article 1  DEFINITIONS

Whether singular or plural, when used in this Agreement and initially capitalized, the terms listed in this Article 1 will have the meanings ascribed to those terms as follows:

"AAA" means the American Arbitration Association. "ACM" means asbestos containing material.

"Company Representative" means the Company representative(s) designated by the Company to direct and coordinate the Contractor's performance of the Services, as such term is defined herein.

"Confidential information" has the meaning ascribed to it in Article 20 of this Agreement. "Contaminated Material" has the meaning ascribed to it in Article 34 of this Agreement. Contractor

"Event of Default" has the meaning ascribed to it in Article 13 of this Agreement. "Force Majeure" has the meaning ascribed to it in Article 21 of this Agreement.

"Proposal" means the document dated December 12, 2007 entitled "Bay Shore OU-4 Cesspool Area Proposal for S-ISCO-MGP Application" annexed hereto and made a part of this Agreement as Exhibit A.

"Purchase Order" has the meaning ascribed to it in Article 2, Section D of this Agreement.

"Scope of Work" means the document dated January 25, 2008 entitled "S-ISCO Application Bay Shore OU-4 Cesspool Area Terms and Conditions – Scope of Work" annexed hereto and made a part of this Agreement as Exhibit B.

"Services" has the meaning ascribed to it in Article 2 of this Agreement. "Term" has the meaning ascribed to it in Article 3 of this Agreement.

"Work Plan" means the New York State Department of Environmental Conservation ("NYSDEC") approved "Bay Shore/Brightwaters Former MGP Site OU-4, Former Cesspool, S-ISCO Work Plan" dated February 19, 2008 annexed hereto and made a part of this Agreement as Exhibit C.

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Article 2 - PERFORMANCE AND SCOPE OF WORK

A.The Contractor shall perform all the work, including furnishing all labor, materials, and equipment (except that which is specifically mentioned in this Agreement, the Work Plan, the Scope of Work or the Proposal as being supplied by others) as set forth in the Work Plan, the Scope of work and the Proposal, hereinafter collectively referred to as the "Services".

B.The Contractor shall perform the Services in strict conformity with the terms of this Agreement, the Work Plan, the Scope of Work and the specifications, drawings and correspondence issued by the Company, if any, for each project to be performed pursuant to this Agreement. The Work Plan, the Scope of Work, the Proposal and all project specifications, drawings and correspondence are incorporated in and hereby made a part of this Agreement.

C.Instructions or explanations given by the Company Representative to the Contractor to complete, clarify or give proper effect to this Agreement, the Work Plan, the Scope of Work, the Proposal and any specifications, drawings and correspondence will be deemed a part of this Agreement. If there is any uncertainty as to the meaning of any portion or portions of the Work Plan, the Scope of Work, the Proposal, this Agreement, or any project specifications, drawings and correspondence, such documents will be interpreted as calling for the best quality as to materials, equipment and workmanship capable of being supplied or applied and requiring that the Services be accurate, current and complete. Any explanation provided by the Company Representative regarding any such uncertainty shall be final and conclusive.

D.The provisions of this Agreement and the Exhibits thereto are intended to complement each other. The Parties agree, however, that in the event of any conflict among the terms of (i) this Agreement, (ii) the Work Plan, (iii) the'Scope of Work, and (iv) the Proposal, the terms of the documents shall govern in the priority listed in this sentence.

E. All data, documents, reports, calculations, photographs, models, diagrams, specifications, computer files and computer data generated during the performance of the Services shall be the exclusive property of the Company and any use by the Contractor unrelated to the preparation of the OU-4 Cesspool Area IRM Completion Report must be authorized in advance and in writing by the Company. This includes, but is not limited to, all process monitoring data, performance monitoring data, soil gas analytical data, groundwater analytical data, soil analytical data, field observations and photographs. The Contractor shall provide a daily data report to XDD that includes all performance and process monitoring data obtained the previous day and shall provide SXDD with real time access to all performance and process monitoring data obtained at the site.

 F.  The Contractor shall identify, in writing, any and all former Company employees that Contractor hires, retains or employs to perform the Services. Such notification shall be on the Contractor's letterhead and forwarded to the Company at the address set forth in Article 16 hereof. Contractor shall provide such initial notification concurrently with the execution of this Agreement and thereafter at the end of each calendar month during the Term (as such term is defined herein) and any extensions thereof.

Article 3 - PERIOD OF PERFORMANCE

The term of this Agreement shall commence as of the date set forth on the first page of this Agreement and shall remain in effect until December 31, 2009 (the "Term"), unless otherwise terminated pursuant to the provisions of this Agreement.

Article 4 - PAYMENT

A.  For and in consideration of the Contractor's true and faithful performance of each and every covenant, agreement and requirement set forth in this Agreement, the Company shall pay the Contractor ) pursuant to the Scope of Work.

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B.The Contractor shall submit an itemized invoice for payment to cover completed project milestones as set forth in the Scope of Work. The Company shall pay all invoices within thirty (30) days of receipt thereof.

C.If the Company disputes and/or questions any portion of an invoice and desires, in its sole discretion, to retain the disputed portion pending resolution, the undisputed portion of such invoice shall be payable in accordance with the terms of this Agreement.

D.Changes In Scope,

1. Extra Services/Deleted Services. The Company, in its sole judgment and discretion, and at any time or from time to time, has the right to require the Contractor to perform other, additional or extra Services ("Extra Services") that are related to the Services to be performed under this Agreement, and to delete all or any part of the Services ("Deleted Services"). Extra Services and Deleted Services shall be collectively referred to as "Changes in Scope." All Company required Changes in Scope shall be furnished to the Contractor in writing.

2. Bidding. The Company reserves the rights to obtain bids and award any Extra Services and/or Deleted Services to other contractors or to perform the Extra Services and/or Deleted Services itself.

3.  Authorization, The Company will not consider, process or pay for Extra Services claims unless the Extra Services claims are submitted in writing and are authorized by the Company's duly executed written order prior to the commencement of the Extra Services.

Article 5 - OMISSION TO POINT OUT ERRORS, VARIATIONS AND DEFECTS

The Company Representative shall advise the Contractor of errors or variations from the requirements of this Agreement and of defects in workmanship and material, but it is expressly agreed that any omission on. the Company Representative's part to point out any such errors, variations, or defects or to provide any instructions or explanations to the Contractor will not give the Contractor any right or claim against the Company and shall not in any way relieve the Contractor from its obligation to perform the Services according to the terms and conditions of this Agreement.

Article 6 WARRANTY AND ACCEPTANCE

A.The Contractor represents and warrants that the Services will be performed in a workmanlike and professional manner consistent with the professional standard of care associated with such services and that all Services, materials and reports prepared by the Contractor will be accurate, current, complete and consistent with the requirements set forth in the Proposal, this Agreement and any project specifications, drawings and correspondence. In the event that the Services furnished by Contractor do not meet the foregoing standards of care and/or the terms of this Agreement, Contractor will re-perform such Services at no cost to Company, provided that Company notifies Contractor, in writing, of such deficiency within a period of one year from the date such Services were accepted by the Company.

B.The Contractor represents and warrants that it has the right to enter into and fully perform this Agreement, and, to the best of Contractor's knowledge, information and belief, no Services, equipment, materials, or reports furnished hereunder will in any way infringe upon or violate any applicable law, rule or regulation, any contract with a third party or any rights of any third person, including, without limitation, rights of privacy, patent, trade secret, trademark or copyright. Contractor, at its sole cost and expense, shall conduct any and all required searches of the privacy, patent, trade secret, trademark or copyright information to ensure that the Services, equipment, materials and reports furnished pursuant to this Agreement are non-infringing.

C.             Acceptance of the Services or portions of the Services shall be made in writing by the Company Representative. No payment other than final payment for a project shall constitute acceptance of the Services or portions thereof.

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D.             The Contractor's failure to comply with any provision of this Article 6 will be a material breach of this Agreement and the Contractor shall be liable to the Company for any and all costs, expenses, fines, levies, legal fees, or statutory and regulatory requirements imposed on the Company as a result of such non-compliance.

Article 7 – SERVICES BY OTHERS

A.The Company reserves the right to perform services or furnish materials not covered by this Agreement and award contracts to third parties for such services or materials. The Contractor shall cooperate with the Company and such third parties and shall not interfere with the performance of such services by the Company or by any third party.

B.Prior to commencing the Services, and from time to time during the Term, the Contractor shall examine the work performed by others insofar as it influences the Services to be performed by the Contractor. If the Contractor finds any defects in the work performed by others, the Contractor shall immediately notify the Company in writing and shall not proceed with the Services until such defects are corrected or the Company Representative authorizes the Contractor proceed with the Services in writing. If the Contractor proceeds with the Services prior to such correction or authorization, then the Contractor shall (i) be deemed to have accepted such work; (ii) be responsible for the accuracy of such work; and (iii) perform any required redesign of such work at the Contractor's sole cost and expense.

Article 8 – COMPANY'S RESPONSIBILITIES

A. The Company shall endeavor to provide, in a timely manner, the Contractor with all known and then available information and data concerning the requirements for the project for which the Services are being rendered,

B. If the Company desires specific safety devices to be included in the design that are beyond those required by applicable codes, regulations, rules and standards. The Company shall so advise the Contractor in writing.

C. The Company shall review all sketches, drawings, specifications, proposals, contracts and other documents submitted by the Contractor, and shall inform the Contractor promptly of the Company's comments. Any Company approval of such documents shall not relieve the Contractor of its obligations under this Agreement,

Article 9 - INSURANCE

A.  Prior to commencing the Services, the Contractor shall, at its own expense, procure and maintain while this Agreement is in effect the following minimum insurance in forms and with insurance companies acceptable to the Company. The Contractor shall ensure that all of its subcontractors, agents, employees, licensees, and invitees are similarly in compliance with the insurance provisions set forth in this Article 9 at all times.

(1)               Workers' Compensation Insurance in accordance with statutory requirements and Employer's Liability with a minimum limit of $1,000,000 each occurrence.

(2)               Commercial General Liability Insurance including Personal Injury, Contractual, Products Liability, Independent Contractors, Broad Form Property Damages and coverage, with the following minimum limits of liability:   $1,000,000 per occurrence Combined Single Limit; and   $2,000,000 General Aggregate.

(3) Professional Liability Insurance  with minimum limits of not less than ten million ($10,000,000) dollars per occurrence in respect of claims arising out of the performance of the Services under this Agreement and caused by any error, omission, or negligent act for which Contractor is liable. Contractor shall maintain this insurance for a minimum of two (2) years after the expiration or termination of this Agreement.

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(4)              Commercial Automobile Liability Insurance with minimum limits of one million ($1,000,000) dollars per occurrence. This insurance is to apply to all owned, non-owned and hired automobiles used by Contractor in the performance of the Services or any services on behalf of the Company.

(5)              Umbrella Liability Insurance to be in force with the Commercial General Liability, Commercial Automobile Liability and Employer's Liability insurance policies set forth above with a minimum limit of not less than five million ($5,000,000) dollars per occurrence.

B.            Endorsement. All polices of insurance required to be maintained by Contractor pursuant to this Article 9 shall be primary to any and all insurance carried by the Company, and its parents, subsidiaries and affiliates. Except for Workers' Compensation Insurance, all policies of insurance required to be maintained by Contractor pursuant to this Article 9 shall be endorsed to warrant that the insurance carrier(s) waive subrogation against the Company and its parents, subsidiaries and affiliates. Such insurance policies shall include an endorsement stating that the Company, its parents, subsidiaries and affiliates, and, if requested, affected property owners are additional insureds with respect to the Contractor's activities relating to this Agreement.

C.            Bonding. If the Contractor is required by law, ordinance or regulation to be bonded, prior to the granting of a license to engage in a business or a permit to exercise a particular privilege, the Contractor shall provide proof of such license bond.

D.            Insurance Notification. Prior to the commencement of the Services, the Contractor shall deliver Certificates of Insurance showing that the insurance set forth in this Article 9 is in force and that not less than 60 days notice will be given to the Company prior to cancellation, termination or material. alteration of said insurance. The Contractor shall not commence the Services until the Contractor delivers acceptable Certificates of Insurance to the Company at KeySpan Corporation, One MetroTech Center, Brooklyn, New York 11201, Attn: Risk Management Department. The Certificate Holder of Insurance is KeySpan Corporation, One MetroTech Center, Brooklyn, New York 11201, Attention: Risk Management Department.

E.The insurance requirements as set forth in this Article 9 are to fully protect the Company and its parents, subsidiaries and affiliates from and against any and all claims by third parties, including employees of Contractor or its agents, subcontractors and invitees. Said insurance, however, shall in no manner relieve or release the Contractor, its agents, subcontractors, and invitees from, or limit their liability as to any and all obligations under this Agreement.

F.Within eight (8) hours of the occurrence of any accidents arising out of the Services or in connection with this Agreement, the Contractor shall provide orally. notification to the Company, which notice shall be confirmed in writing within seven (7) days. Such notice shall be provided to the Company's Risk Management Department, One MetroTech Center, Brooklyn, New York 11201. Such notice shall not relieve either Party of any of its obligations under this Agreement, nor be construed to be other than a mere notification.

G.If any or all of the insurance policies required to be maintained by the Contractor pursuant to this Article 9 are available only on a claims-made basis, then the dates of coverage (including the retroactive date) and the time period within which any claim can be filed shall be so stated in the Certificate of Insurance and the Contractor shall not permit any gaps in coverage to occur.

Article 10 - INDEMNIFICATION

A.  The Contractor shall defend and indemnify and save harmless the Company and its parents, affiliates, subsidiaries, directors, members, trustees, shareholders, officers, employees and agents (collectively, the "Indemnified Parties"), from and against any and all obligations, fees, charges, demands, damages, costs, losses (including, but not limited to property damage, bodily injury, personal injury or death resulting therefrom), claims, penalties, expenses (including, but not limited to, attorneys'

fees and expenses of litigation, accounting, consulting or engineering fees and related expenses), judgments, liens and encumbrances, whenever made or incurred, arising out of or in connection with the negligence, acts, errors, or omissions of the Contractor in the performance of the Services, or any person or entity rendering services or materials to the Contractor for use in the performance of the Services.

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B.The Contractor shall defend and indemnify and save harmless the Indemnified Parties from and against any penalties, fines or forfeitures imposed by a governmental authority or expenses associated therewith (including, reasonable litigation costs and reasonable attorneys' fees) arising out of or connected with any failure or refusal by the Contractor, or any person or entity rendering services or materials to the Contractor for use in the performance of the Services, to comply with any law, statute, regulations, rule, ordinance, order, injunction, writ, decree or award of any government or political subdivision thereof, or any agency, authority, bureau, commission, department or instrumentality thereof, or any court, regarding the performance of the Services.

C.The Contractor represents and warrants that the materials, goods, work and Services provided by the Contractor under this Agreement shall be delivered free of any third party claim for infringement of any copyright, trademark, service mark, patent rights or any other proprietary or intellectual property rights that may affect the adoption or use of the goods, work and Services contracted for under this Agreement. The Contractor shall defend, hold harmless and indemnify the Indemnified Parties from and against the payment of any royalties, damages, losses, or expenses claimed or established against the Indemnified Parties on behalf of any person, firm, entity or corporation arising out of or connected with such infringement or other obligation for which the Contractor is alleged to be responsible. The Indemnified Parties shall have the right, in their discretion, to cancel the undelivered portion of the Services under this Agreement upon their receipt of a notice or claim charging infringement,

D.The Contractor shall indemnify and hold harmless the Indemnified Parties against any and all liabilities whatsoever for damages and/or injuries which may be incurred by the Indemnified Parties by virtue of defective material or workmanship in the goods, work and Services supplied hereunder.

E.in accordance with Paragraphs A, B, C, and ID of this Article 10, the Indemnified Parties have the right to demand that the Contractor undertake to defend the Indemnified Parties against all lawsuits for which the Contractor has a duty to indemnify the Indemnified Parties. In the event that the Contractor indemnifies the Indemnified Parties for any damages, losses, costs, and expenses which result from the negligence of a third party, any corresponding cause of action which the Indemnified Parties may have against such third party will be assigned by the Indemnified Parties to the Contractor.

F.In the event that an Indemnified Party becomes aware of any event or circumstance which might entitle it to indemnification under this Article 10, it shall provide Contractor with written notification within the earlier of thirty (30) days after discovery of such event or circumstance or ten (10) calendar days prior to the time any response is required by law regarding such event or circumstance.

G.The Company shall indemnify and hold harmless the Contractor and its agents and employees from and against all claims, damages, losses and expenses, including but not limited to reasonable attorney's fees, arising out of or resulting from damage, loss or expense if attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property arising out of the negligence, acts or omissions of the Company, or for those whose acts the Company may be liable.

Article 11 - COMPLIANCE

A.             The Contractor shall comply with all applicable Federal, State and local laws, rules, ordinances, regulations, codes, orders or directives that in any manner regulate or affect the Services, including but not limited to, all applicable environmental laws, ordinances and regulations, the Occupational Safety and Health Act of 1970, as amended, and the regulations promulgated thereunder, Executive Order No. 11246, as amended, relative to Equal Employment Opportunity and all other applicable laws, rules and regulations, including Title VII of the Civil Rights Act of 1964, and all laws, rules and regulations applicable to the hiring of disabled veterans, veterans of the Vietnam era and individuals with physical or mental disabilities.

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B.The attached Appendix A entitled "NONDISCRIMINATION IN EMPLOYMENT" is hereby incorporated in and made a part of this Agreement and is binding upon the Contractor to the extent that this Agreement constitutes a "subcontract" as defined in Section 60-1.3(w) of the Rules and Regulations of the Office of Federal Contract Compliance, Equal Employment Opportunity, 41 CFR Part 60.

C.The Contractor shall indemnify and hold the Indemnified Parties harmless from any loss, damage, penalty or injury, including attorney's fees and expenses, suffered by the Indemnified Parties due to the Contractor's default in compliance with applicable Federal, state and local laws, rules, ordinances, regulations, codes, orders or directives. This indemnification and hold harmless obligation is separate from and independent of any other obligations of the Contractor's to indemnify and hold the Indemnified Parties harmless from claims, costs, obligations or expenses.

Article 12 – LIMITATION OF LIABILITY

A.Except as otherwise specifically set forth herein, the Contractor's total liability to the Company arising out of or in connection with this Agreement for the Contractor's performance of the Services required hereunder shall not exceed the amounts paid or payable to the Contractor hereunder; provided, however, that the foregoing limitation of liability shall not apply to the gross negligence or willful misconduct of the Contractor, its employees, contractors, subcontractors and agents. The limitation of liability set forth in this Article 12 (I) is exclusive of and shall not be reduced by any sums recoverable under any insurance carried by or on behalf of the Contractor, its contractors and subcontractors in accordance with this Agreement, and (ii) shall not be construed to limit or otherwise affect the Contractor's hold harmless/indemnification obligations set forth in this Agreement.

B.NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, ARISING OUT OF THIS AGREEMENT.

Article 13 - EVENT OF DEFAULT

Any one or more of the following events shall constitute an Event of Default under this Agreement, and the term "Default" or "Event of Default" shall mean any one or more of the following events:

A.The Company's failure to pay any amount due and not in dispute pursuant to this Agreement within thirty (30) days after the Company receives notice from the Contractor;

B.The Contractor's failure to observe and perform any material covenant, condition, or agreement on its part to be performed and such failure continues for a period of 30 days after written notice is received by the Contractor specifying the nature of such default and requesting that it be remedied; provided however, that the Contractor shall have up to thirty (30) days to cure or make substantial progress (in the reasonable opinion of the Company) towards curing such Default;

C.The Contractor's dissolution or liquidation, or any material representation or warranty made herein proving to have been false or incorrect in any material respect at the time made;

D.The Contractor's breach of the terms of Article 19 and/or 20 of this Agreement; or

E.             Either Party (i) files a petition or otherwise commences a proceeding under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it, (ii) makes an assignment or any general arrangement (other than an assignment undertaken in connection with a financing) for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator, administrator, receiver, bankruptcy trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, provided that if such action is taken without such party's consent, such party shall be allowed 60 days to dismiss such appointment, or (v) is generally unable to pay its debts as they come due.

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Article 14 - TERMINATION

A.           Termination for Default. If there is an Event of Default under this Agreement, the non-defaulting Party, to the extent permitted by law, may, upon 30 days' prior written notice to the defaulting Party, terminate this Agreement and thereupon this Agreement shall cease and terminate unless within such 30 day period the cause of the Event of Default hereunder that was the subject of such notice has been cured or the defaulting Party has instituted and is diligently proceeding (in the reasonable opinion of the non-defaulting Party) with corrective action sufficient to cure such Event of Default.

B.           Termination for Convenience. The Company reserves the right to terminate this Agreement for convenience upon ten days notice to the Contractor. Upon such termination, the Company shall pay only for all Services performed through the effective date of termination plus reasonable costs incurred in effecting such termination and shall have no further liability to the Contractor, except as specified under this Agreement.

Article 15 - SUBCONTRACTORS

The provisions of this Agreement apply to any authorized subcontractors and their directors, officers, agents and employees in all respects and the Services performed by a subcontractor are subject to the provisions hereof, as if furnished directly by the Contractor. The Contractor is not discharged in any manner from its obligations and liabilities hereunder by the employment of a subcontractor but is liable hereunder for all subcontractor acts and omissions. The Contractor shall obtain the Company's written approval for each of its subcontractors prior to the commencement of the Services to be performed by such subcontractor. Upon the Contractor's request to subcontract any portion of the Services, the Contractor shall provide references to enable the Company to verify the subcontractor's experience. The Contractor shall not subcontract in whole or in part any of the Services, without first having obtained the Company's written consent to such subcontract. Any such subcontract for which the Company's written consent is not obtained will be null and void.

Article 16 - NOTICES/COMPANY CONTACTS

A,    All notices, demands, requests, consents, approvals and other communications which may or are required to be given by either Party to the other Party under this Agreement must be in writing and sent by United States registered or certified mail, postage prepared, return receipt requested or a national overnight carrier, and addressed to the Party for whom it is intended at its address set forth below:

If to the Contractor:	[Contractor to specify]
	Attn:
If to the Company:
	KeySpan Corporate Services LLC One MetroTech Centre Brooklyn, NY 11201 Attention: Christine Stockhausen Telephone: 718-403-2775 Facsimile: 718-797-5786

B.Either Party may designate a change of address by written notice to the other Party. Such notice shall be given at least ten (10) days before such change of address is to become effective.

C.The Contractor shall contact the following individuals with respect to the matters set forth below regarding this Agreement:

(1)           Commercial - For commercial matters contact Christine Stockhausen at 718-403­2775. Commercial matters include inquiries regarding Agreement terms and conditions, modifications to this Agreement and negotiation of changes.

(2)           Performance of Services - For performance related issues, contact William J. Ryan at (516) 545-2586.

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Article 17 – AUDITS

From the date hereof, the Contractor shall provide the Company access to all of the Contractor's books, records, vouchers, memoranda, papers or documents relating to the Services and the Contractor shall preserve all such records for a period of two (2) years after final payment under this Agreement, during which period the Company shall complete any audit that may be desired. If the Company does not avail itself of this right of access to the Contractor's records as herein provided, the Company will not be deemed to have waived any of the Company's other rights under this Agreement or to have ratified or accepted the Contractor's charges for any Services performed.

Article 18 - TAXES

A.The Contractor shall be responsible for and shall pay all payroll taxes and other taxes it incurs in performing the Services.

B.The Contractor shall not include New York State or local sales tax on its invoices. If applicable, the Company will pay such taxes directly to New York State through Direct Payment Permit Number DP-3471 (1.D. No. 11-3431358). If a certificate of exemption or similar document is required to exempt the Contractor from sales or similar tax liability, the Company shall obtain and furnish to the Contractor evidence of such exemption in a form satisfactory to the applicable taxing authority.

Article 19 - GRATUITIES

The Contractor on behalf of itself and its agents, servants, employees and subcontractors, warrants that no gratuity, payment, gift, service or other item of value (excepting a business meal or gift of nominal value) will be offered to any Company employee, or to any family member of a Company employee, or an employee of the parents, subsidiaries or affiliates of the Company. Whether or not authorized and whether or not intended to influence, the tendering of any such gratuity, payment, gift, service or other item of value (excepting a business meal or gift of nominal value) to: any such employee or to any employee family member, associate or agents of such employee; is an Event of Default and shall give rise to an immediate right of termination of this Agreement by the Company.

Article 20 - NON-DISCLOSURE

A.The Contractor hereby acknowledges that in connection with its performance of Services, the Contractor may be furnished with or exposed to information that is proprietary and confidential to the Company and/or its parents, subsidiaries and affiliates (the "Confidential Information"). Confidential Information shall include but shall not be limited to information concerning customers, employees, contractors, facility locations, techniques, methods, computer programs, software, drawings, maps, plans, and other data relating to the Company, its parents, subsidiaries and affiliates.

B.It is understood and agreed that (i) the Contractor shall use such Confidential Information only in connection with performing the Services, and (ii) the Contractor shall not disclose such Confidential Information to third parties or use such Confidential Information for any other purpose without the Company's prior written consent.

C.Upon project completion and/or the expiration or termination of this Agreement, the Contractor shall immediately return all such Confidential Information, including all copies thereof, to the Company, and shall delete and/or destroy any and all electronic filing maintained by the Contractor that contain Confidential Information, The Contractor acknowledges that the breach of the Contractor's obligations under this provision will cause irreparable harm to the Company, its parents, subsidiaries and affiliates. Any breach of these provisions by the Contractor shall entitle the Company, its parents, subsidiaries and affiliates to make use of any and all available remedies under this Agreement, and at law and in equity including, but not limited to, injunctive relief.

D.The non-disclosure obligations set forth in this Article 20 shall not apply to (i) information that was in the public domain prior to Contractor's receipt thereof or that subsequently becomes a part of the public domain by publication or otherwise, except through the Contractor's wrongful act; (ii) information made available to the Contractor by a third party having no confidentiality obligations with respect thereof; or (iii) information which was in the possession of Contractor prior to disclosure by Company. In the event that Contractor is required, in the course of administrative or judicial proceedings, to disclose Confidential Information, Contractor may make such disclosure; provided, however, that Contractor shall immediately notify Company of the requirement prior to disclosing the Confidential Information so that the Company may attempt to cause such third party to treat the Confidential Information in a confidential manner and to prevent such Confidential Information from becoming part of the public domain. The above non-disclosure obligations shall remain in effect for a period of two (2) years from the expiration or earlier termination of this Agreement.

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E.Notwithstanding the foregoing, neither the Contractor nor its Subcontractors shall communicate with the public, the media, regulatory agencies or other third parties regarding any aspect of the Services or the Company's environmental cleanup activities in Bayshore. Personnel of VeruTEK and its Subcontractors shall direct any such third party inquiries to the XDD Site Manager.

F.Contractor shall not use the Company's name or logo or the name or logo of any of the Company's parents, subsidiaries or affiliates, for any advertising, promotion, trade display or other commercial purposes without the prior written consent of the Company.

Article 21 - FORCE MAJEURE

Neither Party shall be considered to be in default in the performance of its obligations under this Agreement, to the extent that the performance of any such obligation is prevented or delayed by any cause, which is beyond its reasonable control, including without limitation, acts of God; entry of an injunctive or restraining order or judgment of any governmental authority, provided that such order or judgment is not the result of the act, or failure to act, of a Party or its subcontractors or suppliers; strikes; lockouts or other industrial disturbances; acts of public enemies; wars; blockades; riots; civil disturbances; epidemics; floods; hurricanes; tornadoes; and general arrest or restraint of government ("Force Majeure"). When it is determined that Force Majeure may result in a. delay of Services, the affected Party shall (i) promptly notify the other Party of such. Force Majeure and its cause and confirm the same in writing within ten (10) calendar days of discovery of the event or circumstances constituting such Force Majeure; (ii) immediately supply such available information about the event or circumstances constituting the Force Majeure and the cause thereof as is reasonably requested by the other Party; and (iii) immediately initiate the removal of the cause of the Force Majeure or, if removal is not possible, to mitigate the effect thereof. In the absence of such notification, the affected Party waives the right to claim that Services were delayed by the occurrence of such event. If, however, the Contractor's performance is delayed, or it is reasonable to anticipate that performance will be delayed, for a period of one month, the Company shall have the right, in its sole discretion, to terminate this Agreement and will remit payment to the Contractor for Services performed up to the time of such termination.

Article 22 - INDEPENDENT CONTRACTOR

The status of the Contractor under this Agreement shall be that of any independent contractor and, in accordance with such status, the Contractor and its officers, agents, employees, representatives and servants shall at all times during the Term of this Agreement conduct themselves in a manner consistent with such status and by reason of this Agreement shall neither hold themselves out as, nor claim to be acting in the capacity of, officers, employees, agents, representatives or servants of the Company nor make any claim, demand or application for any right or privilege applicable to the Company including, without limitation, rights or privileges derived from Worker's Compensation coverage and retirement membership or credit.

Article 23 - ARTICLE TITLES

The article titles are only for purposes of convenience, do not form a part of this Agreement, and will not be construed to qualify, explain, or affect any provision of this Agreement.

Article 24 - GOVERNING LAW

This Agreement will be deemed to have been entered into and will be construed, governed and enforced in accordance with the laws of the State of New York, excluding its conflict of law rules. Any action arising out of or relating to this Agreement will be brought in New York State Supreme Court,

Nassau or Suffolk Counties, or United States District Court for the Eastern District of New York. The Contractor, therefore, waives any rights it may have to insist that any lawsuit to which it is a party be litigated in any venue other than the above courts, and covenants not to sue the Company or its parents, subsidiaries or affiliates in any court other than the above described courts with respect to any Agreement-related dispute.

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Article 25 - ASSIGNMENT

This Agreement is binding upon the Parties and their heirs, executors, administrators, successors, and assigns. Neither party shall assign this Agreement without first having obtained the other Party's written consent to such assignment. Any such assignment for which the other Party's written consent is not obtained will be null and void.

Article 26 - BINDING EFFECT

This Agreement inures to the benefit of and is binding upon the Parties hereto and their respective permitted successors and assigns; provided however, that this Agreement will not bind the Company until executed by a duly authorized representative of the Company and, if required, approved or ratified by the Company's Board of Directors.

Article 27 - SEVERABILITY

If any Article, phrase, provision or portion of this Agreement is, for any reason, held or adjudged to be invalid or illegal or unenforceable by a court of competent jurisdiction, such Article, phrase, provision or portion so adjudged will be deemed separate, distinct and independent and the remainder of this Agreement will be and remain in full force and effect and will not be invalidated or rendered illegal or unenforceable or otherwise affected by such adjudication. The Parties will endeavor to promptly negotiate a revised term or condition to replace that which was deemed illegal or. unenforceable.

Article 28 - COUNTERPARTS

   This Agreement may be executed in several counterparts, each of which is an original and all of which constitute one and the same instrument.

Article 29 - ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and completely and fully supersedes all other prior understandings or agreements, both written and oral, between the Parties. All previous communications and representations, whether oral or written, including, but not limited to any proposal(s), purchase order(s), and/or invoice(s) are hereby annulled and superseded, except to the extent that any such communications and representations are specifically incorporated in or referred to in this Agreement. This Agreement may be amended, changed, modified or altered only by a written instrument executed by both Parties.

Article 30 - WAIVER

No delay or omission in the exercise of any right under this Agreement will impair any such right or will be taken, construed or considered as a waiver or relinquishment thereof, but any such right may be exercised from time to time and as often as may be deemed expedient. If any of the terms and conditions are breached and thereafter waived, such waiver will be limited to the particular breach so waived and will not be deemed to be a waiver of any other breach under this Agreement.

Article 31 - PROVISIONS REQUIRED BY LAW DEEMED INSERTED

Each and every provision of law and governmental regulation required by law to be inserted in this Agreement is deemed inserted and this Agreement will read and be enforced as though the same were so included in this Agreement. If through mistake or otherwise any such provision is not inserted or is not correctly inserted, then, upon the application of either Party, this Agreement shall be deemed to be amended to make such insertion or correction.

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Article 32 - DISPUTE RESOLUTION

A.            Step Negotiation. In the event of a dispute regarding this Agreement, the Parties shall attempt, in good faith, to resolve the dispute amicably and promptly by appointing a senior executive of each Party to attempt to mutually agree upon a resolution. Either Party may give the other Party written notice of any dispute or claim. Within ten (10) days after delivery of said notice, the executives will meet at a mutually acceptable time and place and thereafter as often as they reasonably deem necessary to exchange information and attempt to resolve the dispute or claim within thirty (30) days.

B.            Mediation. If the senior executives of the Parties fail to reach agreement by direct negotiation within thirty (30) days from the commencement of step negotiation as set forth in Paragraph A of this Article 32, the Parties may submit the dispute to non-binding mediation under the Construction Industry Mediation Rules of the American Arbitration Association (the "AAA").

C.           Arbitration. If the Parties cannot resolve the dispute by non-binding mediation within thirty (30) days from the commencement of mediation, the dispute may be submitted, upon request of either Party, to binding arbitration by a retired New York State or federal court judge who has not previously been employed by either Party, and does not have a direct or indirect interest in either Party or the subject matter of the arbitration. Such arbitrator shall either be as mutually agreed by the Parties within thirty (30) days after written notice from either Party requesting arbitration, or failing agreement, shall be selected under the expedited rules of the AAA for Commercial Dispute Resolution, unless otherwise agreed by the Parties. Such arbitration shall be held within the State of New York. The substantive law specified in this Agreement shall apply to the proceeding, and the rules of the AAA shall apply to the extent not inconsistent with the rules herein specified. The judgment rendered by the arbitrator may be enforced in any court having jurisdiction of the subject matter and the Parties. All costs of the arbitration shall be paid equally by the Parties, unless the award shall specify a different division of the costs, Each Party shall be responsible for its own expenses, including attorneys' fees. Each Party shall be afforded adequate opportunity to present information in support of its position on the dispute being arbitrated. The arbitrator may also request additional information from the Parties.

D.           Arbitration Rules, The arbitrator shall be bound by the terms of this Agreement and may not detract from or add to its terms. The Parties may by mutual agreement specifythe rules that are to govern the arbitration proceedings and limit the matters to be considered. To the extent practical, the arbitrator shall render a decision within thirty (30) days after the commencement of the proceedings. The findings and award of the arbitrator shall be final and conclusive and shall be binding upon the Parties, except as otherwise provided by applicable law. Each Party agrees that it will not bring a lawsuit concerning any dispute covered by this arbitration provision and submitted to arbitration, except for matters where a Party may seek a temporary restraining order, preliminary injunction or similar equitable relief in any court of competent jurisdiction, and except for matters where a Party may seek a permanent injunction, specific performance or similar equitable relief in such court to enforce a decision reached through arbitration. Any monetary award of the arbitrator may be enforced by the Party in whose favor such monetary award is made in a court of competent jurisdiction. If an action is instituted to enforce such arbitration proceeding or decision, the Party prevailing in such action shall be entitled to recover from the other Party reasonable attorneys' fees and costs of such suit as part of the judgment.

E. Continued Performance. Unless otherwise directed by the Company, the Contractor shall continue performance of the Services in conformance with the requirements of this Agreement notwithstanding the existence of any dispute or controversy between the parties; provided that the Company shall continue to make undisputed payments to the Contractor in accordance with the terms hereof.

Article 33 - E-COMMERCE

The Company reserves the rights, but shall not be obligated, to (a) convert all terms that are the subject of this transaction to an 'e-commerce' format to enable the Company to conduct its management of and performance under this Agreement over the Internet, and (b) to use the services of a third party provider to furnish or create the required 'e-commerce' solution for such Internet capability.

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Article 34 — HAZARDOUS MATERIALS

In the event the Contractor encounters or suspects the presence of asbestos containing material ("ACM") or any materials classified as hazardous or regulated substances, materials or waste by any federal, state, or local law, regulation or ordinance ("Contaminated Material"), other than any ACM or Contaminated Material identified in the project specifications, while engaged in the performance of the Services, the Contractor shall immediately discontinue that portion of the Services in progress in the affected area and shall notify the Company of such actual or suspected presence of ACM or Contaminated Material. Following such notification, the Company shall assess the conditions in the affected area.

Article 35 — REUSE OF DOCUMENTS

The drawings and documents prepared or furnished by the Contractor pursuant to this Agreement shall not be used by the Contractor for any other purpose. Any modifications to such drawings and documents made by or on behalf of the Company by anyone other than a professionally licensed engineer shall be at the Company's sole risk.

Article 36 — THIRD PARTY BENEFICIARY

Nothing under this Agreement shall be construed to give any rights or benefits in the Agreement to anyone other than the Company, its parents, subsidiaries and affiliates, and the Contractor, and all duties and responsibilities undertaken pursuant to this Agreement will be for the sole and exclusive benefit of the Company, its parents, subsidiaries and affiliates and the Contractor and not for the benefit of any other party, including employees of Contractor. In no event shall this Agreement be construed to (i) be an employment agreement with any employee of Contractor, or (ii) otherwise create any employee rights for the benefit of Contractor's employees.

Article 37 — PARTIALLY COMPLETED SERVICES

If the Contractor for any reason does not complete all of the Services under this Agreement, the Contractor shall be responsible for the accuracy, completeness, and workmanship of the completed Services. Contractor shall not be responsible for any claim, loss, damage or expenses in the event the Company uses the partially completed. Services to complete the project or for any other purpose.

Article 38 — ELECTRONIC MEDIA

Electronic media, including magnetic and optical disks and magnetic tapes, submitted by the Contractor to the Company under this Agreement shall operate on a system of hardware and software compatible to that utilized by the Company. The Company acknowledges that, with the passage of time, the system on which the electronic media was produced may be changed and updated. The Contractor and the Company agree that while the Contractor is under no obligation to maintain electronic media for the Services to operate on changed or updated electronic systems, the Parties shall provide reasonable cooperation in the transfer of electronic media to new technology as required.

Article 39 — REMOVAL OF ENGINEER'S EMPLOYEES

A.The Contractor shall immediately remove from the Company's property any Contractor employees the Contractor or subcontractor employees for conduct which in the Company Representative's opinion is improper, and such employees will not again be assigned to perform the Services under this Agreement.

B.The Contractor shall also remove from the Company's property any Contractor or subcontractor employees whose presence, in the Company Representative's opinion, is undesirable during periods of national emergency or any other times when the Company Representative determines that the interests of the Company might be prejudiced by the continued presence of such employees at the site. It will not be necessary for the Company Representative to give any reason when directing the Contractor to remove employees from the site.

C.            The Contractor shall require Contractor and subcontractor employees to conform to the rules and regulations of the Company and any agencies having jurisdiction at the site.

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Article 40 – NON-EXCLUSIVE AGREEMENT

The Contractor acknowledges and agrees that this Agreement is not exclusive. It is understood and agreed that while this Agreement is in effect, the Company may retain any other person, firm or entity to provide and perform the Services contemplated hereunder by executing an agreement substantially similar to this Agreement.

Article 41 – CONFLICT OF INTEREST

Prior to initiating any work under this Agreement, Contractor shall undertake a comprehensive conflict of interest review to determine that it has no current or past obligation, direct or indirect that would conflict with the provision of the Services or would otherwise hinder Contractor's zealous defense of its provision of Services. Contractor shall inform KeySpan in writing that such conflict check has been completed within fifteen (15) days of execution of this Agreement. Until the completion of the Services and any follow up expert witness work that may be required, Contractor shall not directly or indirectly, provide services to, or be employed by, any party to provide services that may give rise to a potential conflict with the Services provided under this Agreement or otherwise inhibit Contractor from performing Services, unless prior written consent is obtained from KeySpan. Contractor shall continue to be bound by the terms of the Confidentiality provisions of this Agreement after performance of its services. In no event shall Contractor perform services for another party wherein Contractor shall describe KeySpan's approach or mindset ("KeySpan's Confidences") regarding environmental issues or any other issue to another party. Contractor recognizes that such a disclosure of KeySpan's Confidences would create irreparable damage to KeySpan and KeySpan shall be entitled to seek injunctive relief to remedy such damage.

Article 42 – WORK IN HARMONY

Contractor shall be responsible for harmonious labor relations among (i) its own employees and (ii) with respect to its presence at the site, its own employees, KeySpan employees, and the employees of any other contractors that are on or in proximity to the site. Contractor shall be responsible for any costs andior delays resulting from its failure to comply with this section.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth in the preamble to this Agreement.

KEYSPAN CORPORATE SERVICES LLC	ContractorVERUTEK TECHNOLOGIES, INC.
By: /s/ David C. Lodemore	By:  /s/ John Collins
Name: David C. Lodemore	Name: John Collins
Title: VP Environmental	Title: President & CEO

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APPENDIX A

NONDISCRIMINATION IN EMPLOYMENT

Federal Requirement

During the performance of this contract, the Contractor agrees as follows:

A.The Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, sex or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, sex or national origin. Such action shall include, but not be limited to the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.

B.The Contractor will in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, sex or national origin.

C.The Contractor will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or workers' representative of the Contractor's commitments under Section 202 of Executive Order No. 11246 of September 24, 1965, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

D.The Contractor will comply with all provisions of Executive Order No. 11246 of Sept. 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

E.The Contractor will furnish all, information and re ports required by Executive Order No 11246 of September 24. 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

F.in the event of the Contractor's noncompliance with the nondiscrimination clauses of this Agreement or with any of such rules, regulations, or orders, this Agreement may be canceled, terminated or suspended in whole or in part and the Contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 11246 or Sept. 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

G. The Contractor will include the provisions of Paragraphs (A) through (F) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order No. 11246 of Sept. 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions including sanctions for noncompliance; provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States.

For the purposes of this clause the words "Contracting Officer," "Agency Contracting Officer," and "Contracting Agency," shall be deemed to be the Contractor; "Government Contracts" shall be deemed to include contracts of the Contractor.

New York State Requirement

During the performance of this Agreement, the Contractor agrees as follows:

A. The Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, sex or national origin, and will take affirmative action to ensure that they are afforded equal employment opportunities without discrimination because of race, creed, color, sex or national origin. Such action shall be taken with reference, but not be limited, to: recruitment employment, job assignment, promotion, upgrading, demotion, transfer, layoff or termination, rates of pay or other forms of compensation, and selection for training of retraining, including apprenticeship and on-the-job training.

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B.The Contractor will send to each labor union or representative of workers with which it has or is bound by a collective bargaining or other agreement or understanding, a notice, to be provided by the State Commission for Human Rights, advising such labor union or representative of the Contractor's agreement under clauses (A) through (G) (hereinafter called "nondiscrimination clauses"). If the Contractor was directed to do so by the contracting agency as part of the bid or negotiation of this Agreement, the Contractor shall request such labor union or representative to furnish it with a written statement that such labor union or representative will not discriminate because of race, creed, color, sex or national origin and that such labor union or representative either will affirmatively cooperate, within the limits of its legal and contractual authority, in the implementation of the policy and provisions of these nondiscrimination clauses or that it consents and agrees that recruitment, employment and the terms and conditions of employment under this contract shall be in accordance with the purposes and provisions of these nondiscrimination clauses. If such labor union or representative fails or refuses to comply with such a request that it furnish such a statement, the Contractor shall promptly notify the State Commission for Human Rights of such failure or refusal.

C.The Contractor will post and keep posted in conspicuous places, available to employees and applicants for employment, notices to be provided by the State Commission for Human Rights setting forth the substance of the provisions of clauses (a) and (b) and such provisions of the State's laws against discrimination as the State Commission for Human Rights shall determine.

D.The Contractor will state, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, that all qualified applicants will be afforded equal employment opportunities without discrimination because of race, creed, color, sex or national origin.

E.The Contractor will comply with the provisions of Sections 291-299 of the Executive Law and the Civil Rights Law, will furnish all information and reports deemed necessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and will permit access to its books, records and accounts by the State Commission for Human Rights, the Attorney General and the Industrial Commissioner for purposes of investigation to ascertain compliance with these nondiscrimination clauses and such sections of the Executive Law and Civil Rights Law.

F.This Agreement may be forthwith canceled, terminated or suspended, in whole or in part, by the contracting agency upon the basis of a finding made by the State Commission for Human Rights that the Contractor. has not complied with these nondiscrimination clauses, and the Contractor may he declared ineligible for future contracts Made by or on behalf of the State or a public authority or agency of the State, until it satisfies the State Commission for Human Rights that it has established and is carrying out a program in conformity with the provisions of these nondiscrimination clauses. Such finding shall be made by the State Commission for Human Rights after conciliation efforts by the Commission have failed to achieve compliance with these nondiscrimination clauses and after a verified complaint has been filed with the Commission, notice thereof has been given to the Contractor and an opportunity has been afforded it to be heard publicly before three members of the Commission. Such sanctions may be imposed and remedies invoked independently of or in addition to sanctions and remedies otherwise provided by law.

G.The Contractor will include the provisions of clauses (A) through (F) in every subcontract or purchase order in such a manner that such provisions will be binding upon such subcontractor or vendor as to operations to be performed within the State of New York. The Contractor will take such action in enforcing such provisions of such subcontract or purchase order as the contracting agency may direct, including sanctions or remedies for non­compliance. If the Contractor becomes involved in or is threatened with litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor shall promptly so notify the Attorney General, requesting him to intervene and protect the interests of the State of New York.

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