UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form 10-QSB/A

                                   (Mark One)

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

                  For the quarterly period ended   September 30, 2003
                                                   ------------------

       [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
            For the transition period from ______________ to ___________


                        Commission File Number: 33-31067

                         ITec Environmental Group, Inc.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in it charter)

                    Delaware                             31-1705310
        ------------------------------              -------------------
       (State or other jurisdiction of                 (IRS Employer
        incorporation or organization)              Identification No.)

                       693 Hi Tech Parkway Suite 3, Oakdale, CA
                     --------------------------------------
                    (Address of principal executive offices)

                                 (209) 848-3900
                            -------------------------
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                      Yes [X]    No [  ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 2003, the issuer
had 58,012,008 shares of common stock, $.001 par value, outstanding.

Transitional Small Business Disclosure Format (Check one):  Yes [ ]   No [X]

This Amendment No. 1 on Form 10-QSB/A amends our quarterly report on
Form 10-QSB for the fiscal quarter ended September 30, 2003 which was
filed on November 13, 2003. This Amendment is a result of (1) a
restatement because the Company (a) mistakenly accrued a Deferred Tax
Asset related to the carry forward of the period's net loss and (b) the
lack of accounting for the fair market value of warrants issued in the
period, (2) reflects a change in certifying accountants.

     The items of our Quarterly Report that are amended and restated
herein are Item 1 of Part I and Item 6 Part II. The remaining items
originally contained in our Quarterly Report as filed with the
Securities and Exchange Commission on November 13, 2003 are unchanged.

<PAGE>

                         ITec Environmental Group, Inc.
                            30 September 2003 10-QSB


                                   INDEX


PART I - FINANCIAL INFORMATION                                    Page

Item 1.  Consolidated Financial Statements (Unaudited)             3

  Consolidated Balance Sheets                                      3-4

  Consolidated Statements of Income and Comprehensive Income
    for the three months ended September 30, 2003 and 2002         5

  Consolidated Statements of Income and Comprehensive Income
    for the nine months ended September 30, 2003 and 2002
    and for the period from Inception (March 28, 2000)
    through September 30, 2003                                     6

  Consolidated Statement of Stockholders' Equity                   7

  Consolidated Statements of Cash Flows for the nine months
    ended September 30, 2003 and for the period from Inception
    (March 28, 2000) through September 30, 2003                    8

  Notes to Consolidated Financial Statements                     9-20

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                 21

Item 3.  Controls and Procedures                                  25

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                        25

Item 2.  Changes in Securities                                    26

Item 3.  Defaults upon Senior Securities                          26

Item 4.  Submission of Matters to a Vote of Security Holders      26

Item 5.  Other Information                                        26

Item 6.  Exhibits and Reports on Form 8-K                         26

            Certifications

SIGNATURES                                                        27



                                   2
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements


                            ITEC ENVIRONMENTAL GROUP
                          (A DEVELOPMENT STAGE COMPANY)
                          BALANCE SHEET (Consolidated)

                                                           As of        As of
                                                          9/30/03      12/31/02
                                                       ----------    ----------
                     ASSETS                            (Unaudited)

Current Assets
      Cash & Cash Equivalents                             100,100           393
      Accounts Receivable (net)                           312,507        14,828
      Inventory                                            64,461       221,434
      Other                                                 4,865         8,000
                                                       ----------    ----------
   Total Current Assets                                   481,933       244,655

Fixed Assets
      Furniture & Equipment (net of Depreciation)         214,016       123,220
                                                       ----------    ----------
   Total Fixed Assets                                     214,016       123,220

Other Assets
      Deposits                                             10,224         5,153
      Prepaid Expenses                                     63,803        10,472
      Note Receivable (net)                                94,183       115,493
      License Fees (net of Amortization)                   17,500        25,000
      Beneficial feature of Warrants (net)                  4,000          --
      Other-misc                                            3,833        40,589
                                                       ----------    ----------
   Total Other Assets                                     193,543       196,707
                                                       ----------    ----------

   Total Assets                                           889,492       564,584
                                                       ==========    ==========


See accompanying notes to consolidated financial statements

                                       3
<PAGE>


                            ITEC ENVIRONMENTAL GROUP
                          (A DEVELOPMENT STAGE COMPANY)
                          BALANCE SHEET (Consolidated), Continued
                                   (Unaudited)

                                                           As of        As of
                                                          9/30/03      12/31/02
                                                       ----------    ----------
                  LIABILITIES

Current Liabilities
      Accounts Payable                                    706,255       782,995
      Accrued Liabilities                                 130,869       112,449
      Accrued Payroll                                      67,228       131,891
      Payroll/Sales Tax Liabilities                         9,078        13,167
                                                       ----------    ----------
   Total Current Liabilities                              913,430     1,040,502

Other Liabilities
      Deferred Revenue                                    475,190       170,000
      Notes Payable                                     2,146,463     1,915,230
                                                       ----------    ----------
   Total Other Liabilities                              2,621,653     2,085,230
                                                       ----------    ----------
  Total Liabilities                                     3,535,083     3,125,732
                                                       ----------    ----------
                    EQUITY

   Preferred Stock, $0.001 par value
       10,000,000 shares authorized none
       issued & outstanding
   Common Stock, $0.001 par value,
      750,000,000 shares authorized, 58,012,008
      shares issued & outstanding at 9/30/03               58,012       254,715
   Paid in Capital                                      4,346,473     3,578,693
   Accum deficit current period                          (655,521)   (2,563,732)
   Accum deficit during
      Development stage                                (6,394,555)   (3,830,823)
                                                       ----------    ----------
   Total Stockholders' deficit                         (2,645,591)   (2,561,147)
                                                       ----------    ----------

Total Liabilities & Stockholders' Equity                  889,492       564,584
                                                       ==========    ==========

See accompanying notes to consolidated financial statements

                                       4

<PAGE>

                            ITEC ENVIRONMENTAL GROUP
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED STATEMENT OF INCOME
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)

                                             Three Months Ended
                                          9/30/03          9/30/02
                                        ----------      ----------
 Equipment Sales                        $               $
 Fees                                                        1,350
                                        ----------      ----------
       Total Revenue                             -           1,350

 Cost of Goods Sold                                          1,247
    Commissions                                                  -
    Equipment Costs                                              -
                                        ----------      ----------
       Cost of Goods Sold                        -           1,247

 Operating Expenses
    Consulting Fees                                         86,700
    Payroll                                164,002         150,126
    International Contract Services                         38,125
    Plant Expenses                           8,389              79
    Professional Fees                       32,459          37,243
    Research and Development                                 1,200
    Travel and Entertainment                17,687          17,468
    Depreciation & Amortization             12,097           4,542
    Engineering                                             83,438
    Freight & Delivery                         675             107
    Public Relations                           150           2,945
    Stockholder Expenses                    (1,467)         38,608
    Telephone                                1,809           9,312
    Insurance                               21,690           7,440
    Rent                                    10,440           2,700
    Other-Misc                               1,758           1,462
    Repairs                                  1,879             150
    Contract Labor                             251             250
    Dues and Subscriptions                     677             551
    Office Supplies                          1,834           1,931
    Office Equipment                           628             298
    Equipment Lease                          1,249               -
    Postage                                    864           2,025
    Trade Shows and Printing                                   335
                                        ----------      ----------
       Total Operating Expenses            277,071         487,035

 Other Income(expense)
    Interest                                (8,900)        (18,746)

       Total Net Income (Loss)          $ (285,971)     $ (505,678)
                                        ==========      ==========
 Shares Outstanding                     58,012,008      26,662,493
 EPS                                    $   (0.005)     $   (0.019)
 EPS - Fully Diluted                    $   (0.005)     $   (0.018)

See accompanying notes to consolidated financial statements


                                      5
<PAGE>
<TABLE>
<CAPTION>
                            ITEC ENVIRONMENTAL GROUP
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED STATEMENT OF INCOME
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)
                                                                      For the period
                                                                      from Inception
                                                                     (March 28, 2000)
                                                 Nine Months Ended       through
                                          9/30/03         9/30/02        9/30/03
                                        ----------      ----------    ---------------
<S>                                     <C>            <C>            <C>
 Equipment Sales                        $  455,000     $              $   479,048
 Fees                                          250           1,350            250
                                        ----------      ----------    ------------
       Total Revenue                       455,250           1,350        479,298

 Cost of Goods Sold
    Commissions                                200           1,247            200
    Equipment Costs                        201,000               -        217,706
                                        ----------      ----------    ------------
       Cost of Goods Sold                  201,200           1,247        217,906

 Operating Expenses
    Consulting Fees                                        168,700      2,458,054
    Payroll                                336,858         414,249      1,399,334
    International Contract Services         25,645         103,049        336,378
    Plant Expenses                          51,621             566         51,621
    Professional Fees                      256,649         129,146        835,270
    Research and Development                 3,750          12,740        115,490
    Travel and Entertainment                29,797          64,178        408,005
    Depreciation & Amortization             32,772          13,540         69,176
    Engineering                                            110,613        204,132
    Freight & Delivery                       5,737           8,627          5,737
    Public Relations                         4,350           7,715         35,797
    Stockholder Expenses                    (2,271)        183,947        ( 2,271)
    Telephone                               11,010          24,288         75,498
    Insurance                               44,497           7,351         95,378
    Rent                                    27,260           7,305         56,510
    Other-Misc                               6,332           5,445        171,665
    Repairs                                  3,401           3,172          3,401
    Contract Labor                           2,845           2,966          2,845
    Dues and Subscriptions                   1,702           6,332          1,702
    Office Supplies                          5,128           8,113         13,407
    Office Equipment                           938               -            938
    Equipment Lease                          6,301               -          6,301
    Debt placement costs                                                  392,834
    Bad debt                                                              168,815
    Postage                                  2,270           5,892          2,270
    Trade Shows and Printing                    27           4,955             27
                                        ----------      ----------    ------------
       Total Operating Expenses            856,619       1,292,889      6,908,314

 Other Income(expense)
    Interest                               (52,952)        (76,232)      (403,155)

       Total Net Income (Loss)          $ (655,521)    $(1,369,018)   $(7,050,077)
                                        ==========      ==========    ===========
 Shares Outstanding                     58,012,008      26,662,493
 EPS                                    $   (0.011)       $ (0.051)
 EPS - Fully Diluted                    $   (0.011)       $ (0.048)
</TABLE>
See accompanying notes to consolidated financial statements
                                      6
<PAGE>

<TABLE>
<CAPTION>
                            ITEC ENVIRONMENTAL GROUP
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE PERIOD ENDED SEPTEMBER 30, 2003

                                                                Additional
                                    No. of Common    Stock        Paid-In     Accumulated     Total
                                    Stock Shares     Amount       Capital       Deficit
                                    ---------------------------------------------------------------------
 <S>                                <C>              <C>       <C>            <C>           <C>

 Balance at December 31, 2000         6,651,987     $  1,000   $    -         $(1,413,949)  $ (1,412,949)
                                    ---------------------------------------------------------------------
 Balance at December 31, 2001        12,692,000      191,688     1,111,380     (3,830,824)    (2,527,756)
                                    ---------------------------------------------------------------------
 Balance at December 31, 2002        41,997,068      254,715     3,578,693     (6,394,555)    (2,561,147)
                                    ---------------------------------------------------------------------
 Net Income for the period ended
    Sept 30, 2003                                                                (655,521)      (655,521)

 Common Stock Issued                  5,975,520        5,100       167,840                       172,940

 Common Stock Issued for Services
 priced between 0.034 - .036          6,097,870        6,098       208,778                       214,876
 priced between 0.038 - .04           1,750,000        1,750        66,250                        68,000
 priced between 0.046 - .050          1,891,550        1,892        90,120                        92,012
 priced at           0.058              300,000          300        16,950                        17,250

 Par value stock adjustment                         (211,842)      211,842                             -

 FMV Warrants                                                        6,000                         6,000

 Balance at September 30, 2003
 (Unaudited)                         58,012,008     $ 58,012   $ 4,346,473   $ (7,050,076)  $ (2,645,591)
                                    =====================================================================
</TABLE>


See accompanying notes to consolidated financial statements

                                       7
<PAGE>
<TABLE>
<CAPTION>

                            ITEC ENVIRONMENTAL GROUP
                          (A DEVELOPMENT STAGE COMPANY)
                            CASH FLOWS (CONSOLIDATED)
                                  (Unaudited)
                                                                                   For the period
                                                                                   from Inception
                                                                                  (March 28, 2000)
                                                           Nine Months Ended           through
                                                          9/30/03      9/30/02         9/30/03
                                                         --------    ----------   ----------------
<S>                                                     <C>         <C>           <C>
Cash Flows From Operating Activities
   Net Income                                           $(655,521)  $(1,369,018)  $ (7,050,077)

   Adjustments to reconcile Net Income to net
    cash provided by operations:
      Common stock issued for compensation                 72,000                       72,000
      Common stock issued for fees and services           170,235       840,000      2,672,225
      Increase/Decrease in accounts receivable           (297,678)       (1,368)      (128,691)
      Increase/Decrease in Inventory                      156,973       (41,119)       (64,461)
      Increase/Decrease in accounts payable,
        accrued expenses and other                       (369,309)     (789,364)    (1,848,569)
      Increase/Decrease in deferred revenue               305,191                      470,164
      Increase/Decrease in prepaid expenses                                             55,032
      Increase/Decrease in other assets                   (27,396)       (9,259)        55,054
                                                         --------    ----------   ------------
Net Cash provided by Operating Activities                (645,504)   (1,370,127)    (5,767,323)

Cash Flows From Investing Activities
         PP&E                                             (90,796)      (40,287)      (214,016)
         License Fee                                        7,500         7,500         15,833
         Deposits                                          (5,070)         (900)       (10,224)
         Notes Receivable                                  39,100                    1,280,478
         Web Site                                          (3,833)                      (3,833)
         Beneficial feature of Warrants                    (4,000)                      (4,000)
                                                         --------    ----------   ------------
      Net cash used in investing activities               (57,099)      (33,687)     1,064,238

Cash Flows From Financing Activities
      Notes payable                                       231,232                      602,986
      Issuance of common stock                           (196,703)     (191,688)      (132,676)
      Additional Paid in Capital                          767,780     1,598,451      4,332,872
                                                         --------    ----------   ------------
Net Cash provided by Financing Activities                 802,310     1,406,763      4,803,183

Net Cash increase for period                               99,707         2,949        100,100
                                                         --------    ----------   ------------

Cash at beginning of period                                   393         4,253             -

Cash at end of period                                   $ 100,100   $     7,202   $    100,100
                                                         ========     =========   ============
</TABLE>
See accompanying notes to Consolidated Financial Statements
                                      8
<PAGE>


                  ITEC ENVIRONMENTAL GROUP, INC. AND SUBSIDIARY
                           A DEVELOPMENT-STAGE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

     (a)  General
          -------

Beechport Capital Corp. ("Beechport") was organized as a Colorado corporation on
January 24, 1989, in order to evaluate, structure and complete a merger with or
acquisition of, prospects consisting of private companies, partnerships or sole
proprietorships.

ITEC Environmental Group, Inc. ("Itec" or the "Company") was incorporated under
the laws of the State of Delaware on March 28, 2000. Itec was formed for the
purpose of acquiring certain patented technology and the development of a
worldwide market for its usage.

On May 4, 2001 Beechport entered into a share exchange agreement with Itec to
acquire all the issued and outstanding shares of common stock of Itec in
exchange for 6,651,987 shares of Beechport's common stock. This business
combination resulted in the shareholders of ITEC owning approximately 66.5% of
the issued and outstanding shares of the Beechports's common stock (10,000,000
shares were outstanding upon completion of the transaction), and Beechport
holding 100% of the issued and outstanding shares of Itec's common stock.

At a special September 27, 2002 meeting of the shareholders of Beechport Capital
Corp., the Company authorized a merger of Beechport into its wholly-owned
subsidiary, Itec Environmental Group, Inc.

The Company's business plan is to attempt to build on the foundation of the
patented technology and proprietary equipment and to form strategic alliances
and a management team to become a worldwide supplier of oil and agricultural
chemical container recycling equipment and related systems. The Company's
initial marketing of the technology will be concentrated in Italy, but is
intending to market in the future in the United States and other countries.

The Company's subsidiary, ECO2 Environmental Systems, Inc. ("ECO2") was
incorporated under the laws of the State of Delaware on April 10, 2000. The only
activity to date has been the registration of a trademark for ECO2.


     (b)  Basis of Presentation
          ---------------------

The accompanying unaudited interim financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information.


                                       9
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

     (b)  Basis of Presentation, continued
          ---------------------

Accordingly, they do not include all of the information and notes required by
accounting principles generally accepted in the United States for complete
financial statements. The accompanying financial statements reflect all
adjustments (consisting of normal recurring accruals), which are, in the opinion
of management, considered necessary for a fair presentation of the results for
the interim periods presented. Operating results for the quarter ended September
30, 2003 are not necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 2003. These financial statements should be
read in conjunction with the audited financial statements included in the
Company's amended Annual Report on Form 10-KSB/A for the year ended December 31,
2002.

     (c)  Per Share Information
          ---------------------

Basic net earnings (loss) per common share is computed by dividing net earnings
(loss) applicable to common shareholders by the weighted-average number of
common shares outstanding during the period. Diluted net earnings (loss) per
common share is determined using the weighted-average number of common shares
outstanding during the period, adjusted for the dilutive effect of common stock
equivalents, consisting of shares that might be issued upon exercise of common
stock options or warrants.

     (d)  Furniture and Equipment
          -----------------------
Property and equipment are recorded at cost. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method for
financial statement purposes. The Company uses other depreciation methods
(generally, accelerated depreciation methods) for tax purposes where
appropriate. Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the remaining lease term or the
estimated useful lives of the improvements.

     (e)  Revenue and Expense Recognition
          -------------------------------

As of September 30, 2003, the Company had revenue of $455,000 for the nine month
period then ended. The Company intends to recognize revenues from sales of
equipment upon delivery as earned as per SAB 101.

Amounts billed in advance of the period in which a service is rendered or a
product is delivered are recorded as a liability under "Deferred Revenue". At
September 30, 2003, deferred revenue for the nine month period then ended
totaled $475,190 for the sale of ECO2 systems not yet shipped.


                                       10
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

    (e)  Revenue and Expense Recognition, continued
         -------------------------------

Itec's primary revenue source, the ECO2TM Environmental System, is a new
cost-effective, environmentally sensitive technology for cleaning plastic
contaminated by substances that make most types of plastic ineligible for
traditional recycling programs. Itec will also provide additional services to
purchasers of the ECO2TM Environmental System in exchange for recurring fees.
These services will include: extended warranty upgrades, technical support and
trouble-shooting, training for operators, consulting for material feedstock and
product sales, and software upgrades that will allow the ECO2TM Environmental
System to clean other contaminated plastic materials. It is intended that this
recurring revenue or royalty fees will average 9% of annual gross revenue of our
customers for a period of five years. Our revenue should be in the range of
$28,000 - $35,000 per system per year. We also intend to require purchasers of
the ECO2TM Environmental System to enter into five year maintenance agreements
providing for fees of $25,000 per year, payable in equal monthly installments,
for telephonic monitoring of the ECO2TM System and software upgrades.

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information". As of September 30, 2003, revenue attributed to
foreign sales was $450,000 for the nine month period then ended with all sales
being earned in Italy.

The Company adopted SFAS No. 52, "Foreign Currency Translation". We have
determined that there is no currency risk due to sales being based and paid in
U. S. dollars.

The Company contracts with others for the manufacturing of the equipment.
General and administrative expenses and the costs of advertising are expensed as
incurred.

     (f)  Concentrations
          --------------

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and cash
equivalents and trade accounts receivables. At September 30, 2003, the Company
had no amounts of cash or cash equivalents in U.S. financial institutions in
excess of amounts insured by agencies of the U.S. Government. At September 30,
2003, the Company had net trade receivables of $312,507. Initial trade
receivables are expected to be principally from customers in Italy. Since
initial anticipated customers will be from one geographic location, a
concentration of credit risk could exist due to potential changes in economic
activity in that area. The Company does not require collateral for its trade
accounts receivables.

     (g)  Cash Equivalents
          ----------------

The Company considers all short-term investments in securities that mature in 90
days or less to be cash equivalents.

                                       11
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

     (h)  Allowance for Doubtful Accounts
          -------------------------------

An allowance for doubtful accounts is provided to reflect potential
uncollectible receivables. As of September 30, 2003, Allowance for Doubtful
Accounts was $186,605 of which $121,480 is for a note receivable from an officer
stockholder without adequate collateral.

     (i)  Use of Estimates in the Preparation of Financial Statements
          -----------------------------------------------------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

     (j)  Geographic Area of Operations
          -----------------------------

Currently, the Company operates its business principally in Italy. The potential
for severe financial impact can result from negative effects of economic
conditions within the markets or geographic areas. Since the Company's business
is principally in one area, this concentration of operations results in an
associated risk and uncertainty.

     (k)  Goodwill and Intangible Assets
          -----------------------------

The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which
requires that goodwill and intangible assets with indefinite lives no longer be
amortized but rather be reviewed annually, or more frequently if impairment
indicators arise, for impairment. Separable intangible assets that are not
deemed to have an indefinite life will continue to be amortized over their
useful lives. In assessing the recoverability of the Company's goodwill and
intangibles, the Company must make assumptions regarding estimated future cash
flows and other factors to determine the fair value of the respective assets. If
these estimates or assumptions change in the future, the Company may need to
record an impairment charge for these assets. An impairment charge would reduce
operating income in the period it was determined that the charge was needed.

         (l) Deferred Tax Assets
             ---------------------

The Company records its federal and state tax liability in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes". The deferred taxes payable are recorded for temporary differences
between the recognition of income and expenses for tax and financial reporting
purposes, using current tax rates.

                                       12
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

         (l) Deferred Tax Assets, continued
             -------------------

Deferred assets and liabilities represent the future tax consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

Since its inception, Itec has an accumulated loss of $7,050,076 for income tax
purposes, which can be used to offset future taxable income through 2022. The
potential tax benefit of this loss is estimated as follows:


            2002 Net Operating Loss Carryforward           $  6,394,555
            2003 YTD Net Operating Loss                         655,521
                                                           ------------
            2003 YTD Net Operating Loss Carryforward       $  7,050,076

          Future tax benefit based on 35% Federal          $   2,467,527
          Valuation allowance                                 (2,467,527)
                                                           -------------
          Net tax benefit                                  $           0
                                                           =============

As of September 30, 2003, no deferred tax assets or liabilities are recorded in
the accompanying financial statements.

     (m) Development Stage Company
         -------------------------

The Company adopted SFAS No. 7 "Accounting and Reporting by Development Stage
Enterprises". This Statement specifies the guidelines for identifying an
enterprise in the development stage and the standards of financial accounting
and reporting for such an enterprise. This Statement requires development stage
companies to do their accounting and to prepare their financial statements using
the same accounting principles as established operating companies.

     (n)  Future Impact of Recently Issued Standards
          ------------------------------------------

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires that we record the fair value of an asset
retirement obligation as a liability in the period in which we incur a legal
obligation associated with the retirement of tangible long lived assets that
resulted from the acquisition, construction, development, and/or normal use of
the assets. We would also record a corresponding asset that is depreciated over
the life of the asset. Subsequent to the initial measurement of the asset
retirement obligation, the obligation will be adjusted at the end of each period
to reflect the passage of time and changes in the estimated future cash flows
underlying the obligation. Our adoption of SFAS No. 143 effective October 1,
2002 did not have a significant impact on our financial statements. However, in
the event that we make alterations to certain leased facilities in the future,
our landlord may be entitled to require us to restore the property upon
termination of the related lease at our expense. As such, any significant
alterations might have a material impact on our consolidated financial
statements.

                                       13
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

     (n)  Future Impact of Recently Issued Standards, continued
          ------------------------------------------

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually in accordance with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. Goodwill and other intangible assets acquired in business
combinations completed before July 1, 2001 are amortized until the adoption of
SFAS No. 142, after which only intangible assets with definite useful lives will
continue to be amortized. Our adoption of SFAS No. 142 effective on October 1,
2002 did not result in a transitional impairment charge, change of useful lives
or residual values of intangible assets acquired, or the reclassification of
existing intangible assets to conform with new classification criteria in SFAS
No. 141. We will perform an annual goodwill impairment test during the fourth
quarter of each fiscal year. There can be no assurance that at the time the test
is completed an impairment charge may not be recorded.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which supersedes both SFAS Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of a business (as
previously defined in that Opinion). SFAS No. 144 retains the fundamental
provisions in SFAS No. 121 for recognizing and measuring impairment losses on
long-lived assets held for use and long-lived assets to be disposed of by sale,
while also resolving significant implementation issues associated with SFAS 121.
For example, SFAS No. 144 provides guidance on how a long-lived asset that is
used as part of a group should be evaluated for impairment, establishes criteria
for when a long-lived asset is held for sale, and prescribes the accounting for
a long-lived asset that will be disposed of other than by sale. SFAS No. 144
retains the basic provisions of APB No. 30 on how to present discontinued
operations in the statement of operations but broadens that presentation to
include a component of an entity (rather than a segment of a business). Unlike
SFAS No. 121 an impairment assessment under SFAS No. 144 will never result in a
write-down of goodwill. Rather, goodwill is evaluated for impairment under SFAS
No. 142, Goodwill and Other Intangible Assets. We adopted the provisions of SFAS
No. 144 effective October 1, 2002. The adoption of SFAS No. 144 did not have a
significant impact on our Consolidated Financial Statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS No. 146 revises the accounting for specified
employee and contract terminations that are part of restructuring activities and
nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity.
Companies will be able to record a liability for a cost associated with an exit


                                       14
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, Continued

     (n)  Future Impact of Recently Issued Standards, continued
          ------------------------------------------

or disposal activity only when the liability is incurred and can be measured at
fair value. Commitment to an exit plan or a plan of disposal expresses only
management's intended future actions and therefore does not meet the requirement
for recognizing a liability and related expense. SFAS No. 146 only applies to
termination benefits offered for a specific termination event or a specified
period. It will not affect accounting for the costs to terminate a capital
lease. We are required to adopt SFAS No. 146 for exit or disposal activities
initiated after December 31, 2002. We are evaluating this new standard but
expect that the effects of adoption, if any, would relate solely to exit or
disposal activities undertaken in the future.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34. FIN 45 elaborates
on the disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. FIN 45 also clarifies
that a guarantor is required to recognize, at inception of a guarantee, a
liability for the fair value of the obligation undertaken. The initial
recognition and measurement provisions of FIN 45 are applicable to guarantees
issued or modified after December 31, 2002 and are not expected to have a
material effect on our Financial Statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No. 123.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock Based Compensation and
provides alternative methods for accounting for a change by registrants to the
fair value method of accounting for stock-based compensation. Additionally, SFAS
No. 148 amends the disclosure requirements of SFAS No. 123 to require disclosure
in the significant accounting policy footnote of both annual and interim
financial statements of the method of accounting for stock-based compensation
and the related pro-forma disclosures when the intrinsic value method continues
to be used. SFAS No. 148 is effective for fiscal years ended after December 15,
2002, and disclosures are effective for the first fiscal quarter beginning after
December 15, 2002. We do not believe that adoption of SFAS No. 148 will have a
material effect on our financial condition or results of operations. We will
continue to apply the intrinsic value method of accounting prescribed by APB No.
25, Accounting for Stock Issued to Employees.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51. FIN 46 addresses
the consolidation by business enterprises of variable interest entities as
defined in the Interpretation. FIN 46 is effective for all new variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003 the provisions of FIN 46
must be applied for the first interim period beginning after June 15, 2003. The
application of FIN 46 is not expected to have a material effect on the Company's
condensed consolidated financial statements. The Company does not have any
variable interest entities, therefore this Interpretation is not expected to
have an impact on its consolidated financial statements.

                                       15
<PAGE>

Note 2 - BASIS OF PRESENTATION - GOING CONCERN

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has suffered recurring losses
from operations and has a net capital deficiency Note 2 - BASIS OF PRESENTATION
- GOING CONCERN, Continued

that raises substantial doubt about the Company's ability to continue as a going
concern. Management is attempting to raise additional equity. The Company filed
a Form SB-2A on June 20, 2003, in an effort to raise up to $5 million in
additional equity. This registration filing is currently under review by the
SEC. There is no guarantee, however, that this offering or any other efforts
will result in the Company raising sufficient capital or any capital or
additional financing.

In view of these matters, continuing as a going concern is dependent upon the
Company's ability to meet its financing requirements, raise additional capital,
and the success of its future operations or completion of a successful business
combination. Management plans to pursue financing arrangements and aggressive
sales of equipment to remedy the capital and loss circumstances to provide the
opportunity for the Company to continue as a going concern.


Note 3 - COMMON STOCK

The Articles of Incorporation of Itec authorize a maximum of 750,000,000 shares
of $0.001 par value common stock and 10,000,000 shares of $0.001 par value
preferred stock. Each share of common stock is entitled to one voting right, the
right to share in earnings, and the right to share in assets upon liquidation.
At September 30, 2003, 58,012,008 shares of common stock were issued and
outstanding.

As previously discussed, on May 4, 2001, Beechport entered into a share exchange
agreement with Itec to acquire all the issued and outstanding shares of common
stock of Itec in exchange for 6,651,987 shares of Beechport's common stock. This
business combination resulted in the shareholders of Itec owning approximately
66.5% of the issued and outstanding shares of the Company's common stock
(10,000,000 shares were outstanding upon completion of the transaction), and the
Company holding 100% of the issued and outstanding shares of Itec's common
stock.

This transaction is a recapitalization of Itec, with no revaluation of assets
and liabilities. Beechport was a shell corporation at the time of the exchange
and therefore the acquisition was not recorded as a purchase transaction.

During third quarter 2003, 50,000 restricted common stock shares were issued to
a vendor for services rendered as part of our SB-2A registration. These shares
are included as part of our current registration offering. The five day average
closing price of the shares was $.04. The Company filed its Form SB-2A on June
20, 2003, in an effort to raise an additional $5 million in equity. This
registration is currently under review by the SEC.


                                       16
<PAGE>

Note 4 - NOTES PAYABLE

The Company entered into an agreement with Glenwood Marketing Associates, Inc.,
(GMA) effective April 25, 2000, whereby GMA agreed to lend $1,100,000 to the
Company. From this $1,100,000 loan, the Company agreed to pay $200,000 of
capital formation fees to GMA. These fees were expensed in the year incurred.
The loan bears interest at 10% per annum payable in monthly interest only
payments for the 36-month term of the loan.

The Company has also conveyed a covenant, so long as GMA acts in accordance with
the terms of the agreement, to hold GMA harmless from any and all claims that
may accrue and to indemnify and hold GMA harmless from any and all losses,
claims, liabilities and expenses, including reasonable costs of investigation,
counsel fees and disbursements, which may be imposed upon or incurred by GMA
with the conduct of its own business with the Company.

In June 2003, the Company filed a lawsuit against Glenwood Marketing Associates,
Inc., for declaratory relief from the note outstanding in the amount of
$1,100,000. This proceeding was filed in California Superior Court for
Stanislaus County. Service was effected on the defendant in June 2003.

In June 2003, Glenwood Marketing Associates, Inc. filed a lawsuit against the
Company seeking a Temporary Restraining Order to refrain from entering into a
Line of Credit with or transfer of stock to Cornell Capital. This proceeding was
filed in Supreme Court of the State of New York for Nassau County. In August,
this action was moved into the United States District Court for the Eastern
District of New York. In November 2003, Itec filed a motion for a change of
venue to the United States District Court, Eastern District of California.

In July 2003, the Company withdrew its lawsuit for declaratory relief in the
amount of $1,100,000 against Glenwood Marketing Associates, Inc. filed in
California Superior Court for Stanislaus County.

In July, the Company borrowed $100,000 through a Note Payable bearing 8%
interest annually due and payable in December 2003. In August, the Company
rolled the aforementioned $100,000 Promissory Note due in December, 2003 into a
new $600,000 Promissory Note Payable bearing 8% interest annually due and
payable in January 2004. Interest is payable at maturity. The Note Unit
consisted of $600,000 principal amount of 8.0% unsecured Note, due January 31,
2004, and a Common Stock Purchase Warrant to purchase 1,000,000 shares of the
Company's common stock, par value $0.001 per share (the Common Stock), at an
exercise price of $0.04 per share. The Warrant expires on July 31, 2005. Total
funds received of $600,000 were allocated $6,000 to the Note Warrant and
$600,000 to the Note. The value allocated to the Note Warrant is being amortized
to interest expense over the term of the Note. At September 30, 2003, the
unamortized discount on the Note is approximately $4,000.


Note 5 - LEASES

Effective April 2001, the Company entered into a lease agreement for office
facilities in California. Under terms of the lease, the Company agreed to pay
monthly lease payments of $900 for 36 months. This lease was terminated in
February 2003 without cost to the Company.


                                       17
<PAGE>

Note 5 - LEASES, Continued

Effective January 2003, the Company entered into a lease agreement for office
and plant facilities in California. Under terms of the lease, the Company agreed
to pay monthly lease payments of $3,480 for 24 months.

Effective January 2003 the Company entered into various lease agreements for
office and plant equipment. The terms of these leases vary from 24 to 60 months.

Future minimum rentals under these operating leases are as follows:

                    Year Ending December 31,
                            2003                             19,486
                            2004                             59,603
                            2005                             20,283
                            2006                             10,048
                            2007                              8,903
                                                       ------------
                            Total                      $    118,323
                                                       ============

Note 6 - TECHNOLOGY LICENSE

Effective June 30, 2000, the Company entered into a five-year patent license
agreement with Honeywell International, Inc. (Honeywell), whereby the Company
obtained a non-exclusive, nontransferable worldwide license to practice the
methods and to make, use, and sell, the products and/or covered by the
proprietary rights, limited to the field of use of separating and recovering
motor oil from high density polyethylene plastic. Under the terms of the
agreement, the Company agreed to pay a $50,000 non-refundable initial license
fee and an additional minimum annual royalty commencing upon delivery of the
first equipment to an Itec customer, of the greater of $50,000 or 5% of the
gross sales of all products and or services sold in the United States and 3% of
the products and or services sold in countries other than the United States. The
initial license fee of $50,000 is not creditable toward the minimum annual
royalty and was payable in three equal installments. The first installment was
due upon the execution of the contract, the second on December 1, 2001, and the
third on April 1, 2001. At March 31, 2002, $33,333 was accrued as a liability.

On April 25, 2001, Honeywell revised the payment schedule to reflect the updated
delivery schedule so that the previous December 1, 2001 payment was due on May
30, 2002 and the final payment due December 31, 2003. As of September 30, 2003,
the $16,667 paid and the additional $33,333 accrued have been accounted for as
prepaid expenses based upon the revised agreement, whereby these amounts apply
only upon shipment of the first equipment systems. The amounts are not
refundable and will be expensed upon shipment. This agreement automatically
renews for additional one-year periods after the end of the initial five-year
term unless written notice is given by either party of its intent to terminate
the agreement. Honeywell may terminate this agreement in the event of bankruptcy
or insolvency of the Company, an assignment for the benefit of creditors of the
Company, the nationalization of the industry which encompasses any products or
services, any suspension of payments under the terms of the agreement by
government regulation, the Company's failure to commence manufacture, a
substantial change in ownership of the Company (whether resulting from merger,

                                       18
<PAGE>

Note 6 - TECHNOLOGY LICENSE, Continued

acquisition, consolidation or otherwise), another company or person acquiring
control of the Company, or the existence of a state of war between the United
States and any country where the Company has a license to manufacture products
or provide services. In addition, if either party to the agreement defaults for
any reason in any of the obligations under the terms of the agreement, the other
party will have the right to terminate the agreement by giving at least 60 days
written notice.

There are no rights to sub-license granted under the terms of this agreement.
The Company has agreed to invest in the commercial development of the technology
and market for the product by committing resources at minimum in accordance with
various requirements as set forth in the commercialization plan provided by the
Company for consideration to Honeywell when the Company applied for the license.
The terms of the agreement require the Company to observe all applicable United
States and foreign laws, regulations, rules, and decrees with respect to the
transfer of the proprietary rights and related technical data to foreign
countries and failure to conform to such laws, regulations, rules and decrees
may result in criminal liability.

The $50,000 license fee is recorded as an intangible asset and is being
amortized over the initial five year term of the license agreement on a
straight-line basis. Management's policy with respect to long-lived assets,
including intangible assets, is to periodically review the carrying amounts, at
least annually, to determine if there is any impairment in the carrying value.
As of September 30, 2003, management believes that there is no impairment in the
carrying value of any of its long-lived assets.


Note 7 - RECEIVABLE RELATED PARTY

On July 5, 2000, the Company's Board of Directors approved and authorized the
Company to make a loan of $250,000 to the Company's President. The loan,
according to the minutes of the Board meeting, is interest only for ten years
with the total principal due at the end of ten years. Interest in the amount of
$18,958 has been waived in the year ended December 31, 2002 and $9,479 in year
ended December, 2001 by the board of directors and was recorded as compensation
expense in the respective periods. As of September 30, 2003, $161,973 was
advanced on the loan. An allowance of $121,480 has been recorded against this
receivable.


Note 8 - AGREEMENT

The Company has entered into an agreement with Cesmet Laboratories SRL, an
Italian company for a cooperative effort and the oversight of ITEC's Italian
operations. The fees for this agreement are on a time and expense basis billed
monthly. A director of the Company is a 50% owner of Cesmet Laboratories SRL.

                                       19
<PAGE>

Note 9 - SUBSIDIARY

On April 11, 2001, ITEC formed a wholly owned subsidiary and incorporated it as
a Delaware corporation known as ECO2 Environmental Systems. The only activity to
date was the registration of a trademark for ECO2.


Note 10 - SUBSEQUENT EVENTS

In early 2003 the Company filed a lawsuit against Fedegari Autoklaven A.G. for
fraud, breach of contract and unfair business practices. The Defendant moved to
dismiss for lack of jurisdiction and improper venue.

On 6 November, 2003 the U.S. District Court granted the Defendant its motion to
dismiss.

In November 2003, Itec filed a motion for a change of venue in the Glenwood
Marketing Associates, Inc. lawsuit to the United States District Court, Eastern
District of California.



                                       20
<PAGE>


ITEM 2.  Management's Discussion and Analysis or Plan of Operation

Itec continues to operate as a "Development Stage Company".

During the next twelve months Itec intends to continue marketing its ECO2
cleaning system for eventual sales. In February 2003, Itec opened a plastic
recycling plant in Oakdale, California to be used as a testing and research
facility. Itec continues to develop and refine its ECO2 cleaning process.

Expenses for the three months ending September 30 2003 were as follows:
Professional Fees & Consulting $32,500; Payroll $164,000; Interest $8,900; G&A
$80,600.

We do not have sufficient cash or lines of credit for the next twelve months to
remain operational and pay our debts and expenses as they come due, but are in
the process of raising funds through a registered offering. Through this
offering, we expect to have sufficient cash or lines of credit to satisfy our
needs for the twelve months ending September 30, 2004. The "offering" refers to
an equity line of credit via Cornell Capital for which Itec has filed an SB-2A
with the SEC on June 20, 2003. As of September 30, 2003, the SEC was still
reviewing our registration statement.

As of September 30, 2003, the testing and evaluation of the first Gen-2 system
delivered to our first Italian customer continues. Further manufacturing and
delivery of Gen-2 ECO2 systems will continue once those results and evaluations
have been completed.

The Italian Governments IG program which is the primary funding source for our
Italian customers continues to move at a very slow pace. Itec continues to
receive assurances from the Italian Government that the IG program is on
schedule and all funding is available. Due to the extended time that the Italian
program has taken, however, Itec may explore other business opportunities and
options available to it in the future.

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-QSB
contains forward-looking statements that involve risks and uncertainties that
could cause our actual results to differ materially. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section entitled "Management's Discussion and Analysis of Financial
Position and Results of Operations--Risk Factors." When used in this report, the
words "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and similar expressions are generally intended to identify
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which reflect our opinions only as of the date of
this Quarterly Report. We undertake no obligation to publicly release any
revisions to the forward-looking statements after the date of this document. You
should carefully review the risk factors described in other documents we file
from time to time with the Securities and Exchange Commission, including the
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002 and the
other Quarterly Reports on Form 10-QSB filed by us in our fiscal year 2003,
which runs from January 1, 2003 to December 31, 2003.

                                       21
<PAGE>

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's condensed consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these condensed consolidated
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the condensed consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. We believe that the estimates, judgments and assumptions
upon which we rely are reasonable based upon information available to us at the
time that these estimates, judgments and assumptions are made. To the extent
there are material differences between these estimates, judgments or assumptions
and actual results, our financial statements will be affected.

On an on-going basis, management evaluates its estimates and judgments,
including those related to revenue recognition, bad debts, inventories, income
taxes and intangibles. Management bases its estimates and judgments on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Management believes the
following critical accounting policies, among others, affect its more
significant judgments and estimates used in the preparation of its condensed
consolidated financial statements.

Deferred Tax Assets

The Company records its federal and state tax liability in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes". The deferred taxes payable are recorded for temporary differences
between the recognition of income and expenses for tax and financial reporting
purposes, using current tax rates.

Deferred assets and liabilities represent the future tax consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

Since its inception, Itec has an accumulated loss of $7,050,076 for income tax
purposes, which can be used to offset future taxable income through 2022. The
potential tax benefit of this loss is estimated as follows:

            2002 Net Operating Loss Carryforward        $  6,394,555
            2003 YTD Net Operating Loss                      655,521
                                                        ------------
            2003 YTD Net Operating Loss Carryforward    $  7,050,076

          Future tax benefit based on 35% Federal       $  2,467,527
          Valuation allowance                             (2,467,527)
                                                        ------------
          Net tax benefit                               $          0
                                                        ============

As of September 30, 2003, no deferred tax assets or liabilities are recorded in
the accompanying financial statements.

                                       22
<PAGE>

Allowances for Doubtful Accounts

We make judgments as to our ability to collect outstanding receivables and
provide allowances for the portion of receivables when collection becomes
doubtful. Provisions are made based upon a specific review of all significant
outstanding invoices. For those invoices not specifically reviewed, provisions
are provided at differing rates, based upon the age of the receivable. In
determining these percentages, we analyze our historical collection experience
and current economic trends. If the historical data we use to calculate the
allowance for doubtful accounts does not reflect the future ability to collect
outstanding receivables, additional provisions for doubtful accounts may be
needed and the future results of operations could be materially affected.

Results of Operations

REVENUES AND EXPENSES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND THE NINE
MONTHS ENDED SEPTEMBER 30, 2003 AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER
30, 2002 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2002

We had no revenues during this past quarter as compared to no revenues for the
three months ended September 30, 2002. Revenues were $455,250 for the nine
months ended September 30, 2003 as compared to no revenues for the nine months
ended September 30, 2002. Our operating loss for the quarter was $285,971
compared to a loss of $505,678 for the three months ended September 30, 2002.
The operating loss was $655,521 for the nine months ended September 30, 2003 as
compared to a loss of $1,369,018 for the nine months ended September 30, 2002.
The decrease in our operating loss is attributable to a decrease in operating
expenses of $436,270.

LIQUIDITY AND CAPITAL RESOURCES

Our current assets increased from $244,655 as of December 31, 2002 to $481,933
as of September 30, 2003. Our current liabilities reduced from $1,040,501 as of
December 31, 2002 to $913,430 as of September 30, 2003. Our working capital
deficit has been reduced from $795,847 as of December 31, 2002 to $431,497 as of
September 30, 2003. Our total assets increased from $564,584 to $889,492. This
increase is attributable to an increase in cash, accounts receivable and
furniture and equipment. Total liabilities increased from $3,125,732 to
$3,535,083 which is primarily attributable to an increase in deferred revenue.

The Company has suffered recurring losses from operations and has a net capital
deficiency that raises substantial doubt about the Company's ability to continue
as a going concern. As of September 30, 2003 the Company does not have
sufficient cash or lines of credit for the next twelve months to remain
operational and pay our debts and expenses as they come due, but is in the
process of raising funds through a registered offering. Through this offering
the Company is attempting to obtain sufficient cash or lines of credit to
satisfy its needs for the twelve months ending September 30, 2004.

The Company filed Form SB-2A with the SEC on June 20, 2003 in an effort to raise
an additional $5 million of equity. This registration filing is currently under
review by the SEC. There is no guarantee, however, that this offering or any
other efforts will result in the Company raising sufficient capital or any
capital or additional financing.


                                       23
<PAGE>

RISK FACTORS

The following risk factors should be considered carefully in addition to the
other information presented in this report. This report contains forward looking
statements that involve risks and uncertainties. Our actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such differences include, but are not limited to, the
following:

IF WE CANNOT OBTAIN ADDITIONAL FUNDS WHEN NEEDED, OR ACHIEVE PROFITABILITY WE
MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.

Our independent auditors have included an explanatory paragraph in their 2002
audit report referring to our recurring operating losses and a substantial doubt
about our ability to continue as a going concern. Management is evaluating
various funding alternatives and believes funds will be available from obtaining
additional financing and from sales revenue sufficient to support planned
operations through September 30, 2004. However, there can be no assurance that
we will be able to raise additional funds or achieve planned sales volumes. If
we do not secure additional funding, we will be unable to conduct all of our
product development efforts as planned, and we may need to cease operations or
sell assets. In addition, the existence of the explanatory paragraph in the
audit report may in and of itself cause our stock price to decline as certain
investors may be restricted or precluded from investing in companies that have
received this notice in an audit report.

Our management has implemented plans designed to reduce our cash requirements
through reductions in operating expenditures and reductions in development
activities should collaborative partners or additional funding not be secured.
However, there can be no assurance that we will be able to successfully
implement these plans or that we will be able to do so without significantly
harming our business, financial condition or results of operations.

WE DO NOT HAVE A LONG OPERATING HISTORY, WHICH MAKES IT DIFFICULT FOR YOU TO
EVALUATE OUR BUSINESS.

Because limited historical information is available on our revenue trends and
operations, it will be difficult for you to evaluate our business. Our prospects
must be considered in light of the substantial risks, expenses, uncertainties
and difficulties encountered by any emerging technology.

WE HAVE A HISTORY OF LOSSES.

We have never been profitable, and we have had operating losses since our
inception. To date, we have engaged primarily in research and development
efforts. The further development and commercialization of our products will
require substantial development, regulatory, sales and marketing, manufacturing
and other expenditures. We have only generated limited revenues from product
sales. Our accumulated deficit was about $7.05 million at September 30, 2003.


                                       24
<PAGE>

IF WE CANNOT OBTAIN ADDITIONAL FUNDS WHEN NEEDED, WE WILL NOT BE ABLE TO
IMPLEMENT OUR BUSINESS PLAN.

We will require substantial additional capital to develop our products,
beginning and scaling up manufacturing, and marketing our products. We have
historically funded a significant portion of our activities through stock
issuance. We are seeking additional equity investment through various sources.
If we are not able to secure additional equity investment or lines of credit it
may seriously limit our ability to execute our business plan.

Cautionary Statement:

This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These statements include statements regarding
intent, belief or current expectations of the Company and its management. These
forward-looking statements are not guarantees of future performance and involve
a number of risks and uncertainties that may cause the Company's actual results
to differ materially from the results discussed in these statements. Factors
that might cause such differences include, but are not limited to, those
described under the heading, "Critical Accounting Policies and Estimates"
herein, or and other factors described in the Company's future filings with the
SEC. The above referenced sections do not apply to our company.


ITEM 3.  Controls and Procedures

An evaluation was carried out by the Company's management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
September 30, 2003 (as defined in Rule 13a-15(e) or 15d-15(e) under the
Securities Exchange Act of 1934). Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the design and
operation of these disclosure controls and procedures were effective.

During the period covered by this report, there have been no changes in the
Company's internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the Company's internal
control over financial reporting.


                                     PART II

ITEM 1.  Legal Proceedings

In early 2003 the Company filed a lawsuit against Fedegari Autoklaven A.G. for
fraud, breach of contract and unfair business practices. This legal proceeding
was filed in California Superior Court for Stanislaus County. Service was
effected on the defendant in June 2003. This case has been moved to U.S.
District Court, Eastern Division of California. The Defendant moved to dismiss
for lack of jurisdiction and improper venue. On 6 November, 2003 the U.S.
District Court granted the Defendant its motion to dismiss.

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<PAGE>

In June 2003, the Company filed a lawsuit against Glenwood Marketing Associates,
Inc., for declaratory relief from the note outstanding in the amount of
$1,100,000. This proceeding was filed in California Superior Court for
Stanislaus County. Service was effected on the defendant in June 2003.

In June 2003, Glenwood Marketing Associates, Inc. filed a lawsuit against the
Company seeking a Temporary Restraining Order to refrain from entering into a
Line of Credit with or transfer of stock to Cornell Capital. This proceeding was
filed in Supreme Court of the State of New York for Nassau County. In August,
this action was moved into the United States District Court for the Eastern
District of New York.

In July 2003, the Company withdrew its lawsuit for declaratory relief in the
amount of $1,100,000 against Glenwood Marketing Associates, Inc. filed in
California Superior Court for Stanislaus County.


ITEM 2.  Changes in Securities and Use of Proceeds

RECENT SALES OF UNREGISTERED SECURITIES.

During third quarter 2003, 50,000 restricted common stock shares were issued to
a vendor for services rendered as part of our SB-2A registration. These shares
are included as part of our current registration offering. The average value of
the shares was $0.04.


ITEM 3.  Defaults Upon Senior Securities   (None)

ITEM 4.  Submission of Matters to a Vote of Security Holders   (None)

ITEM 5.  Other Information   (None)

ITEM 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
     1350,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
     1350,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
     1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
     1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

Form 8-K filed on August 12, 2003 to report the issuance of a promissory note in
the amount of $600,000 and issuance of warrants, and incorporated by reference
herein.

Form 8-K filed on December 24, 2003 to report changes in registrant's certifying
accountant, and incorporated by reference herein.


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<PAGE>



                                   SIGNATURES

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


Dated:  February 5, 2004             ITEC ENVIRONMENTAL GROUP, INC.
                                     (Registrant)


                                 BY  /s/ Gary M. De Laurentiis
                                     -------------------------
                                     Gary M. De Laurentiis
                                     Chief Executive Officer


                                 BY  /s/ Michael E. Hofmann
                                     -------------------------
                                     Michael E. Hofmann
                                     Chief Financial Officer


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