----

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| Nevada                                                        |   | 98-0200471                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |

| 4235 Commerce Street                     |   |       |
|------------------------------------------|--------|------------|
| Little River, South Carolina             |   | 29566      |
| (Address of principal executive offices) |   | (Zip Code) |

| (843) 390-2500 |
|----------------|

| Large accelerated filer   ̈                                             | Accelerated filer   ̈    |
|---------------------------------------------------------------------------------------|----------------------------------------|
|                                                                                  |                                   |
| Non-accelerated filer   ̈ (Do not check if a smaller reporting company) | Smaller reporting company  x |

----

|              |                                                                                                        | Page   |
|-------------------|-------------------------------------------------------------------------------------------------------------|--------|
| PART I.           | FINANCIAL INFORMATION                                                                                       |   |
|              |                                                                                                        |   |
| Item 1.           | Financial Statements                                                                                        | 1      |
|              |                                                                                                        |   |
|              | Consolidated Balance Sheets (unaudited) as of June 30, 2012 and December 31, 2011                           | 2      |
|              |                                                                                                        |   |
|              | Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2012 and 2011 | 3      |
|              |                                                                                                        |   |
|              | Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2012 and 2011           | 4      |
|              |                                                                                                        |   |
|              | Notes to the Unaudited Consolidated Financial Statements                                                    | 5      |
|              |                                                                                                        |   |
| Item 2.           | Management's Discussion and Analysis of Financial Condition and Results of Operations                       | 17     |
|              |                                                                                                        |   |
| Item 3.           | Quantitative and Qualitative Disclosures about Market Risk                                                  | 22     |
|              |                                                                                                        |   |
| Item 4.           | Controls and Procedures                                                                                     | 22     |
|              |                                                                                                        |   |
|              |                                                                                                        |   |
| PART II.          | OTHER INFORMATION                                                                                           |   |
|              |                                                                                                        |   |
| Item 1.           | Legal Proceedings                                                                                           | 23     |
|              |                                                                                                        |   |
| Item 1A.          | Risk Factors                                                                                                | 24     |
|              |                                                                                                        |   |
| Item 2.           | Unregistered Sales of Equity Securities and Use of Proceeds                                                 | 24     |
|              |                                                                                                        |   |
| Item 3.           | Defaults upon Senior Securities                                                                             | 25     |
|              |                                                                                                        |   |
| Item 4.           | Mine Safety Disclosures                                                                                     | 25     |
|              |                                                                                                        |   |
| Item 5.           | Other Information                                                                                           | 25     |
|              |                                                                                                        |   |
| Item 6.           | Exhibits                                                                                                    | 25     |
|              |                                                                                                        |   |
| Signatures        |                                                                                                        | 26     |
|              |                                                                                                        |   |
| Index of Exhibits | E-1                                                                                                         |

----

----

| Item1. | Financial Statements |
|--------|----------------------|

----

|                                                                                                                                  |   | June 30, |        |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|--------------|--------|
|                                                                                                                                  |   | 2012     |        |   | 2011         |   |
| Assets                                                                                                                                |   |     |        |   |         |   |
| Current assets:                                                                                                                       |   |     |        |   |         |   |
| Cash                                                                                                                                  |   | $        | 446,274     |   |         | $      | 145,993 |   |
| Accounts receivable                                                                                                                   |   |     | 16,239      |   |         |   | 7,872 |   |
| Prepaid expenses                                                                                                                      |   |     | 25,435      |   |         |   | 10,927 |   |
| Lease receivable                                                                                                                      |   |     | 10,535      |   |         |   | 14,296 |   |
| Inventory                                                                                                                             |   |     | 205,014     |   |         |   | 219,209 |   |
| Note receivable                                                                                                                       |   |     | 14,598      |   |         |   | 16,364 |   |
| Other receivable                                                                                                                      |   |     | --          |   |         |   | 12,081 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total current assets                                                                                                      |   |     | 718,095     |   |         |   | 426,742 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Property and equipment, net                                                                                                           |   |     | 178,897     |   |         |   | 239,605 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Lease receivable, long-term                                                                                                           |   |     | --          |   |         |   | 19,700 |   |
| Note receivable, long-term                                                                                                            |   |     | 5,462       |   |         |   | 10,848 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total assets                                                                                                              |   | $        | 902,454     |   |         | $      | 696,895 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Liabilities  and Stockholders’ Deficiency                                                                             |   |     |        |   |         |   |   |   |
| Current liabilities:                                                                                                                  |   |     |        |   |         |   |   |   |
| Accounts payable                                                                                                                      |   | $        | 239,211     |   |         | $      | 229,086 |   |
| Accrued expenses                                                                                                                      |   |     | 230,938     |   |         |   | 166,136 |   |
| Customer deposits                                                                                                                     |   |     | 36,109      |   |         |   | 41,529 |   |
| Convertible debentures                                                                                                                |   |     | 25,000      |   |         |   | 25,000 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total current liabilities                                                                                                 |   |     | 531,258     |   |         |   | 461,751 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Convertible debentures                                                                                                                |   |     | 526,125     |   |         |   | 526,125 |   |
| Convertible promissory notes                                                                                                          |   |     | 500,000     |   |         |   | 500,000 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total liabilities                                                                                                         |   |     | 1,557,383   |   |         |   | 1,487,876 |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Commitments and contingencies                                                                                                         |   |     |        |   |         |   |   |   |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
| Stockholders’ deficiency:                                                                                                       |   |     |        |   |         |   |   |   |
| Common stock, $.001 par value; 400,000,000 shares authorized; 137,230,165 and 122,735,165 shares issued and outstanding, respectively |   |     | 137,230     |   |         |   | 122,735 |   |
| Additional paid-in capital                                                                                                            |   |     | 15,950,228  |   |         |   | 14,810,185 |   |
| Accumulated deficit                                                                                                                   |   |     | (16,742,387 | )      |         |   | (15,723,901 | ) |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total stockholders' deficiency                                                                                            |   |     | (654,929    | )      |         |   | (790,981 | ) |
|                                                                                                                                  |   |     |        |   |         |   |   |   |
|   Total liabilities and stockholders' deficiency                                                                            |   | $        | 902,454     |   |         | $      | 696,895 |   |

----

|                                                   |   | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |   |
|--------------------------------------------------------|--------|----------------------------|-------------|--------|--------------------------|--------|
|                                                   |   | 2012                       |        |   | 2011                     |   |   | 2012 |   |   | 2011 |   |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |
| Revenues:                                              |   |                       |        |   |                     |   |   |   |   |   |   |   |
| Sales                                                  |   | $                          | 23,753      |   |                     | $      | 176,642 |   |   | $ | 48,011 |   |   | $ | 204,152 |   |
| Leasing and licensing fees                             |   |                       | 13,500      |   |                     |   | 14,177 |   |   |   | 35,041 |   |   |   | 26,177 |   |
|                                                   |   |                       | 37,253      |   |                     |   | 190,819 |   |   |   | 83,052 |   |   |   | 230,329 |   |
| Cost of sales                                          |   |                       | 10,105      |   |                     |   | 72,342 |   |   |   | 16,707 |   |   |   | 92,157 |   |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                           |   |                       | 27,148      |   |                     |   | 118,477 |   |   |   | 66,345 |   |   |   | 138,172 |   |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                    |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative                             |   |                       | 337,904     |   |                     |   | 559,456 |   |   |   | 636,109 |   |   |   | 889,387 |   |
| Sales and marketing                                    |   |                       | 120,808     |   |                     |   | 126,262 |   |   |   | 247,036 |   |   |   | 248,977 |   |
| Research and development                               |   |                       | 96,818      |   |                     |   | 38,297 |   |   |   | 159,283 |   |   |   | 112,986 |   |
|                                                   |   |                       | 555,530     |   |                     |   | 724,015 |   |   |   | 1,042,428 |   |   |   | 1,251,350 |   |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                   |   |                       | (528,382    | )      |                     |   | (605,538 | ) |   |   | (976,083 | ) |   |   | (1,113,178 | ) |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                        |   |                       | 229         |   |                     |   | 483 |   |   |   | 1,067 |   |   |   | 589 |   |
| Finance fees                                           |   |                       | --          |   |                     |   | (122 | ) |   |   | -- |   |   |   | (9,538 | ) |
| Interest expense                                       |   |                       | (21,562     | )      |                     |   | (18,238 | ) |   |   | (43,470 | ) |   |   | (45,713 | ) |
| Total other income (expense)                           |   |                       | (21,333     | )      |                     |   | (17,877 | ) |   |   | (42,403 | ) |   |   | (54,662 | ) |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                               |   | $                          | (549,715    | )      |                     | $      | (623,415 | ) |   | $ | (1,018,486 | ) |   | $ | (1,167,840 | ) |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share, basic and diluted                  |   | $                          | (0.00       | )      |                     | $      | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.01 | ) |
|                                                   |   |                       |        |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding, basic and diluted |   |                       | 135,602,418 |   |                     |   | 118,182,132 |   |   |   | 133,454,368 |   |   |   | 114,786,584 |   |

----

|                                                                                                          |   | Six Months EndedJune 30, |       |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                                          |   | 2012                     |       |   | 2011 |   |
| Cash flows from operating activities:                                                                         |   |                     |       |   |   |   |
| Net loss                                                                                                      |   | $                        | (1,018,486 | ) |   | $ | (1,167,840 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                                   |   |                     |       |   |   |   |   |   |
| Depreciation and amortization                                                                                 |   |                     | 60,708     |   |   |   | 5,438 |   |
| Stock-based compensation expense                                                                              |   |                     | 88,638     |   |   |   | 378,055 |   |
| Write-down of lease receivable                                                                                |   |                     | 20,113     |   |   |   | -- |   |
| Accretion of interest on convertible notes                                                                    |   |                     | --         |   |   |   | 9,682 |   |
| Changes in operating assets and liabilities:                                                                  |   |                     |       |   |   |   |   |   |
| Accounts receivable                                                                                           |   |                     | (8,367     | ) |   |   | (58,642 | ) |
| Lease receivable                                                                                              |   |                     | 3,348      |   |   |   | 8,758 |   |
| Note receivable                                                                                               |   |                     | 7,152      |   |   |   | -- |   |
| Inventory                                                                                                     |   |                     | 14,195     |   |   |   | (60,588 | ) |
| Other receivable                                                                                              |   |                     | 12,081     |   |   |   | -- |   |
| Prepaid expenses                                                                                              |   |                     | (14,508    | ) |   |   | 11,531 |   |
| Accounts payable                                                                                              |   |                     | 46,125     |   |   |   | 56,936 |   |
| Accrued expenses                                                                                              |   |                     | 64,802     |   |   |   | (12,101 | ) |
| Customer deposits                                                                                             |   |                     | (5,420     | ) |   |   | 8,000 |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Net cash used in operating activities                                                                         |   |                     | (729,619   | ) |   |   | (820,771 | ) |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Cash flows from financing activities:                                                                         |   |                     |       |   |   |   |   |   |
| Proceeds from sale of common stock, net of offering costs                                                     |   |                     | 1,029,900  |   |   |   | 661,500 |   |
| Proceeds from issuance of note payable                                                                        |   |                     | --         |   |   |   | 200,000 |   |
| Repayment of convertible debentures                                                                           |   |                     | --         |   |   |   | (25,000 | ) |
| Deposit – note purchase                                                                                 |   |                     | --         |   |   |   | 150,000 |   |
| Stock subscription receivable                                                                                 |   |                     | --         |   |   |   | (30,000 | ) |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Net cash provided by financing activities                                                                     |   |                     | 1,029,900  |   |   |   | 956,500 |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Increase in cash                                                                                              |   |                     | 300,281    |   |   |   | 135,729 |   |
| Cash  - beginning of period                                                                         |   |                     | 145,993    |   |   |   | 65,660 |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Cash  - end of period                                                                               |   | $                        | 446,274    |   |   | $ | 201,389 |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                             |   |                     |       |   |   |   |   |   |
| Cash paid for interest                                                                                        |   | $                        | 632        |   |   | $ | 28,401 |   |
| Cash paid for income taxes                                                                                    |   | $                        | 5,462      |   |   | $ | -- |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Non-cash operating activity:                                                                                  |   |                     |       |   |   |   |   |   |
| Issuance of 360,000 shares of common stock as payment of director fees                                        |   | $                        | 36,000     |   |   | $ | -- |   |
|                                                                                                          |   |                     |       |   |   |   |   |   |
| Non-cash financing activity:                                                                                  |   |                     |       |   |   |   |   |   |
| Issuance of 562,500 shares of common stock as payment of principal and interest due on convertible debentures |   | $                        | --         |   |   | $ | 45,000 |   |

----

|                |   | June 30, 2012 |    |   | December 31, 2011 |   |
|---------------------|--------|--------------------|---------|--------|-------------------|--------|
| Parts and materials |   | $                  | 137,133 |   |              | $      | 133,048 |   |
| Finished goods      |   |               | 67,881  |   |              |   | 86,161 |   |
|                |   | $                  | 205,014 |   |              | $      | 219,209 |   |

----

|                                      |   | June 30, 2012 |     |   | December 31, 2011 |   |
|-------------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
| Leasehold improvements                    |   | $                  | 328,977  |   |              | $      | 328,977 |   |
| Equipment                                 |   |               | 41,240   |   |              |   | 41,240 |   |
|                                      |   |               | 370,217  |   |              |   | 370,217 |   |
| Less:  Accumulated depreciation |   |               | (191,320 | )      |              |   | (130,612 | ) |
|                                      |   | $                  | 178,897  |   |              | $      | 239,605 |   |

|                   |   | June 30, 2012 |    |   | December 31, 2011 |   |
|------------------------|--------|--------------------|---------|--------|-------------------|--------|
| Accrued compensation   |   | $                  | 147,482 |   |              | $      | 128,415 |   |
| Accrued interest       |   |               | 78,823  |   |              |   | 36,103 |   |
| Accrued other expenses |   |               | 4,633   |   |              |   | 1,618 |   |
|                   |   | $                  | 230,938 |   |              | $      | 166,136 |   |

----

----

----

----

----

|                                        |   | StockOption Shares |      |   | Weighted Average Exercise Price Per Common Share |   |   | Aggregate Intrinsic Value |   |
|---------------------------------------------|--------|--------------------|-----------|--------|--------------------------------------------------|--------|--------|---------------------------|--------|
| Outstanding at December 31, 2011            |   |               | 300,000   |   |                                             | $      | 0.08   |                      |   | $ | -- |   |
| Granted during the period                   |   |               | 6,346,920 |   |                                             |   | 0.10   |                      |   |   | -- |   |
| Exercised during the period                 |   |               | --        |   |                                             |   | --     |                      |   |   | -- |   |
| Terminated during the period                |   |               | --        |   |                                             |   | --     |                      |   |   | -- |   |
|                                        |   |               |      |   |                                             |   |   |                      |   |   |   |   |
| Outstanding at June 30, 2012                |   |               | 6,646,920 |   |                                             | $      | 0.10   |                      |   | $ | -- |   |
|                                        |   |               |      |   |                                             |   |   |                      |   |   |   |   |
| Available for purchase at June 30, 2012     |   |               | 300,000   |   |                                             | $      | 0.08   |                      |   | $ | -- |   |
|                                        |   |               |      |   |                                             |   |   |                      |   |   |   |   |
| Available for purchase at December 31, 2011 |   |               | 300,000   |   |                                             | $      | 0.08   |                      |   | $ | -- |   |

----

|          |                                     | Stock Options Outstanding                                 |      |      | Stock Options Exercisable                        |   |
|---------------|------------------------------------------|-----------------------------------------------------------|-----------|-----------|--------------------------------------------------|--------|
| ExercisePrice |                                     | Number of Shares Available Under Outstanding StockOptions |      |      | Weighted Average Exercise Price Per Common Share |   |   | Weighted Average Remaining Contractual Life (Years) |   |   | Number of Shares Available for Purchase Under Outstanding StockOptions |   |   | Weighted Average Exercise Price Per Common Share |   |   | Weighted Average Remaining Contractual Life (Years) |   |
| $             |       0.08 |                                                      |      | 300,000   |                                             |   | $ | 0.08 |   |   |   | 1.8 |   |   |   | 300,000 |   |   | $ | 0.08 |   |   |   | 1.8 |   |
| $             |       0.10 |                                                      |      | 6,346,920 |                                             |   | $ | 0.10 |   |   |   | 8.7 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
|          |                                     |                                                      | 6,646,920 |      |                                             | $      | 0.10 |   |   |   | 8.4 |   |   |   | 300,000 |   |   | $ | 0.08 |   |   |   | 1.8 |   |

|                           |   | StockOption Shares |      |   | Weighted Average Grant Date Fair ValuePer Share |   |
|--------------------------------|--------|--------------------|-----------|--------|-------------------------------------------------|--------|
| Nonvested at December 31, 2011 |   |               | --        |   |                                            |   | -- |   |
| Granted during the period      |   |               | 6,346,920 |   |                                            | $      | 0.05 |   |
| Vested during the period       |   |               | --        |   |                                            |   | -- |   |
| Terminated during the period   |   |               | --        |   |                                            |   | -- |   |
| Nonvested at June 30, 2012     |   |               | 6,346,920 |   |                                            | $      | 0.05 |   |

----

|                                        |   | Warrant Shares |       |   | Weighted Average Exercise Price Per Common Share |   |   | Aggregate Intrinsic Value |   |
|---------------------------------------------|--------|----------------|------------|--------|--------------------------------------------------|--------|--------|---------------------------|--------|
| Outstanding at December 31, 2011            |   |           | 33,381,748 |   |                                             | $      | 0.18   |                      |   | $ | 46,061 |   |
| Issued during the period                    |   |           | 11,706,250 |   |                                             | $      | 0.13   |                      |   |   | -- |   |
| Exercised during the period                 |   |           | --         |   |                                             |   | --     |                      |   |   | -- |   |
| Terminated during the period                |   |           | (625,000   | )      |                                             | $      | 0.10   |                      |   |   | -- |   |
|                                        |   |           |       |   |                                             |   |   |                      |   |   |   |   |
| Outstanding at June 30, 2012                |   |           | 44,462,998 |   |                                             | $      | 0.17   |                      |   | $ | -- |   |
|                                        |   |           |       |   |                                             |   |   |                      |   |   |   |   |
| Available for purchase at June 30, 2012     |   |           | 41,901,884 |   |                                             | $      | 0.17   |                      |   | $ | -- |   |
|                                        |   |           |       |   |                                             |   |   |                      |   |   |   |   |
| Available for purchase at December 31, 2011 |   |           | 29,487,302 |   |                                             | $      | 0.19   |                      |   | $ | 46,061 |   |

|                    |                                | Warrants Outstanding                                  |       |       | Warrants Exercisable                                |   |
|-------------------------|-------------------------------------|-------------------------------------------------------|------------|------------|-----------------------------------------------------|--------|
| Range ofExercise Prices |                                | Number of Shares Available Under Outstanding Warrants |       |       | Weighted Average Remaining Contractual Life (Years) |   |   | Weighted Average Exercise Price Per Common Share |   |   | Number of Shares Available for Purchase Under Outstanding Warrants |   |   | Weighted Average Exercise Price Per Common Share |   |   | Weighted Average Remaining Contractual Life (Years) |   |
| $                       |     0.07 - 0.10 |                                                  |       | 23,181,061 |                                                |   |   | 5.4 |   |   | $ | 0.09 |   |   |   | 22,319,947 |   |   | $ | 0.09 |   |   |   | 5.3 |   |
| $                       |     0.20 - 0.35 |                                                  |       | 18,649,437 |                                                |   |   | 2.1 |   |   | $ | 0.23 |   |   |   | 16,949,437 |   |   | $ | 0.23 |   |   |   | 2.1 |   |
| $                       |   0.40 & 0.50         |                                                  |       | 2,632,500  |                                                |   |   | 1.5 |   |   | $ | 0.50 |   |   |   | 2,632,500 |   |   | $ | 0.50 |   |   |   | 1.5 |   |
|                    |                                |                                                  | 44,462,998 |       |                                                |   | 3.8 |   |   | $ | 0.17 |   |   |   | 41,901,884 |   |   | $ | 0.17 |   |   |   | 3.8 |   |

----

|                            |   | Warrant Shares |        |   | Weighted Average Grant Date Fair Value Per Share |   |
|---------------------------------|--------|----------------|-------------|--------|--------------------------------------------------|--------|
| Non-vested at December 31, 2011 |   |           | 3,894,446   |   |                                             | $      | 0.08 |   |
| Issued during the period        |   |           | 11,706,250  |   |                                             | $      | 0.08 |   |
| Vested during the period        |   |           | (13,039,582 | )      |                                             | $      | 0.08 |   |
| Terminated during the period    |   |           | --          |   |                                             |   | -- |   |
| Non-vested at June 30, 2012     |   |           | 2,561,114   |   |                                             | $      | 0.08 |   |

|                       |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|----------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                       |   | 2012                       |   |   | 2011                     |   |   | 2012 |   |   | 2011 |   |
| General and administrative |   | $                          | 22,842 |   |                     | $      | 322,367 |   |   | $ | 38,071 |   |   | $ | 366,516 |   |
| Sales and marketing        |   |                       | 16,885 |   |                     |   | 4,000 |   |   |   | 40,677 |   |   |   | 4,000 |   |
| Research and development   |   |                       | 5,401  |   |                     |   | -- |   |   |   | 9,890 |   |   |   | -- |   |
| Finance fees               |   |                       | --     |   |                     |   | 123 |   |   |   | -- |   |   |   | 7,539 |   |
|                       |   | $                          | 45,128 |   |                     | $      | 326,490 |   |   | $ | 88,638 |   |   | $ | 378,055 |   |

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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
|---------|------------------------------------------------------------|

| Item 4. | Controls and Procedures |
|---------|-------------------------|

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| Item 1. | Legal Proceedings |
|---------|-------------------|

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| Item 1A. | Risk Factors |
|----------|--------------|

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
|---------|-------------------------------------------------------------|

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| Item 3. | Defaults Upon Senior Securities |
|---------|---------------------------------|

| Item 4. | Mine Safety Disclosures |
|---------|-------------------------|

| Item 5. | Other Information |
|---------|-------------------|

| Item 6. | Exhibits |
|---------|----------|

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|                        | INTEGRATED ENVIRONMENTALTECHNOLOGIES, LTD. |                                  |
|-----------------------------|--------------------------------------------|---------------------------------------|
|                        |                                       |                                  |   |
| August 14, 2012   | By:                                        | /s/ David R. LaVance                  |   |
|                        |                                       | David R. LaVance                      |   |
|                        |                                       | President and Chief Executive Officer |   |
|                        |                                       |                                  |   |
| August 14, 2012             | By:                                        | /s/ Thomas S. Gifford                 |   |
|                        |                                       | Thomas S. Gifford                     |   |
|                        |                                       | Executive Vice President,             |   |
|                        |                                       | Chief Financial Officer and Secretary |   |

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| Exhibit No. |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1         |   | Amended and Restated Articles of Incorporation of Integrated Environmental Technologies, Ltd. (the “Company”) (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K that was filed with the Securities and Exchange Commission (the “SEC”) on May 22, 2012).                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.2         |   | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s current report on Form 8-K that was filed with the SEC on May 22, 2012).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.1         |   | Convertible Debenture Unit Purchase Agreement between the Company and L.J. Tichacek dated April 26, 2007 (incorporated by reference to Exhibit 4.1 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.2         |   | 10% Convertible Debenture in the principal amount of $25,000 issued to L.J. Tichacek dated April 26, 2007 (incorporated by reference to Exhibit 4.2 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.3         |   | 8% Convertible Debenture in the principal amount of $150,000 issued by the Company to E. Wayne Kinsey, III (“Kinsey”) dated July 7, 2011 (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K that was filed with the SEC on July 13, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.4         |   | 8% Convertible Debenture in the principal amount of $150,000 issued by the Company to Zanett dated July 7, 2011 (incorporated by reference to Exhibit 4.2 to the Company’s current report Form 8-K that was filed with the SEC on July 13, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.5         |   | Note Purchase Agreement, dated September 23, 2011, among the Company, Kinsey and Zanett (incorporated by reference to Exhibit 10.1 to the Company’s current report Form 8-K that was filed with the SEC on October 3, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.6         |   | Form of 8% Convertible Secured Promissory Note issued by the Company to each of Kinsey ($400,000) and Zanett ($100,000) on September 23, 2011 (incorporated by reference to Exhibit 10.2 to the Company’s current report Form 8-K that was filed with the SEC on October 3, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.7         |   | Security Agreement, dated September 23, 2011, between the Company and Kinsey, as agent for the Secured Note holders.  Upon the request of the SEC, the Company agrees to furnish copies of each of the following schedules and exhibits:  Schedule I – Capital Securities; Schedule II – Grantors; Schedule III – Patents; Schedule IV – Trademarks; Schedule V – Copyrights; Exhibit A – Form of Patent Security Agreement; Exhibit B – Form of Trademark Security Agreement; Exhibit C – Form of Copyright Security Agreement; Annex I – Form of Supplement to Security Agreement (incorporated by reference to Exhibit 10.3 to the Company’s current report Form 8-K that was filed with the SEC on October 3, 2011). |

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| Exhibit No. |   |  Description                                                                                                                                                                                                                                                                                                                           |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1        |   | Exclusive License and Distribution Agreement between I.E.T., Inc. and Benchmark Energy Products, L.P. dated June 20, 2007 (incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K that was filed with the SEC on August 21, 2007).                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.2        |   | Amendment to the Exclusive License and Distribution Agreement between I.E.T., Inc. and Benchmark Energy Products, L.P. dated December 1, 2011 (incorporated by reference to Exhibit 10.3 to the Company’s annual report on Form 10-K for the year ended December 31, 2011 that was filed with the SEC on March 30, 2012).             |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.3        |   | Amended and Restated Registration Rights Agreement between the Company and E. Wayne Kinsey, III and Zanett dated September 23, 2011 (incorporated by reference to Exhibit 10.4 to the Company’s annual report on Form 10-K for the year ended December 31, 2011 that was filed with the SEC on March 30, 2012).                       |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.4        |   | 2002 Stock Option Plan of the Company (incorporated by reference to Exhibit 10.4 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.5        |   | 2010 Stock Incentive Plan of the Company (incorporated by reference to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                               |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.6        |   | Investor Relations Consulting Agreement between the Company and Gary J. Grieco, dba 3GC, Ltd., dated March 1, 2010 (incorporated by reference to Exhibit 10.7 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.7        |   | Addendum dated May 19, 2010 to Investor Relations Consulting Agreement between the Company and Gary J. Grieco, dba 3GC, Ltd., dated March 1, 2010 (incorporated by reference to Exhibit 10.8 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).      |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.8        |   | Addendum dated September 1, 2010 to Investor Relations Consulting Agreement between the Company and Gary J. Grieco, dba 3GC, Ltd., dated March 1, 2010 (incorporated by reference to Exhibit 10.9 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011). |
|        |   |                                                                                                                                                                                                                                                                                                                                        |
| 10.9        |   | Non-Exclusive Independent Sales Representative Agreement between the Company and Gary J. Grieco, dba 3GC, Ltd., dated February 1, 2011 (incorporated by reference to Exhibit 10.10 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                |

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| Exhibit No. |   |  Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.10       |   | Form of Warrant, dated April 21, 2011, issued by the Company to each of David R. LaVance (for the purchase of 1,818,182 shares of the Company’s common stock), Raymond C. Kubacki (for the purchase of 1,818,182 shares of the Company’s common stock) and Valgene L. Dunham (for the purchase of 969,697 shares of the Company’s common stock) (incorporated by reference to Exhibit 10.12 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.11       |   | Form of Warrant, dated May 23, 2011, issued by the Company to each of David R. LaVance (for the purchase of 3,100,000 shares of the Company’s common stock) and Thomas S. Gifford (for the purchase of 3,100,000 shares of the Company’s common stock) (incorporated by reference to Exhibit 10.13 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011).                                                                                                                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.12       |   | Sales Management Services Agreement, dated as of December 6, 2011, by and between I.E.T., Inc. and TrueLogix, LLC (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K that was filed with the SEC on December 6, 2011).                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.13       |   | Warrant, dated October 27, 2011, issued by the Company to Raymond C. Kubacki for the purchase of 468,750 shares of the Company’s common stock (incorporated by reference to Exhibit 10.4 to the Company’s annual report on Form 10-K for the year ended December 31, 2011 that was filed with the SEC on March 30, 2012).                                                                                                                                                                                                                                                                                                                                                               |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.14       |   | Form of Incentive Stock Option Agreement, dated March 27, 2012, issued by the Company to each of David R. LaVance (for the purchase of 3,000,000 shares of the Company’s common stock) and Thomas S. Gifford (for the purchase of 2,000,000 shares of the Company’s common stock) (incorporated by reference to Exhibit 10.14 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 that was filed with the SEC on May 15, 2012).                                                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.15       |   | Form of Non-Qualified Stock Option Agreement, dated March 27, 2012, issued by the Company to each of:  Raymond C. Kubacki (for the purchase of 541,860 shares of the Company’s common stock); David N. Harry (for the purchase of 309,640 shares of the Company’s common stock); Valgene L. Dunham (for the purchase of 340,600 shares of the Company’s common stock); and E. Wayne Kinsey, III  (for the purchase of 154,820 shares of the Company’s common stock) (incorporated by reference to Exhibit 10.15 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 that was filed with the SEC on May 15, 2012). |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1        |   | Section 302 Certification of Principal Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.2        |   | Section 302 Certification of Principal Financial Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.1        |   | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32.2        |   | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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