UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





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





For
the quarterly period ended June 30,
2010





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





Commission
file number 000-26309





INTEGRATED ENVIRONMENTAL
TECHNOLOGIES, LTD.


(Exact
name of registrant as specified in its charter)





Nevada
            98-0200471(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)





4235
      Commerce StreetLittle
      River, South Carolina
            
            29566(Address
      of principal executive offices)
            
            (Zip
      Code)





(843)
390-2500


(Registrant’s
telephone number, including area code)





Copies
of Communications to:


Alfred V.
Greco, PLLC


199 Main
Street, Suite 706


White
Plains NY  10601


(914)
682-3030


Fax (914)
682-3030





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes x    No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes  ̈   No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.





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





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


Yes  ̈    No
x





The
number of shares of Common Stock, $0.001 par value, outstanding on June 30,
2010, was 105,261,228 shares.











PART
      I – FINANCIAL INFORMATION
              
              Item
      1. Financial Statements.
              
              Integrated
      Environmental Technologies, Ltd.Condensed
      Consolidated Balance Sheets


June
      30,
                  
                  
                  December
      31,2010
                  
                  
                  2009Assets:Current
      Assets:Cash
                  
                  $
                  349,003
                  
                  
                  $
                  819,611Accounts
      receivable
                  
                  
                  498,950
                  
                  
                  
                  111,375Inventory
                  
                  
                  199,716
                  
                  
                  
                  82,910Prepaid
      expenses
                  
                  
                  8,481
                  
                  
                  
                  20,256Total
      current assets
                  
                  
                  1,056,150
                  
                  
                  
                  1,034,152Building
                  
                  
                  223,244
                  
                  
                  
                  -Equipment
                  
                  
                  28,371
                  
                  
                  
                  20,445Accumulated
      depreciation
                  
                  
                  (13,945
                  )
                  
                  
                  (11,597
                  )-Total
      building and equipment
                  
                  
                  237,670
                  
                  
                  
                  8,848$
                  1,293,820
                  
                  
                  $
                  1,043,000Liabilities
      and Shareholders' Equity (Deficit)Current
      liabilities:Accounts
      payable
                  
                  $
                  154,723
                  
                  
                  $
                  112,057Accrued
      expenses
                  
                  
                  146,498
                  
                  
                  
                  189,386Notes
      payable
                  
                  
                  250,000
                  
                  
                  
                  98,300Convertible
      notes
                  
                  
                  437,453
                  
                  
                  
                  489,000Total
      current liabilities
                  
                  
                  988,674
                  
                  
                  
                  888,743Shareholders'
      Equity (Deficit)Common
      stock 200,000,000 shares authorizedpar
      value $.001, 105,261,228 and 94,533,467 shares issuedand
      outstanding at June 30, 2010 and December 31, 2009
                  
                  
                  105,261
                  
                  
                  
                  94,533Stock
      bought not issued, 0 and 6,264,329 sharesat
      June 30, 2010 and December 31, 2009
                  
                  
                  -
                  
                  
                  
                  6,264Paid-in
      capital
                  
                  
                  12,228,300
                  
                  
                  
                  11,384,911Retained
      earnings (deficit)
                  
                  
                  (12,028,415
                  )
                  
                  
                  (11,331,451
                  )Total
      shareholders' equity (deficit)
                  
                  
                  305,146
                  
                  
                  
                  154,257Total
      liabilities and shareholders' equity (deficit)
                  
                  $
                  1,293,820
                  
                  
                  $
                  1,043,000




See notes
to condensed consolidated financial statements.









Integrated
      Environmental Technologies, Ltd.Condensed
      Consolidated Statements of OperationsUnaudited




For
      The Six Months Ended
              June
      30,
            
            
            For
      The Three Months Ended
              June
      30,2010
            
            
            2009
            
            
            2010
            
            
            2009Sales
            
            $
            610,621
            
            
            $
            35,736
            
            
            $
            543,402
            
            
            $
            783Licensing
      Fees
            
            
            29,628
            
            
            
            -
            
            
            
            28,910
            
            
            
            -Total
      Revenue
            
            
            640,249
            
            
            
            35,736
            
            
            
            572,312
            
            
            
            783Cost
      of sales
            
            
            209,456
            
            
            
            17,412
            
            
            
            176,095
            
            
            
            530Gross
      profit
            
            
            430,793
            
            
            
            18,324
            
            
            
            396,217
            
            
            
            253Professional
      and administrative fees
            
            
            324,772
            
            
            
            162,093
            
            
            
            195,195
            
            
            
            79,910Salary
            
            
            418,556
            
            
            
            296,862
            
            
            
            154,932
            
            
            
            133,904Depreciation
      and amortization
            
            
            2,347
            
            
            
            1,615
            
            
            
            1,400
            
            
            
            1,223Office
      & miscellaneous expense
            
            
            281,979
            
            
            
            203,303
            
            
            
            190,533
            
            
            
            84,384Bad
      debt expense
            
            
            2,706
            
            
            
            30
            
            
            
            -
            
            
            
            -Total
      operating expenses
            
            
            1,030,360
            
            
            
            663,904
            
            
            
            542,060
            
            
            
            299,421Loss
      from operations
            
            
            (599,567
            )
            
            
            (645,580
            )
            
            
            (145,843
            )
            
            
            (299,168
            )Other
      income (expense):Finance
      fees
            
            
            (62,754
            )
            
            
            (178,491
            )
            
            
            (9,916
            )
            
            
            (118,002
            )Interest
      expense
            
            
            (34,642
            )
            
            
            (63,441
            )
            
            
            (26,389
            )
            
            
            (39,082
            )Total
      other income (expense)
            
            
            (97,396
            )
            
            
            (241,932
            )
            
            
            (36,305
            )
            
            
            (157,084
            )Net
      loss
            
            $
            (696,963
            )
            
            $
            (887,511
            )
            
            $
            (182,148
            )
            
            $
            (456,252
            )Weighted
      average shares outstanding
            
            
            103,047,996
            
            
            
            81,374,213
            
            
            
            104,779,295
            
            
            
            83,664,511Net
      loss per share basic and diluted
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.00
            )
            
            $
            (0.01
            )




See notes
to condensed consolidated financial statements.









Integrated
      Environmental Technologies, Ltd.Condensed
      Consolidated Statements of Cash FlowsUnauditedFor
      The Six Months Ended June 30,2010
            
            
            2009Cash
      flows from operating activities:Net
      loss
            
            $
            (696,963
            )
            
            $
            (887,511
            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
            
            
            2,347
            
            
            
            1,615Stock
      and warrants issued for loan or interest costs
            
            
            160,423
            
            
            
            -Stock
      and warrants issued to employees and
              directors
      for services
            
            
            117,000
            
            
            
            178,491Accretion
      of interest
            
            
            9,682
            
            
            
            -Other
            
            
            -
            
            
            
            (3,109
            )Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (387,575
            )
            
            
            (762
            )Inventory
            
            
            (116,806
            )
            
            
            (1,809
            )Deposits
      and prepaids
            
            
            11,776
            
            
            
            24,579Accounts
      payable
            
            
            42,666
            
            
            
            (5,897
            )Accrued
      expenses
            
            
            (42,890
            )
            
            
            24,801Cash
      used in operating activities
            
            
            (900,340
            )
            
            
            (669,603
            )Cash
      flows from investing activities:Purchase
      of building improvements and equipment
            
            
            (231,168
            )
            
            
            -Cash
      used in investing activities
            
            
            (231,168
            )
            
            
            -Cash
      flows from financing activities:Proceeds
      from the sale of common stock and warrants
            
            
            59,880
            
            
            
            505,000Payment
      on notes payable, net
            
            
            175,000
            
            
            
            175,000Payments
      on convertible debentures
            
            
            -
            
            
            
            (4,000
            )Proceeds
      from convertible debt
            
            
            211,270
            
            
            
            -Proceeds
      from the exercise of warrants and options
            
            
            214,750
            
            
            
            -Cash
      provided by financing activities
            
            
            660,900
            
            
            
            676,000Increase
      (decrease) in cash
            
            
            (470,608
            )
            
            
            6,397Cash
      beginning of period
            
            
            819,611
            
            
            
            33,357Cash
      end of period
            
            $
            349,003
            
            
            $
            39,754Supplemental
      disclosure of cash flow information:Cash
      paid for interest
            
            $
            34,642
            
            
            $
            47,054Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -Non-cash
      financing activities:Stock
      and warrants issued to employees and directors
              for
      services
            
            $
            117,000
            
            
            $
            178,491Stock
      and warrants issued for loan and interest costs
            
            $
            160,423
            
            
            $
            -Stock
      issued for convertible notes
            
            $
            295,800
            
            
            $
            -





See notes
to condensed consolidated financial statements.







Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements


Note
1 – Basis of presentation





The
unaudited condensed consolidated financial statements have been prepared in
accordance with United States generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and reflect
all adjustments which, in the opinion of management, are necessary for a fair
presentation.  All such adjustments are of a normal recurring
nature.  The results of operations for the interim period are not
necessarily indicative of the results to be expected for a full
year.  Certain amounts in the prior year statements have been
reclassified to conform to the current year presentations.  The
statements should be read in conjunction with the financial statements and
footnotes thereto included in our Form 10-K for the year ended December 31,
2009.





The
financial statements include the Company’s wholly-owned
subsidiary.  All significant inter-company transactions and balances
have been eliminated.





Note
2 - Going concern





The
accompanying condensed consolidated financial statements have been prepared
assuming that we will continue as a going concern.  Our ability to
continue as a going concern is dependent upon attaining profitable
operations.  We may consider using borrowings and security sales to
mitigate the effects of our cash position; however, no assurance can be given
that debt or equity financing, if and when required, will be
available.  The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets and
classification of liabilities that might be necessary should we be unable to
continue in existence.





Note
3 - Notes payable





Notes
payable consisted of the following at June 30, 2010:





Note
      payable, secured, bearing interest at base margin rate plus
      3.25%   per annum.
            
            $
            250,000$
            250,000





Note
4 - Convertible notes payable





As of
June 30, 2010, we have 10% convertible notes totaling $216,500.  We
have extended the original maturity date of January 2, 2009 for these notes, and
will continue to accrue interest at a rate of 10% per annum, payable
semi-annually, until the notes are paid.  These notes are currently in
default.





On April
8, 2010, the Board authorized the offering of a maximum aggregate amount of
$750,000 in 8% annual interest convertible debentures with detachable Series
“IE” warrants.  The instruments mature on April 7, 2011, and have a
$0.60 conversion-to-common-stock rate through maturity.  The warrants
are exercisable at $0.75 per share through December 31, 2010, or at $1.20 per
share from January 1, 2011 through December 31, 2011.  In the quarter
ended June 30, 2010, we sold 5 units consisting of $250,000 of 8% Convertible
Debentures, 50,000 warrants (exercisable at $0.75 per share through December 31,
2011), and 200,000 Series “IE” Warrants, for a total purchase price of
$252,500.  We allocated the proceeds from the sale of the instruments
based on the fair value of each of the instruments sold.  The value
assigned to the notes was $211,270, and the value assigned to the warrants was
$41,230.  We will accrete additional interest over the period of the
sale to maturity of the notes.   In the quarter ended June 30,
2010, we accreted interest of $9,682, and will accrete $29,048 in future
periods.







Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements


Note
5 – Common stock





In the
quarter ended March 31, 2010, we sold a total of 180,000 shares for a total
purchase price of $18,000.





In the
quarter ended March 31, 2010, warrants and options were exercised for a total
purchase price of $16,100, which resulted in 160,000 shares
issued.





On
January 20, 2010, 123,214 warrants were issued through a cashless exercise of
150,000 warrants, thereby using the 26,786 remaining warrant shares to satisfy
the exercise price.





On
January 21, 2010, we authorized the issuance of a total of 450,000 shares of
restricted common stock to certain employees as contract compensation or as
bonus in lieu of cash compensation, and to directors as compensation for
attendance of board meetings.  These shares were issued on February 2,
2010.  The expense was $117,000, which represented the fair market
value of the shares on the date the awards were made.




On March
5, 2010, a note and accrued interest totaling $26,685 were converted into
106,740 shares of restricted common stock at a conversion rate of $0.25 per
share.  The shares were issued on March 11, 2010.





In the
quarter ended March 31, 2010, certain note holders converted $272,500 of
principal amounts due under their debenture agreements at a conversion rate of
$0.25 per share of common stock.  The 1,090,000 shares were issued on
February 25, 2010 and April 15, 2010.





In the
quarter ended June 30, 2010, 68,478 shares were issued by a cashless exercise of
warrants to purchase 150,000 shares for $0.25 per share, thereby using the
81,522 remaining warrant shares to satisfy the exercise price.  The
68,478 shares were issued on April 26, 2010.





In the
quarter ended June 30, 2010, warrants and options were exercised for a total
purchase price of $198,650, which resulted in the issuance of 2,085,000
shares.





On April
16, 2010, we issued 200,000 shares in connection with a consulting
agreement.  The value of the shares was $61,800, which will be
expensed over the one-year term of the agreement.  These shares were
issued on April 26, 2010.







Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements


Note
6 – Options and warrants





A summary
of stock options and warrants is as follows:





Options
            
            
            Average
              Price
            
            
            Warrants
            
            
            Average
              PriceOutstanding  1/1/2010
            
            
            1,075,000
            
            
            $
            0.11
            
            
            
            17,379,582
            
            
            $
            0.12Granted
            
            
            -
            
            
            
            -
            
            
            
            1,425,000
            
            
            
            0.41Cancelled
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Exercised
            
            
            25,000
            
            
            
            0.11
            
            
            
            2,520,000
            
            
            
            .10Outstanding
      6/30/2010
            
            
            1,050,000
            
            
            $
            0.11
            
            
            
            16,284,582
            
            
            $
            0.15





On
February 25, 2010, we issued 225,000 warrants to purchase restricted shares of
common stock at $0.28 per share, issued in connection with consulting
services.  The value of the services was $35,818 which will be
expensed over the one-year period of the consulting agreement.  The
amount expensed as professional fees in the three and six months ended June 30,
2010 was $8,622 and $11,939, respectively.





On March
5, 2010, we granted 300,000 warrants to purchase restricted shares of common
stock at $0.10 per share, issued in connection with our
borrowings.  We expensed as loan costs $52,838 in the period ended
March 31, 2010.





On April
1, 2010, we issued 400,000 warrants to purchase restricted shares of common
stock at $0.30 per share, issued in connection with consulting
services.  The value of the services was $86,848, which will be
expensed over the one-year period of the consulting agreement.  For
the quarter ended June 30, 2010, we expensed $21,712 as professional
fees.





On April
8, 2010, we issued 150,000 warrants to purchase restricted shares of common
stock at $0.60 per share through December 31, 2010, or at $1.00 per share from
January 1, 2011 through December 31, 2011.  These warrants were issued
in connection with our borrowings (see Note 5).  The value of the
warrants was $29,664, which will be expensed over one year.  For the
quarter ended June 30, 2010, we expensed $7,416 as loan fees.





On April
16, 2010, we granted 250,000 warrants to purchase restricted shares of common
stock in connection with the sale of our convertible debentures (see Note
4).





On June
17, 2010, we granted 100,000 warrants to purchase restricted shares of common
stock in connection with a New Market Facilitation Consulting
Agreement.  Pursuant to this agreement, the Consultant agreed to
perform services relative to the introduction of the Company and its products
into identified new market areas.  The warrants are exercisable at
$1.00 per share through December 31, 2011.  The fair market value of
the warrants was $16,000, which we will expense over the six-month term of the
agreement.  In the quarter ended June 30, 2010, we expensed $1,333 as
loan fees.







Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements


The fair
market value of the warrants was determined using the Black-Scholes model with
the following weighted average assumptions:  Strike Price $0.34; Stock
Price $0.30; Term 1.7 years; Dividend Yield 0%; Volatility 155%; and Interest
Rate 0.9%.





Note
7 – Related-party transactions





We had a
consulting agreement with a shareholder requiring payments of $3,000 per
month.  On March 1, 2010, the term and scope of the agreement were
revised, and compensation was increased to $6,000 per month.  On May
19, 2010, we executed an addendum whereby compensation was decreased to $4,500
per month.  As of June 30, 2010, we have recorded $30,000 in
consulting fee expense.





We have
employment agreements with two of our executives through March 30, 2012, whereby
we agreed to annual compensation in the amount of $240,000.  As of
June 30, 2010, the future minimum payments are as follows:





Related-party
      compensation requirements2010
            
            
            120,0002011
            
            
            240,000Thereafter
            
            
            60,000Total
            
            $
            420,000





Note
8 – Commitments and Contingencies





We
entered into a lease agreement for our premises on January 1, 2006 for a
three-year term.  In January 2009, we agreed to renew the lease for a
term of five years for $71,291 per year.  The renewal term shall be
upon the same covenants, conditions, and provisions as provided in the original
lease.





Note
9 – Subsequent events





We have
evaluated all subsequent events, and have determined that the following events
require disclosure in these financial statements.





In July
and August, 2010, we entered into New Market Facilitation Consulting Agreements
for four markets, wherein the Consultants agreed to perform services relative to
the introduction of the Company and its products into identified new market
areas for the purpose of facilitating productive discussions and sales
opportunities.  The term of the agreements is six months, which may be
renewed.  We agreed to compensate the Consultants with a total of
800,000 warrants to purchase shares of our restricted common stock for
consideration of $0.005 per warrant.  600,000 of the warrants are
exercisable at $0.50 per share and the remaining 200,000 warrants are
exercisable for $1.00 per share, all expiring on December 31,
2011.  The agreements further allow for the issuance of a second
tranche of incentive-based warrants, based upon the Consultant securing orders
valued at $200,000 or greater of the Company’s products into identified new
markets, with a minimum of 50% down payment received with said
orders.  The amount, purchase price, and exercise price of the
warrants are to be determined upon an initial order, but the exercise price is
to be set at a value of no less than 125% greater than the market value of our
common stock on the trading day preceding our receipt of the sales order and
down payment.







Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements


On July
23, 2010, we granted 270,000 warrants to purchase restricted shares of our
common stock at $0.10 per share.  These warrants were issued to
correct an administrative error associated with a loan agreement which was
executed in 2009, and expire on December 31, 2011.









FORWARD-LOOKING
STATEMENTS





This document contains forward-looking
statements. All statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state securities laws,
including, but not limited to, any projections of earnings, revenue or other
financial items; any statements of the plans, strategies and objections of
management for future operations; any statements concerning proposed new
services or developments; any statements regarding future economic conditions or
performance; any statements of belief; and any statements of assumptions
underlying any of the foregoing.





Forward-looking statements may include
the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect”
or “anticipate” or other similar words.  These forward-looking
statements present our estimates and assumptions only as of the date of this
report.  Except for our ongoing securities laws, we do not intend, and
undertake no obligation, to update any forward-looking statement. Additionally,
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 most likely do not apply to our forward-looking statements as a result of
being a penny stock issuer. You should, however, consult further disclosures we
make in future filing of our Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K.





Although we believe that the
expectations reflected in any of our forward-looking statements are reasonable,
actual results could differ materially from those projected or assumed in any of
our forward-looking statements.  Our future financial condition and
results of operations, as well as any forward-looking statements, are subject to
change and inherent risks and uncertainties.  The factors impacting
these risks and uncertainties include, but are not limited to:




·
              the
      unavailability of funds for capital expenditures and/or general working
      capital;
 ·
              implementation
      of our business plan within the oil and gas industry with our distributor,
      Benchmark; and/or within the food processing industry with our dealer,
      D2W2; and/or continued entry and subsequent sales into other
      markets;
 ·
              increased
      competitive pressures from existing competitors and new
      entrants;
 ·
              increases
      in interest rates or our cost of borrowing or a default under any material
      debt agreements;
 ·
              the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require our management to make estimates about matters that are inherently
      uncertain;
 ·
              substantial
      dilution to our stockholders as the result of the issuance of our common
      stock in exchange for debt and/or equity financing;
 ·
              potential
      change in control upon completion of financing agreements, if
      any;
 ·
              deterioration
      in general or regional economic conditions;
 ·
              adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;
 ·
              changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;
 ·
              loss
      of customers or sales weakness;
 ·
              excessive
      product failure and related warranty expenses;
 ·
              inability
      to achieve future sales levels or other operating results;
    and
 ·
              operational
      inefficiencies in distribution or other
systems.







For a detailed description of these and
other factors that could cause actual results to differ materially from those
expressed in any forward-looking statement, please see “Part II, Other
Information, Item 1A, Risk Factors” in this document and in our Annual Report on
Form 10-K for the year ended December 31, 2009.





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





The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and related notes
included elsewhere in this quarterly report. References in the following
discussion and throughout this quarterly report to “we”, “our”, “us”, “IET”,
“the Company”, and similar terms refer to Integrated Environmental Technologies,
Ltd. and its wholly-owned subsidiary, IET, Inc., unless otherwise expressly
stated or the context otherwise requires.





OVERVIEW
AND OUTLOOK





Integrated
Environmental Technologies, Ltd. is a life sciences-focused technology company
that commercializes innovative technologies which are focused on the enhancement
of the environment and the health, safety, and well-being of current and future
generations.  Our wholly-owned subsidiary, IET, Inc., designs,
manufactures, markets, sells, installs, and supports our proprietary EcaFlo®
equipment, featuring electro-chemical activation (“ECA”) technology, in the
United States and throughout the world.





The core
of our business is the commercialization of ECA technology.  ECA
technology is a process of passing a diluted saline solution and ordinary water
through an electrolytic cell in order to generate, by electrochemical energy
conversion, environmentally-responsible, highly-active, meta-stable solutions
which possess electron-donor or electron-acceptor properties known as Catholytes
and Anolytes.





Our equipment and the solutions our
equipment produces remain the focus of our revenue strategy.  We
produce and sell ECA equipment and related supplies under the EcaFlo® trade
name, including three models of EcaFlo® equipment:  C-101, C-102 and
C-104.  These pieces of equipment generate varying volumes of the
hospital-level disinfectant trademarked EcaFlo® Anolyte.  Our business
model primarily calls for the sale of EcaFlo® equipment, at contract prices, to
existing, reputable, successful industry leaders within different markets
(i.e.:  Benchmark – Oil and Gas; D2W2 – Food
Processing).  While we profit from sales of EcaFlo® equipment, there
are costs of goods sold and general and administrative costs associated with
these sales.  Our plan also calls for technology fees to be paid to us
on the EcaFlo® fluid solutions that are generated by our distributors and sold
to their customers.  The fees are at reasonable rates on a
per-gallon-sold basis and have absolutely no cost to us.  These
technology fees are a sustaining revenue source and will build as we sell and
install each piece of EcaFlo® equipment.  In addition to establishing
a solid distribution network, we occasionally make sales directly to customers,
on a limited basis, in order to effect initial penetration into some lucrative
markets.











Our
solutions have developed strong commercial interest and substantial market
potential:





·
            EcaFlo®
      Anolyte – a strong oxidizing solution formed from naturally occurring
      elements that kills unwanted microorganisms and pathogens,
    and


·
            EcaFlo®
      Catholyte – an anti-oxidizing, mildly alkaline solution ideal for use as a
      degreaser, cleaner, and detergent.





We are
highly focused on commercialization of our products in the oil and gas
industry.  We have recently completed expansion of our manufacturing
facility in order to increase production capabilities.  The
combination of demand for gas, rubbing up against environmental concerns
regarding “fracking” fluids permeating ground-water tables and water supplies,
is providing the impetus in our monetizing this technology.  Our oil
and gas industry distributor, Benchmark Energy Products, LLC, is producing
EcaFlo® solutions tailor-made to answer the needs of the oil and gas markets
through an Exclusive License and Distribution Agreement.  Recently we
announced that the EPA-registered product, Excelyte® (Benchmark’s brand name for
EcaFlo® Anolyte), was successfully utilized in a number of gas well fracturing
treatments.  The primary use of Excelyte® is to eliminate oilfield
bacteria in water employed in oil and gas wells.





EcaFlo®
Anolyte, an EPA-registered product, could conceivably replace all applications
for chlorine-related antimicrobials from an efficacy and efficiency
standpoint.  Our commercialization of this product is premised upon
the compelling economics, given the low cost to produce Anolyte and the
environmentally friendly nature of the product.  The product can be as
much as 100 times more effective than the bleach solutions traditionally used to
mitigate pathogens in food processing, water disinfection, and fungicidal
control.  The product quickly destroys microorganisms and pathogens on
fruits, vegetables, and processing equipment without leaving a harmful
residue.





After
several years of product and market development, we are seeing strong demand for
our current generation equipment from commercial users in multiple industries,
including oil and gas and fresh food packaging.  We are exploring the
potential need for larger volume equipment to increase capacities of EcaFlo®
solutions for certain in-plant industrial uses.  A global fresh food
packager has expressed interest in implementing the use of EcaFlo® Anolyte as a
hard-surface disinfectant within its facilities prior to making a major capital
investment in changing the systems currently used for product sanitation in
order to integrate the use of EcaFlo® Anolyte into this process.





We have
incurred losses since inception.  For the quarter ended June 30, 2010,
we had a net loss of $696,963 and for the year ended December 31, 2009, we had a
net loss of $2,798,404.  Our ability to proceed with our plan of
operation has continuously been a function of our ability to increase revenues
and raise sufficient capital to continue our operations.





Management
intends to continue to closely monitor the costs associated with the production
of EcaFlo®devices
in an attempt to minimize capital shortages.  As we continue to expand
operational activities and execute our business plan, we anticipate experiencing
positive cash flows from operations in future quarters.  Debt
borrowings may be considered from time to time, if needed.










Currently, management is focused
on:




-
            finalizing
      processes for technology fee reporting and billing for oil and gas
      applications;


-
            developing
      entry into specific vertical markets with new distribution networks and
      personnel;


-
            making
      changes to the Company’s EPA product registration “master label” to
      include the addition of certain microorganisms and a change to “shelf
      life” verbiage; and


-
            finalizing
      negotiations of contract terms within the two largest market areas served
      by IET’s key distributors, Benchmark and
D2W2.





Obtaining a patent on our “EC”
electrolytic cell will further secure the Company’s ability to manufacture the
most reliable, high-volume producing, pH neutral anolyte product, IET’s EcaFlo®
Anolyte.  Demonstration of EcaFlo® fluid solutions in an in-plant
sanitation system, to “prove positive” the efficacy and ease of use, is the
final step to commercialization in a major food processing
application.  Risk of failure in this demonstration has been mitigated
by carefully developed protocols and implementation.  Entry into new
markets, through a proven distribution vehicle, will serve to expand our markets
and provide acceptance of EcaFlo® Anolyte as the preferred “green” disinfectant
that replaces traditional, hazardous disinfectant chemicals.  IET
continues to focus on educating consumers and the investing public about the
differences between “cleaning,” “sanitizing” and “disinfecting”, and how those
classifications relate to the development of commercial markets for EcaFlo®
solutions.  As we seek and obtain modifications to our EPA product
registration “master label,” we open more doors for the use of EcaFlo® Anolyte
in different areas.  In the unlikely event that our proposed changes
are not accepted, our current EPA product registration (EPA Registration No.
82341-1) affords us the ability to continue to serve the oil and gas industry,
as well as food processing, hard-surface disinfection, and many other
applications.  Meetings and contract negotiations could result in
future material events for IET.





Results
of Operations for the Three and Six Months Ended June 30, 2010 and
2009





The
following table summarizes selected items from the statement of operations at
June 30, 2010 compared to June 30, 2009.





SALES
      AND COST OF SALES:
            
            Three
      Months Ended June 30,
            
            
            Increase/
              (Decrease)
            
            
            Six
      Months
              Ended
      June 30,
            
            
            Increase/
              (Decrease)2010
            
            
            2009
            
            
            $
            
            
            
            %
            
            
            2010
            
            
            2009
            
            
            $
            
            
            
            %Sales
      and Licensing Fees
            
            $
            572,312
            
            
            $
            783
            
            
            $
            571,529
            
            
            
            72,992
            %
            
            $
            640,249
            
            
            $
            35,736
            
            
            $
            604,513
            
            
            
            1,692
            %Cost
      of Sales
            
            
            176,095
            
            
            
            530
            
            
            
            175,565
            
            
            
            33,125
            %
            
            
            209,456
            
            
            
            17,412
            
            
            
            192,044
            
            
            
            1,103
            %Gross
      Profit
            
            
            396,217
            
            
            
            253
            
            
            
            395,964
            
            
            
            156,508
            %
            
            
            430,793
            
            
            
            18,324
            
            
            
            412,469
            
            
            
            2,251
            %Gross
      ProfitPercentage
      ofSales
            
            
            69
            %
            
            
            32
            %
            
            
            --
            
            
            
            37
            %
            
            
            67
            %
            
            
            51
            %
            
            
            --
            
            
            
            16
            %









Sales





Our sales for the three and six months
ended June 30, 2010 were $572,312 and $640,249, an increase of $571,529, or
72,992%, from sales of $783 in the three months ended June 30, 2009, and an
increase of $604,513, or 1,692%, from sales of $35,736 for the six months ended
June 30, 2009.  The increase in sales was as a result of finalizing
conclusive agreements with distributors, and continuing to develop opportunities
in targeted markets.





During
the second quarter of 2010, equipment orders and technology fee billings have
continued to increase.  We currently have pending sales of
approximately $900,000.





Cost
of sales / Gross profit percentage of sales





Our cost of sales for the three and six
months ended June 30, 2010 was $176,095 and $209,456, an increase of $175,565,
or 33,125%, from $530 for the three months ended June 30, 2009, and an increase
of $192,044, or 1,103%, from $17,412 for the six months ended June 30,
2009.  The increase in our cost of sales is as a result of an increase
in sales for this period.  The cost of sales did increase less as a
percentage of sales, and we anticipate this trend to continue as sales volumes
increase.  We are continuing to update and upgrade our product line
and we closely monitor the costs of all of our products.





As of the
three and six months ended June 30, 2010, our gross profit margins increased 37%
to 69%, as compared to 32% from the three months ended June 30, 2009, and
increased 16% to 67%, from 51% for the six months ended June 30,
2009.  We anticipate that this margin will continue to increase in the
future as equipment sales increase.





EXPENSES:





Three
      Months Ended
              June
      30,
            
            
            Increase/(Decrease)
            
            
            Six
      Months Ended
              June
      30,
            
            
            Increase/(Decrease)2010
            
            
            2009
            
            
            $
            
            
            
            %
            
            
            2010
            
            
            2009
            
            
            $
            
            
            
            %Expenses:Professional
      andadministrativefees
            
            $
            195,195
            
            
            $
            79,910
            
            
            $
            115,285
            
            
            
            144
            %
            
            $
            324,772
            
            
            $
            162,093
            
            
            $
            162,679
            
            
            
            100
            %Salary
            
            
            154,932
            
            
            
            133,904
            
            
            
            21,028
            
            
            
            16
            %
            
            
            418,556
            
            
            
            296,862
            
            
            
            121,694
            
            
            
            41
            %Depreciation
      andamortization
            
            
            1,400
            
            
            
            1,223
            
            
            
            177
            
            
            
            14
            %
            
            
            2,347
            
            
            
            1,615
            
            
            
            732
            
            
            
            45
            %Office
      andmiscellaneousexpense
            
            
            190,533
            
            
            
            84,384
            
            
            
            106,149
            
            
            
            126
            %
            
            
            281,979
            
            
            
            203,303
            
            
            
            78,676
            
            
            
            39
            %Bad
      debt expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,706
            
            
            
            30
            
            
            
            2,676
            
            
            
            8,920
            %Total
      Expenses
            
            
            542,060
            
            
            
            299,421
            
            
            
            242,639
            
            
            
            81
            %
            
            
            1,030,360
            
            
            
            663,904
            
            
            
            366,456
            
            
            
            55
            %(Loss)
      from operations
            
            
            (145,843
            )
            
            
            (299,168
            )
            
            
            (153,325
            )
            
            
            (51
            %)
            
            
            (599,567
            )
            
            
            (645,580
            )
            
            
            (46,013
            )
            
            
            (7
            %)Other
      income(expense):Finance
      fees
            
            
            (9,916
            )
            
            
            (118,002
            )
            
            
            (108,086
            )
            
            
            (92
            %)
            
            
            (62,754
            )
            
            
            (178,491
            )
            
            
            (115,737
            )
            
            
            (65
            %)Interest
      expense
            
            
            (26,389
            )
            
            
            (39,082
            )
            
            
            (12,693
            )
            
            
            (32
            %)
            
            
            (34,642
            )
            
            
            (63,441
            )
            
            
            (28,799
            )
            
            
            (45
            %)Total
      otherincome
      (expense)
            
            
            (36,305
            )
            
            
            (157,084
            )
            
            
            (120,779
            )
            
            
            (77
            %)
            
            
            (97,396
            )
            
            
            (241,932
            )
            
            
            (144,536
            )
            
            
            (60
            %)Net
      (loss)
            
            $
            (182,148
            )
            
            $
            (456,252
            )
            
            $
            (274,104
            )
            
            
            (60
            %)
            
            $
            (696,963
            )
            
            $
            (887,511
            )
            
            $
            (190,548
            )
            
            
            (21
            %)









Professional
and Administrative Fees





Professional
and administrative fees for the three and six months ended June 30, 2010 were
$195,195 and $324,772, an increase of $115,285, or 144%, from $79,910 for the
three months ended June 30, 2009 and an increase of $162,679, or 100%, from
$162,093 for the six months ended June 30, 2009.  The increase in
professional and administrative fees was the result of utilizing the services of
financial consultants to assist us in developing plans for financings and for
assistance with market awareness of our company’s progress.  Whenever
possible, we are trying to reduce the use of outside consultants, but we will
still need some assistance for areas of our business in which we do not have
sufficient in-house expertise.





Salary
Expenses





Salary expenses for the three and six
months ended June 30, 2010 were $154,932 and $418,556, an increase of $21,028,
or 16%, from $133,904 for the three months ended June 30, 2009 and an increase
of $121,694 or 41% from $296,862 for the six months ended June 30,
2009.  The increase in salary expenses was the result of additions to
our engineering, production, and administrative staff, as well as the issuance
of stock compensation to board members and certain employees pursuant to the
terms of contractual agreements.  We expect salary expense to increase
in the future as the Company grows and as sales volumes increase.  We
may need to continue issuing stock and stock options in exchange for services
and adequate personnel compensation.





Depreciation
and Amortization Expenses





Depreciation
and amortization expenses for the three and six months ended June 30, 2010 were
$1,400 and $2,347, an increase of $177 or 14% from $1,223 for the three months
ended June 30, 2009 and an increase of $732 or 45% from $1,615 for the six
months ended June 30, 2009.  The increase in depreciation expenses was
the result of the purchase of additional depreciable equipment and recent
building improvements.





Office
and Miscellaneous Expenses





Office and miscellaneous expenses for
the three and six months ended June 30, 2010 were $190,533 and $281,979, an
increase of $106,149 or 126%, from $84,384 for the three months ended June 30,
2009 and an increase of $78,676 or 39% from $203,303 for the six months ended
June 30, 2009.  The increase in office and miscellaneous expenses was
primarily the result of an increase in engineering supplies necessary to meet
the demand of our increased sales volume.





Bad
Debt Expenses





Bad debt
expense for the three months ended June 30, 2010 and June 30, 2009 was
$0.  Bad debt expense for the six months ended June 30, 2010 was
$2,706, an increase of $2,676 from $30 for the six months ended June 30,
2009.  The increase in bad debt expenses was as a result of one of our
former vendors not delivering a portion of the services for which we
pre-paid.  We have historically had limited write-offs as the result
of bad debts.  We continually evaluate the creditworthiness of our
customers and typically require a deposit of 50% of the total purchase price
with each EcaFlo® equipment order.  We evaluate the collectability of
accounts receivable regularly and it is our policy to record an allowance when
the results of the evaluation indicate an increased risk related to the
customer's ability to meet their financial obligations.










Loss
from Operations





The loss
from operations for the three and six months ended June 30, 2010 was $145,843
and $599,567, a decrease of $153,325, or 51%, from $299,168 for the three months
ended June 30, 2009 and a decrease of $46,013 or 7% from $645,580 for the six
months ended June 30, 2009.  The decrease in the loss from operations
was the result of our increased sales volume.





Finance
Fees





Finance fees for the three and six
months ended June 30, 2010 were $9,916 and $62,754, a decrease of $108,086, or
92%, from $118,002 for the three months ended June 30, 2009 and a decrease of
$115,737, or 65%, from $178,491 for the six months ended June 30,
2009.  The decrease in finance fees was due to a decrease in temporary
working capital loans needed during this time.





Interest
Expense





Interest expense for the three and six
months ended June 30, 2010 was $26,389 and $34,642, a decrease of $12,693, or
32%, from $39,082 for the three months ended June 30, 2009 and a decrease of
$28,799, or 45%, from $63,441 for the six months ended June 30,
2009.  The decrease in interest expense was as a result of having paid
off a number of our convertible debentures and temporary working capital loans
which were accruing interest in 2009.





Net
Loss





Our net
loss for the three and six months ended June 30, 2010 was $182,148 and $696,963,
a decrease of $274,104, or 60%, from $456,252 for the three months ended June
30, 2009 and a decrease of $190,548 or 21% from $887,511 for the six months
ended June 30, 2009.  We continue to have a net loss but believe the
loss will be reduced and profitability will be attained in future quarters as
the sales of our products continue to increase.





Liquidity
and Capital Resources





The
following table summarizes total current assets, total current liabilities and
working capital at June 30, 2010 compared to December 31, 2009.




June
            
            
            December
            
            
            Increase
      / (Decrease)30,  2010
            
            
            31,
      2009
            
            
            $
            
            
            %Current
      Assets
            
            $
            1,056,150
            
            
            $
            1,034,152
            
            
            $
            21,998
            
            
            
            2
            %Current
      Liabilities
            
            
            988,674
            
            
            
            888,743
            
            
            $
            99,931
            
            
            
            11
            %Working
      Capital
            
            $
            67,476
            
            
            $
            145,409
            
            
            $
            (77,933
            )
            
            
            (54
            %)





Current assets for the six months ended
June 30, 2010 were $1,056,150, an increase of $21,998, or 2%, from $1,034,152 at
December 31, 2009.  The increase in current assets was as a result of
an increase in our accounts receivable and inventory for this
period.  Current liabilities for the same period were $988,674, an
increase of $99,931, or 11%, from $888,743 for the year ended December 31,
2009.  This increase was due to an increase in notes payable for this
period.










At June
30, 2010, our cash balance was $349,003.  We believe that our cash on
hand will be sufficient to meet our capital and operating requirements for at
least the next quarter.  Our future capital requirements, however,
will depend on numerous factors, including without limitation, potential
acquisitions and/or joint ventures, purchases of our stock and future results of
operations.





In
addition to sales-generated revenue, we continue to use traditional and/or debt
financing, to provide the capital we need to run the business.  In the
future, we plan to generate enough revenues from the sales of our products in
order for us to not have to sell additional stock or obtain additional
loans.





To meet
the backlog for IET’s EcaFlo® equipment, we have completed a facility expansion
in order to quadruple the production capacities for
manufacturing.  Additionally, we continue to anticipate an increase in
employees in the next twelve months as we add assembly personnel, shipping and
receiving personnel and additional administrative support
personnel.





As of June 30, 2010, we had convertible
loans totaling $466,500.  $216,500 of these loans are accruing
interest at a rate of 10% per annum payable semi-annually.  We
extended the original maturity date of January 2, 2009, and will continue to
accrue interest at a rate of 10% per annum until the notes are
paid.  These notes are currently in default.  The remaining
$250,000 in convertible notes are accruing interest at a rate of 8% per annum
payable semi-annually, and are due April 7, 2011.





Going
Concern





The
financial statements included in this filing have been prepared in conformity
with generally accepted accounting principles that contemplate the continuance
of the Company as a going concern.  Our ability to continue as a going
concern is dependent on attaining profitable operations.  Our cash
position may be inadequate to pay all of the costs associated with testing,
production and marketing of products.  Management will consider
borrowings and security sales to mitigate the effects of our cash position;
however, no assurance can be given that debt or equity financing, if and when
required, will be available.  The financial statements do not include
any adjustments relating to the recoverability and classification of recorded
assets and classification of liabilities that might be necessary should we be
unable to continue existence.





Critical
Accounting Policies and Estimates





Our
discussion of financial conditions and results of operations is based upon the
information reported in our financial statements.  The preparation of
these statements requires us to make assumptions and estimates that affect the
reported amounts of assets, liabilities, revenues and expenses as well as the
disclosure of contingent assets and liabilities at the date of our financial
statements.  We base our assumptions and estimates on historical
experience and other sources that we believe to be reasonable at the
time.  Actual results may vary from our estimates due to changes in
circumstances, weather, politics, global economics, mechanical problems, general
business conditions and other factors.  Our significant estimates are
related to the valuation of warrants and options.










Revenue
Recognition





We
recognize sales revenue when title passes and all significant risks of ownership
change, which occurs either upon shipment or delivery based on contractual
terms.  In the case where a customer prefers to make its own shipping
arrangements, we consider that the sale has occurred when the equipment is
crated and on our loading dock awaiting pick-up.





Off-Balance
Sheet Arrangements





As of
June 30, 2010, we did not have any off-balance sheet arrangements that had or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to investors.





Item
3. Quantitative and Qualitative Disclosures About Market Risk





Concentration
of Credit Risk





We sell products to customers in
diversified industries and geographical regions.  During the years
ended December 31, 2009 and 2008, three of our customers represented 26%, 24%,
and 12% and 41%, 16%, and 12% of sales, respectively.  We continually
evaluate the creditworthiness of our customers and typically require a deposit
of 50% of the total purchase price with each EcaFlo® equipment
order.





We evaluate the collectability of
accounts receivable regularly and it is our policy to record an allowance when
the results of the evaluation indicate an increased risk related to the
customer's ability to meet their financial obligations.  As of
December 31, 2009 and 2008, there was no reserve for bad debts.





Item
4T. Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





Our Chief
Executive Officer and Principal Financial Officer, William E. Prince, has
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this Report.  Based on that
evaluation, Mr. Prince concluded that our disclosure controls and procedures are
effective in timely alerting him to material information relating to us
(including our consolidated subsidiaries) required to be included in our
periodic SEC filings and in ensuring that information required to be disclosed
by us in the reports that we file or submit under the Act is accumulated and
communicated to our management, including our principal executive and principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.










Changes
in Internal Control Over Financial Reporting





There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





PART
II – OTHER INFORMATION





Item
1. Legal Proceedings.





We are not a party to any material
legal proceedings.





Item
1A. Risk Factors.





FACTORS
THAT MAY AFFECT OUR RESULTS OF OPERATIONS





We
are required to make accounting estimates and judgments in preparing our
consolidated financial statements.





In preparing our consolidated financial
statements in accordance with accounting principles generally accepted in the
United States, we make certain estimates and assumptions that affect the
accounting for and recognition of assets, liabilities, revenues and
expenses.  These estimates and assumptions must be made because
certain information that is used in the preparation of our consolidated
financial statements is dependent on future events, or cannot be calculated with
a high degree of precision from data available.  In some cases, these
estimates are particularly difficult to determine and we must exercise
significant judgment.  The estimates and the assumptions having the
greatest amount of uncertainty, subjectivity and complexity are related to our
accounting for bad debts, returns and allowances, warranty and repair costs,
derivatives, and asset impairments.  Actual results could differ
materially from the estimates and assumptions that we use, which could have a
material adverse effect on our financial condition and results of
operations.





Our
auditor’s report reflects the fact that without realization of additional
capital, it would be unlikely for us to continue as a going
concern.





As a
result of our deficiency in working capital at December 31, 2009 and June 30,
2010, our auditors have included a paragraph in their report regarding
substantial doubt about our ability to continue as a going
concern.  Our plans in this regard are to seek additional funding
through sales-generated revenue, future equity private placements with
traditional financing firms and/or with an industry partner, or debt
facilities.  Our most critical tool in addressing deficiencies in
working capital while we transition to profitability will continue to be our
ability to manage cash flow.  Our goal is to reduce the need for debt
or equity financing, and trend toward operating from revenue from the sales of
our equipment and receipt of technology fees.





We
have minimal operating history, which raises concern as to our ability to
successfully develop profitable business operations.





We have a
limited operating history.  However, our management team has extensive
experience in project development and managing corporate assets.  A
highly successful professional who brings more than three decades of business
development experience to us from the environmental engineering industry heads
our marketing and sales department.  The Company’s engineering
department is headed by a former member of the military, who has expertise that
centers on the primary mechanical and electrical aspects of our
technologies.  Our prospects must be considered in light of the risks,
expenses and difficulties frequently encountered in establishing a business in
our intended industries.  Outside of the high levels of expertise
noted above and our concentrated effort to be the leading provider in our
industries, there is nothing at this time on which to base an assumption that
our business operations will prove to be successful or that we will ever be able
to operate profitably.










Our
future operating results will depend upon many factors, including:





·
            The
      continuation of our efforts to raise adequate working capital through
      equity investment, traditional financing, and the generation of sales
      revenues;


·
            The
      continued success of lab and field testing that supports the development
      of our EcaFlo® technology product lines;


·
            Demand
      for our EcaFlo® equipment and solutions;


·
            The
      level and intensity of our competition;


·
            Our
      ability to maintain key management and technical support staff, and to
      attract more employees with similar characteristics;
and


·
            The
      continuation of our efforts to efficiently develop products to
      commercialize while maintaining quality and controlling
    costs.





To
achieve profitable operations, we must successfully act on the factors stated
above, along with continually developing ways to enhance our production
efforts.





We are subject to significant competition from large,
well-funded companies.





The
industries we intend to compete in are characterized by intense competition and
rapid and significant technological advancements.  Many companies,
research institutions and universities are working in a number of areas similar
to our primary fields of interest to develop new products, some of which may be
similar and/or competitive to our products.  Furthermore, many
companies are engaged in the development of water “purifying” products which may
be similar and/or competitive to our products and technology.  Most of
the companies with which we compete have substantially greater financial,
technical, manufacturing, marketing, distribution and other resources than
us.





We
are highly dependent on William E. Prince, our Chief Executive Officer,
President and Chairman, and other key employees.  The loss of Mr.
Prince or those employees, upon whose knowledge, leadership and technical
expertise we rely, would harm our ability to execute our business
plan.





Our
success depends heavily upon the continued contributions of William E. Prince,
whose knowledge, leadership and technical expertise would be difficult to
replace, and on our ability to retain and attract technical and professional
staff.  If we were to lose Mr. Prince’s services, our ability to
execute our business plan would be harmed and we may be forced to cease
operations until such time as we could hire a suitable replacement for
him.  We also have other key employees who manage our operations and
perform critical engineering and design functions, as well as direct the overall
marketing and sales of our products.  If we were to lose their
services, senior management would be required to expend time and energy to
replace and train their replacements.  To the extent that we are
smaller than our competitors and have fewer resources, we may not be able to
attract the sufficient number and quality of staff.










Potential
issuance of additional common stock could dilute existing
stockholders.





We are
authorized to issue up to 200,000,000 shares of common stock.  To the
extent of such authorization, our board of directors has the ability, without
seeking stockholder approval, to issue additional shares of common stock in the
future for such consideration as the board may consider
sufficient.  We may seek additional equity financing, which if sought
or obtained may result in additional shares of our common stock being
issued.  The issuance of additional common stock in the future will
reduce the proportionate ownership and voting power of the common stock held by
our existing stockholders.





Because
our common stock is deemed a low-priced “Penny” stock, an investment in our
common stock should be considered high risk and subject to marketability
restrictions.





Since our
common stock is a penny stock, as defined in Rule 3a51-1 under the Securities
Exchange Act, it will be more difficult for investors to liquidate their
investment even if and when a market develops for the common
stock.  Until the trading price of the common stock rises above $5.00
per share, if ever, trading in the common stock is subject to the penny stock
rules of the Securities Exchange Act specified in rules 15g-1 through
15g-10.  Those rules require broker-dealers, before effecting
transactions in any penny stock, to:





·
              Deliver
      to the customer, and obtain a written receipt for, a disclosure
      document;
 ·
              Disclose
      certain price information about the
stock;
 ·
              Disclose
      the amount of compensation received by the broker-dealer or any associated
      person of the broker-dealer;
 ·
              Send
      monthly statements to customers with market and price information about
      the penny stock; and
 ·
              In
      some circumstances, approve the purchaser’s account under certain
      standards and deliver written statements to the customer with information
      specified in the rules.





Consequently,
the penny stock rules may restrict the ability or willingness of broker-dealers
to sell the common stock and may affect the ability of holders to sell their
common stock in the secondary market and the price at which such holders can
sell any such securities.  These additional procedures could also
limit our ability to raise additional capital in the future.





Our
stock is thinly traded; as a result, investors may be unable to sell at or near
ask prices or at all if they need to liquidate their shares.





The
shares of our common stock have historically been thinly-traded on the OTC
Bulletin Board, meaning that the number of persons interested in purchasing our
common shares at or near ask prices at any given time may be relatively small or
non-existent.  This situation is attributable to a number of factors,
including the fact that we are a small company which is relatively unknown to
stock analysts, stock brokers, institutional investors and others in the
investment community that generate or influence sales volume, and that even if
we came to the attention of such persons, they tend to be risk-averse and would
be reluctant to follow an unproven company such as ours or purchase or recommend
the purchase of our shares until such time as we became more seasoned and
viable.  As a consequence, there may be periods of several days or
more when trading activity in our shares is minimal or non-existent, as compared
to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share
price.  We cannot give any assurance that a broader or more active
public trading market for our common shares will develop or be sustained, or
that current trading levels will be sustained.  Due to these
conditions, we can give investors no assurance that they will be able to sell
their shares at or near ask prices or at all if they need money or otherwise
desire to liquidate their shares.










Our
internal controls may be inadequate, which could cause our financial reporting
to be unreliable and lead to misinformation being disseminated to the
public.




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  As defined in Exchange Act Rule
13a-15(f), internal control over financial reporting is a process designed by,
or under the supervision of, the principal executive and principal financial
officer and effected by the board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that: (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of our
assets; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that our receipts and expenditures
are being made only in accordance with authorizations of management of the
Company, and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.




We have a
limited number of personnel that are required to perform various roles and
duties as well as be responsible for monitoring and ensuring compliance with our
internal control procedures.  As a result, our internal controls may
be inadequate or ineffective, which could cause our financial reporting to be
unreliable and lead to misinformation being disseminated to the
public.  Investors relying upon this misinformation may make an
uninformed investment decision.





If
we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board, which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.





Companies
trading on the OTC Bulletin Board, such as us, generally must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13, in order to maintain price
quotation privileges on the OTC Bulletin Board.  More specifically,
the Financial Industry Regulatory Authority (“FINRA”) has enacted Rule 6530,
which determines eligibility of issuers quoted on the OTC Bulletin Board by
requiring an issuer to be current in its filings with the
Commission.  Pursuant to Rule 6530(e), if we file our reports late
with the Commission three times in a two-year period or our securities are
removed from the OTC Bulletin Board for failure to timely file twice in a
two-year period, then we will be ineligible for quotation on the OTC Bulletin
Board.  As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market.  As of the date of this filing, we have not had any
late filings reported by FINRA within the last two years.










Item 2. Recent Sales of Unregistered Securities





Stock
Issuances Pursuant to Convertible Notes and Debenture Agreements





On April
15, 2010, we issued 128,000 shares of our restricted common stock to certain
debenture holders pursuant to their conversion of $32,000 of principal amounts
due under their debenture agreements, at a conversion rate of $0.25 per share,
on March 1, 2010.





We
believe that the issuance of the above shares is exempt from the registration
and prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) and Regulation D Rule 506.  The recipients of the shares
were afforded an opportunity for effective access to files and records of the
Company that contained the relevant information needed to make their investment
decisions, including the financial statements and 34 Act reports.  We
reasonably believed that the recipients, immediately prior to their conversion
of the notes, had such knowledge and experience in our financial and business
matters that they were capable of evaluating the merits and risks of their
investments.  The recipients had the opportunity to speak with our
management on several occasions prior to their investment
decisions.





Stock
Issuances Pursuant to Consulting Agreements





On April
26, 2010, we issued 200,000 shares of our restricted common stock to 3CD
Consulting, LLC, pursuant to the receipt of $200, as per the terms of our April
1, 2010 consulting agreement which allows for the purchase of the 200,000 shares
at a price of $0.001 per share.





We
believe that the issuance of the above shares is exempt from the registration
and prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) and Regulation D Rule 506.  The recipient of the shares
was afforded an opportunity for effective access to files and records of the
Company that contained the relevant information needed to make their investment
decision, including the financial statements and 34 Act reports.  We
reasonably believed that the recipient, immediately prior to the issuance of the
shares, had such knowledge and experience in our financial and business matters
that they were capable of evaluating the merits and risks of their
investment.  The recipient had the opportunity to speak with our
management on several occasions prior to their investment decision.





Stock
Issuances Pursuant to the Exercise of Options and Warrants





On April
7, 2010, a warrant holder exercised 68,478 warrants through a cashless exercise
by tendering to us its warrant to purchase 150,000 shares, thereby using the
81,522 remaining warrant shares to satisfy the exercise price.  The
68,478 shares were issued on April 26, 2010.





On April
8, 2010, a warrant holder exercised 200,000 warrants at a price of $0.05 per
share for a total purchase price of $10,000, all of which was paid in
cash.  The 200,000 shares were issued on April 26, 2010.










On April
12, 2010, a warrant holder exercised 530,000 warrants at a price of $0.10 per
share for a total purchase price of $53,000, all of which was paid in
cash.  The 530,000 shares were issued on April 15, 2010.





On April
15, 2010, a warrant holder exercised 500,000 warrants at a price of $0.10 per
share for a total purchase price of $50,000.  The 500,000 shares were
issued on April 26, 2010.





On April
30, 2010, a warrant holder exercised 500,000 warrants at a price of $0.10 per
share for a total purchase price of $50,000, all of which was paid in
cash.  The 500,000 shares were issued on May 12, 2010.





On May
12, 2010, a warrant holder exercised 200,000 warrants at a price of $0.10 per
share for a total purchase price of $20,000, all of which was paid in
cash.  The 200,000 shares were issued on May 17,
2010.





On May
28, 2010, a warrant holder exercised 140,000 warrants at a price of $0.10 per
share for a total purchase price of $14,000, all of which was paid in
cash.  The 140,000 shares were issued on June 21,
2010.





On June
7, 2010, an option holder exercised 15,000 options at a price of $0.11 per share
for a total purchase price of $1,650, all of which was paid in
cash.  The 15,000 shares were issued on June 10, 2010.





We
believe that the issuance of the above shares is exempt from the registration
and prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) and Regulation D Rule 506.  The recipients of the shares
were afforded an opportunity for effective access to files and records of the
Company that contained the relevant information needed to make their investment
decisions, including the financial statements and 34 Act reports.  We
reasonably believed that the recipients, immediately prior to the issuance of
the shares, had such knowledge and experience in our financial and business
matters that they were capable of evaluating the merits and risks of their
investments.  The recipients had the opportunity to speak with our
management on several occasions prior to their investment
decisions.





Warrant
Issuances





On April
1, 2010, we issued 400,000 warrants to purchase shares of our restricted common
stock to 3CD Consulting, LLC pursuant to its consulting
agreement.  The warrants are exercisable at $0.30 per share and expire
on December 31, 2011.





On April
12, 2010, pursuant to a promissory note, we issued 150,000 warrants to purchase
shares of our restricted common stock.  The warrants are exercisable
at $0.60 per share through December 31, 2010, or for $1.00 per share from
January 1, 2011 through June 30, 2011.





On April
16, 2010, in connection with the sale of four units of an 8% debenture
instrument, we sold 200,000 warrants to purchase shares of our restricted common
stock for $2,000.  The warrants are exercisable at $0.75 per share
through December 31, 2010, or for $1.20 per share from January 1, 2011 through
December 31, 2011.










On April
16, 2010, in connection with the sale of one unit of an 8% debenture instrument,
we sold 50,000 warrants to purchase shares of our restricted common stock for
$500.  The warrants are exercisable at $0.75 per share through
December 31, 2011.





On June
17, 2010, we issued 100,000 warrants to purchase shares of our restricted common
stock for consideration of $0.005 per warrant, pursuant to a consulting
agreement.  The warrants are exercisable at $1.00 per share and expire
on December 31, 2011.





We
believe that the issuance of the above warrants is exempt from the registration
and prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) and Regulation D Rule 506.  The recipients of the
warrants were afforded an opportunity for effective access to files and records
of the Company that contained the relevant information needed to make their
investment decisions, including the financial statements and 34 Act
reports.  We reasonably believed that the recipients, immediately
prior to the issuance of the warrants, had such knowledge and experience in our
financial and business matters that they were capable of evaluating the merits
and risks of their investments.  The recipients had the opportunity to
speak with our management on several occasions prior to their investment
decisions.





Subsequent
Issuances





Warrant
Issuances





On July
12, 2010, we issued 400,000 warrants to purchase shares of our restricted common
stock for consideration of $0.005 per warrant, pursuant to a consulting
agreement.  200,000 of the warrants are exercisable at $0.50 per share
and the remaining 200,000 warrants are exercisable for $1.00 per share, all
expiring on December 31, 2011.





On July
16, 2010, we issued 300,000 warrants to purchase shares of our restricted common
stock for consideration of $0.005 per warrant, pursuant to a consulting
agreement.  The warrants are exercisable at $0.50 per share and expire
on December 31, 2011.





On July
23, 2010, we issued 270,000 warrants to purchase restricted shares of our common
stock at $0.10 per share.  These warrants were issued to correct an
administrative error associated with a loan agreement which was executed in
2009, and expire on December 31, 2011.





On August
5, 2010, we issued 100,000 warrants to purchase shares of our restricted common
stock for consideration of $0.005 per warrant, pursuant to a consulting
agreement.  The warrants are exercisable at $0.50 per share and expire
on December 31, 2011.





We
believe that the issuance of the above warrants is exempt from the registration
and prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) and Regulation D Rule 506.  The recipients of the
warrants were afforded an opportunity for effective access to files and records
of the Company that contained the relevant information needed to make their
investment decisions, including the financial statements and 34 Act
reports.  We reasonably believed that the recipients, immediately
prior to the issuance of the warrants, had such knowledge and experience in our
financial and business matters that they were capable of evaluating the merits
and risks of their investments.  The recipients had the opportunity to
speak with our management on several occasions prior to their investment
decisions.










Issuer
Purchases of Equity Securities





The Company did not repurchase any of
its equity securities during the quarter ended June 30, 2010.





Item
5. Other Information.





None.









Item
6. Exhibits.





Exhibits





Incorporated
      by referenceExhibit
              number
            
            Exhibit
      description
            
            Filed
              herewith
            
            Form
            
            Period
              ending
            
            Exhibit
              No.
            
            Filing
              date2(a)
            
            Agreement
      and Plan of Merger between Coronado Explorations Ltd and Naturol,
      Inc.
            
            
            
            8-K
            
            
            
            2(a)
            
            10/25/012(b)
            
            Amendment
      No. 1 to the Agreement and Plan of Merger between Coronado Explorations
      Ltd and Naturol, Inc.
            
            
            
            8-K
            
            
            
            2(b)
            
            1/25/022(c)
            
            Agreement
      and Plan of Merger and Reincorporation
            
            
            
            8-K
            
            
            
            2(c)
            
            3/10/083(i)(a)
            
            Certificate
      of Incorporation of Coronado Explorations Ltd. – Dated February 2,
      1999
            
            
            
            10SB12G
            
            
            
            2(a)
            
            6/9/993(i)(b)
            
            Amended
      and Restated Articles of Incorporation of Coronado Explorations Ltd. –
      Dated May 20, 1999
            
            
            
            10SB12G
            
            
            
            2(b)
            
            6/9/993(i)(c)
            
            Certificate
      of Amendment of Certificate of Incorporation of Coronado Explorations Ltd.
      – Dated October 5, 2000
            
            
            
            10-KSB
            
            1/31/02
            
            3(i)(c)
            
            4/30/023(i)(d)
            
            Articles
      of Incorporation of Naturol, Inc. – Dated June 9, 2001
            
            
            
            10-KSB
            
            1/31/02
            
            3(i)(d)
            
            4/30/023(i)(e)
            
            Certificate
      of Amendment to Articles of Incorporation of I.E.T., Inc.
            
            
            
            10-QSB
            
            6/30/04
            
            3
            
            8/23/043(i)(f)
            
            Certificate
      of Amendment of Certificate of Incorporation of Naturol Holdings Ltd. –
      Dated May 5, 2004
            
            
            
            10-QSB
            
            3/31/04
            
            3(i)
            
            5/14/043(i)(g)
            
            Certificate
      of Merger between Coronado Subsidiary Corp. and Naturol, Inc. – Dated
      January 14, 2001
            
            
            
            8-K
            
            
            
            3(i)(g)
            
            1/25/023(i)(h)
            
            Articles
      of Incorporation of Integrated Environmental Technologies, Ltd. – Dated
      January 11, 2008
            
            
            
            8-K
            
            
            
            3(i)(h)
            
            3/10/08









Incorporated
      by referenceExhibit
              number
            
            Exhibit
      description
            
            Filed
              herewith
            
            Form
            
            Period
              ending
            
            Exhibit
              No.
            
            Filing
              date3(i)(i)
            
            Articles
      of Merger of Integrated Environmental Technologies, Ltd., Nevada
      corporation and Integrated Environmental Technologies, Ltd., Delaware
      corporation – Dated February 15, 2008 (Nevada)
            
            
            
            8-K
            
            
            
            3(i)(j)
            
            3/10/083(i)(j)
            
            Certificate
      of Merger of Integrated Environmental Technologies, Ltd., Nevada
      corporation and Integrated Environmental Technologies, Ltd., Delaware
      corporation – Dated February 18, 2008 (Delaware)
            
            
            
            8-K
            
            
            
            3(i)(j)
            
            3/10/083(ii)(a)
            
            Bylaws
      of Coronado Explorations Ltd. – Dated February 9, 2001
            
            
            
            8-K
            
            
            
            3(ii)(e)
            
            1/25/023(ii)(b)
            
            Bylaws
      of Naturol, Inc. – Dated June 9, 2001
            
            
            
            10-KSB
            
            1/31/02
            
            3(ii)(f)
            
            4/30/023(ii)(c)
            
            Bylaws
      of Integrated Environmental Technologies, Ltd., a Nevada corporation –
      Dated January 11, 2008
            
            
            
            8-K
            
            
            
            3(ii)(c)
            
            3/10/0810.12
            
            Employment
      Agreement of William E. Prince, dated January 3, 2005.
            
            
            
            8-K
            
            
            
            10.4
            
            1/07/0510.13
            
            Employment
      Agreement of Marion Sofield – January 3, 2005
            
            
            
            8-K
            
            
            
            10.5
            
            1/07/0510.14
            
            Addendum
      to Marion Sofield’s Employment Agreement – Dated February 28,
      2005
            
            
            
            10-KSB
            
            12/31/04
            
            10.6
            
            3/30/0510.18
            
            Stock
      Acquisition Agreement dated June 20, 2007
            
            
            
            8-K
            
            
            
            10.1
            
            8/21/0710.19
            
            Exclusive
      License and Distribution Agreement dated June 20, 2007
            
            
            
            8-K
            
            
            
            10.2
            
            8/21/0731
            
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act
            
            X32
            
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act
            
            X











SIGNATURES





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





INTEGRATED
      ENVIRONMENTAL TECHNOLOGIES, LTD. (Registrant)By:
              /s/ William E. PrinceWilliam
      E. Prince, Chief Executive Officerand Principal
      Financial Officer (on behalf of theregistrant and as Principal
      Accounting Officer)





Date:  August
13, 2010