UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-Q/A
 Amendment
No. 1
 
 x  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934




For
the quarterly period ended June 30,
2008


 ̈  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 Street
 Little
River, South Carolina 29566
 
 
 (843)
390-2500
 
 
 Copies of Communications to:
 Stoecklein
Law Group
 Emerald
Plaza
 402
West Broadway
 Suite
690
 San
Diego, CA 92101
 (619)
704-1310
 Fax
(619) 704-0556
 
 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 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 July 21,
2008, was 73,100,467 shares.
  
  
  *EXPLANATORY
NOTE – The Registrant is amending this Form 10-Q to revise certain language in
Item 4 Controls and Procedures and to revise certain language in Exhibit 31. No
changes were made to the financial statements or other disclosures in the Form
10-Q for the quarter ended June 30, 2008.
 
 PART
I – FINANCIAL INFORMATION
 
 Item
1. Financial Statements.
 
 Integrated
Environmental Technologies, Ltd.
 Condensed
Consolidated Balance Sheet
 
 June
      30,
              
              
              December
      31,2008
              
              
              2007Assets
              
              Unaudited
              
              
              AuditedCurrent
      Assets:Cash
              
              $
              24,956
              
              
              $
              72,334Accounts
      receivable
              
              
              52,367
              
              
              
              49,184Inventory
              
              
              292,596
              
              
              
              309,634Prepaid
      expenses
              
              
              10,942
              
              
              
              5,942Total
      current assets
              
              
              380,861
              
              
              
              437,094Equipment
              
              
              13,045
              
              
              
              13,045Accumulated
      depreciation
              
              
              (9,692
              )
              
              
              (8,552
              )Total
      building and equipment
              
              
              3,353
              
              
              
              4,493$
              384,214
              
              
              $
              441,587Liabilities
      and Shareholders' Equity (Deficit)Current
      liabilities:Accounts
      payable
              
              $
              116,220
              
              
              $
              91,817Accrued
      expenses
              
              
              31,054
              
              
              
              96,374Notes
      payable
              
              
              148,300
              
              
              
              98,300Convertible
      notes
              
              
              382,044
              
              
              
              -Total
      current liabilities
              
              
              677,618
              
              
              
              286,491Convertible
      notes
              
              
              -
              
              
              
              288,306Shareholders'
      Equity (Deficit)Common
      stock 200,000,000 shares authorizedpar
      value $.001, 73,070,467 and 68,070,467 shares issuedand
      outstanding at June 30, 2008 and December 31, 2007
              
              
              73,070
              
              
              
              68,010Stock
      bought not issued, 60,000 and 120,000 sharesat
      June 30, 2008 and December 31, 2007
              
              
              60
              
              
              
              120Paid-in
      capital
              
              
              7,311,414
              
              
              
              6,783,315Retained
      earnings (deficit)
              
              
              (7,677,948
              )
              
              
              (6,984,655
              )Total
      shareholders' equity (deficit)
              
              
              (293,404
              )
              
              
              (133,210
              )Total
      liabilities and shareholders' equity (deficit)
              
              $
              384,214
              
              
              $
              441,587
 
 See
notes to condensed consolidated financial statements
  2
  Integrated
Environmental Technologies, Ltd.
 Condensed
Consolidated Statement of Operations
 Unaudited
 
 Six
      Months Ended June 30,
              
              
              Three
      Months Ended June 30,2008
              
              
              2007
              
              
              2008
              
              
              2007Sales
              
              $
              244,167
              
              
              $
              195,572
              
              
              $
              1,347
              
              
              $
              118,289Cost
      of sales
              
              
              85,819
              
              
              
              95,372
              
              
              
              1,086
              
              
              
              45,801Gross
      profit
              
              
              158,348
              
              
              
              100,200
              
              
              
              261
              
              
              
              72,488Professional
      and administrative fees
              
              
              155,147
              
              
              
              454,048
              
              
              
              73,706
              
              
              
              320,620Salary
              
              
              319,386
              
              
              
              388,695
              
              
              
              125,174
              
              
              
              153,387Depreciation
      and amortization
              
              
              1,140
              
              
              
              1,140
              
              
              
              570
              
              
              
              570Office
      & miscellaneous expense
              
              
              181,689
              
              
              
              228,283
              
              
              
              108,073
              
              
              
              92,061Bad
      debt expense
              
              
              37,746
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
      operating expenses
              
              
              695,108
              
              
              
              1,072,166
              
              
              
              307,523
              
              
              
              566,638Loss
      from operations
              
              
              (536,760
              )
              
              
              (971,966
              )
              
              
              (307,262
              )
              
              
              (494,150
              )Other
      income (expense):Finance
      fees
              
              
              (26,740
              )
              
              
              -
              
              
              
              (21,740
              )
              
              
              -Interest
      expense
              
              
              (129,794
              )
              
              
              (252,737
              )
              
              
              (67,510
              )
              
              
              (213,172
              )Total
      other income (expense)
              
              
              (156,534
              )
              
              
              (252,737
              )
              
              
              (89,250
              )
              
              
              (213,172
              )Net
      loss
              
              $
              (693,294
              )
              
              $
              (1,224,703
              )
              
              $
              (396,512
              )
              
              $
              (707,322
              )Weighted
      average shares outstanding
              
              
              69,311,786
              
              
              
              51,918,350
              
              
              
              70,493,104
              
              
              
              50,474,665Net
      loss per share basic and diluted
              
              $
              (0.01
              )
              
              $
              (0.02
              )
              
              $
              (0.01
              )
              
              $
              (0.01
              )
 
 See
notes to condensed consolidated financial statements
  3
  Integrated
Environmental Technologies, Ltd.
 Condensed
Consolidated Statement of Cash Flows
 Unaudited
 
 Six
      Months EndedJune
      30,2008
              
              
              2007Cash
      flows from operating activities:Net
      loss
              
              $
              (693,294
              )
              
              $
              (1,224,703
              )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
              
              
              1,140
              
              
              
              1,140Accretion
      of interest on convertible notes
              
              
              93,738
              
              
              
              41,495Stock,
      options and warrants issued for services
              
              
              33,098
              
              
              
              468,790Beneficial
      Conversion
              
              
              -
              
              
              
              78,600Changes
      in operating assets and liabilities:Cash,
      restricted
              
              
              -
              
              
              
              50,000Accounts
      receivable
              
              
              (3,183
              )
              
              
              (108,638
              )Notes
      Receivable
              
              
              -
              
              
              
              (20,000
              )Inventory
              
              
              17,038
              
              
              
              (94,321
              )Deposits
      and prepaids
              
              
              (5,000
              )
              
              
              -Accounts
      payable
              
              
              24,403
              
              
              
              15,932Accrued
      expenses
              
              
              (65,318
              )
              
              
              (14,465
              )Cash
      used in operating activities
              
              
              (597,378
              )
              
              
              (806,170
              )Cash
      flows from financing activities:Proceeds
      from notes payable
              
              
              50,000
              
              
              
              14,317Proceeds
      from exercise of warrants
              
              
              -
              
              
              
              237,500Proceeds
      from sale of convertible notes
              
              
              -
              
              
              
              114,438Proceeds
      from the sale of common stock
              
              
              500,000
              
              
              
              724,562Cash
      provided by financing activities
              
              
              550,000
              
              
              
              1,090,817Decrease
      in cash
              
              
              (47,378
              )
              
              
              284,647Cash
      beginning of period
              
              
              72,334
              
              
              
              22,187Cash
      end of period
              
              $
              24,956
              
              
              $
              306,834Supplemental
      disclosure of cash flow information:Cash
      paid for interest
              
              $
              37,012
              
              
              $
              34,214Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -Non-cash
      financing activities:Stock
      and warrants issued for services
              
              $
              16,740
              
              
              $
              482,941
 
 See
notes to condensed consolidated financial statements
  4
 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,
2007.
 
 The
financial statements include our 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 affects 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, 2008:
 
 Note
      payable, unsecured, with a flat interest of $2,500 (see Note
      7).
              
              $
              50,000Note
      payable, unsecured, bearing interest at a rate of 10% per annum, unable to
      locate lender.
              
              
              50,000Note
      payable, unsecured, non-interest bearing, unable to locate
      lender
              
              
              25,000Notes
      payable, unsecured, bearing interest at rate of 19.99% per annum, with
      monthly principal and interest payments (see Note 7).
              
              
              23,300$
              148,300
 
 Note
4 - Convertible notes payable
 
 As
of June 30, 2008, we had convertible loans totaling $501,000, accruing interest
at a rate of 10% per annum payable semi-annually and maturing on January 2,
2009.  We accrete interest between the date of issuance of the units
and the maturity date for the convertible notes to reflect the difference
between what was received for the notes and what will be paid at
maturity.  As of the six month period ended June 30, 2008 and 2007, we
had expensed interest of $93,738 and $41,495 respectively.  At June
30, 2008 we had $118,956 of un-accreted interest which will be expensed in
fiscal 2008.
  5
 Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements
  On
April 23, 2008, we entered into a Securities Purchase Agreement with AD Capital,
LLC, wherein we agreed to sell and AD Capital agreed to purchase up to an
aggregate of $150,000 in principal amount of debentures.  Pursuant to
the agreement, we issued 150,000 warrants exercisable at $0.05 per share,
expiring in five years (4/23/13) and 150,000 warrants exercisable at $0.25 per
share, expiring in five years (4/23/13).  The warrants and $10,000
were issued to AD Capital as payment in full for fees associated with the
convertible debenture in the amount of $150,000.  The convertible
debenture was convertible by AD Capital only in the event of default by the
Company in repayment of the $150,000 on or before June 25, 2008, plus 10%
interest.  On May 5, 2008, we repaid the $150,000 to AD Capital;
therefore the convertible debenture is null and void.  AD Capital
retains the 150,000 $0.05 warrants and the 150,000 $0.25 warrants as
agreed.  The value of the warrants was calculated as $16,740 and this
was recorded as a loan fee expense.
 
 Note
5 – Common stock
 
 On
June 20, 2007, the Company entered into a Stock Acquisition Agreement with
Benchmark Performance Group, Inc. (“Benchmark”).  Pursuant to the
agreement, Benchmark agreed to purchase 35,000,000 shares of common stock for a
total purchase price of $3,500,000 or $0.10 per share.  On June 27,
2007, 5,000,000 shares were issued pursuant to the agreement for cash proceeds
of $188,000 and the conversion of $312,000 that was a deposit for equipment to
be purchased, for a total of $500,000.  On October 31, 2007, an
additional 5,000,000 shares were issued pursuant to the agreement.  On
May 19, 2008, concurrent with the receipt by us of $500,000, the Company issued
an additional 5,000,000 shares of our common stock, resulting in total proceeds
received to date of $1,500,000.  The remaining 20,000,000 shares will
be issued pursuant to the agreement under the terms as follows:  (1)
Benchmark will issue two equal payments in the amount of $500,000 on or before
October 31, 2008 and April 30, 2009.  Upon receipt of each payment,
the Company will cause to be issued 5,000,000 shares of common
stock.  Upon issuance of each 10,000,000 shares, the Company will
initiate a registration of the shares; (2) on or before October 31, 2009,
Benchmark will issue final payment in the amount of $1,000,000.  Upon
receipt, the Company will cause to be issued 10,000,000 shares of common stock
and initiate a final registration for the remaining unregistered
shares.
 
 Pursuant
to the Agreement, Benchmark shall have the right to maintain an equity position
in the Company equal to the equity position it would own upon the issuance of
all shares due under the agreement.  If at any time during the
Anti-Dilution Period, the Company were to issue any shares of common stock which
would impair the equity position of Benchmark, then the Company shall issue a
warrant to purchase shares of common stock at an exercise price of $0.10 per
share, which would upon exercise, reinstate their equity
position.  The warrants will be exercisable at any time through
October 31, 2009.
 
 In
addition, Benchmark can acquire additional shares of common stock whereby the
purchase would give Benchmark 51% of the Company’s total outstanding
equity.  Benchmark will be able to purchase these additional shares at
any time through October 31, 2009, at an exercise price equal to the weighted
average per share price of common stock over the 22 trading days prior plus a
15% per share control premium to the date we receive written notice of their
desire to make this purchase.
  6
 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  1/1/07
              
              
              1,075,000
              
              
              $
              0.116
              
              
              
              5,204,000
              
              
              $
              0.25Granted
              
              
              -
              
              
              
              -
              
              
              
              300,000-
              
              
              
              0.25Cancelled
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Exercised
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Outstanding
      06/30/08
              
              
              1,075,000
              
              
              $
              0.116
              
              
              
              5,504,000
              
              
              $
              0.25
 
 Note
7 – Related-party transactions
 
 We
have consulting agreements with a shareholder and a Director requiring payments
of $2,500 per month for each.  As of June 30, we recorded $30,000 in
consulting fee expense.
 
 We
have employment agreements with two of our executives whereby we have agreed to
annual compensation in the amount of $240,000.  As of June 30, 2008,
the future minimum payments are as follows:
 
 Related-party
      compensation requirements2008
              
              $
              120,0002009
              
              
              240,0002010
              
              
              240,0002011
              
              
              240,000Total
              
              $
              840,000
 
 On
August 17, 2006, the Company received an unsecured loan of $25,000 from a
shareholder at an interest rate of 19.99% per annum.  As of June 30,
2008, the remaining principal balance of the note is $23,300.
 
 We
borrowed $16,000 on January 18, 2008 for working capital from an officer of the
company.  Interest on the loan was $1,000.  The loan and
interest were repaid on January 25, 2008.
 
 On
April 16, 2008, the Company entered into a loan agreement with a corporate
officer.  Pursuant to the loan agreement, the Company promised to
repay the principal amount of $9,000 plus a flat interest of
$500.  The loan and interest were repaid on May 13, 2008.
 
 On
June 18, 2008, we borrowed $50,000 from a shareholder.  Pursuant to
the loan agreement, the Company agreed to repay the principal and a flat
interest fee of $2,500 by July 5, 2008.  $30,000 was subsequently paid
toward this loan on July 16, 2008.
 
  7
 Integrated
Environmental Technologies, Ltd.
 Notes
to Condensed Consolidated Financial Statements
  Note
8 – Commitments and contingencies
 
 On
August 22, 2006, we entered into a supply agreement with Aquastel, Inc., wherein
Aquastel agreed to supply us with C-50 and C-100 cells on an exclusive basis in
the United States.  The term of the agreement is for 3 years,
terminating on August 22, 2009.  At the end of the term, the parties
will attempt to renegotiate in good faith to extend the agreement.
 
 On
June 20, 2007, in connection with the Stock Acquisition Agreement with
Benchmark, we entered into an Exclusive License and Distribution Agreement,
wherein we granted the exclusive, world-wide right, license and authority to
market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in
Oilfield Applications to Benchmark Energy Products.  The agreement
provides for special pricing of equipment to Benchmark and per gallon technology
fees, paid to IET on the EcaFlo® fluids sold by Benchmark, for a five-year
period consistent with the license period.
 
 Note
9 – Subsequent events
 
 On
July 15, 2008, we entered into a Promissory Note Agreement with The Morton
Fishman Revocable Trust.  Pursuant to the agreement, Mr. Fishman has
agreed to loan the Company $150,000 at an interest rate of 16% per annum, due on
or before August 27, 2008.  The Company agreed to pay administration
and legal fees of $12,000, which were deducted from the net proceeds of the
loan.  Further, we agreed to issue warrants to purchase up to 200,000
shares of our common stock at a strike price of $0.05 per share, which expire
July 15, 2010.  The note agreement allows for a one-time extension of
45 days for an additional fee of $5,000.
 
 On
July 18, 2008, we issued 30,000 previously authorized shares of common stock for
services.
 
 
 
  8
  FORWARD-LOOKING
STATEMENTS
 
 This document contains “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995.  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.
 
 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:
 
 o
              our
      current lack of working capital;
  o
              implementation
      of our business plan within the oil and gas industry with
      Benchmark;
  o
              increased
      competitive pressures from existing competitors and new
      entrants;
  o
              increases
      in interest rates or our cost of borrowing or a default under any material
      debt agreements;
  o
              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;
  o
              substantial
      dilution to our stockholders as the result of the issuance of our common
      stock in exchange for debt and/or equity financing, including additional
      shares to Benchmark;
  o
              potential
      change in control upon completion of the Benchmark
    agreements;
  o
              deterioration
      in general or regional economic
conditions;
  o
              adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;
  o
              changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;
  o
              loss
      of customers or sales weakness;
   9
  o
              excessive
      product failure and related warranty
expenses;
  o
              inability
      to achieve future sales levels or other operating
  results;
  o
              the
      unavailability of funds for capital expenditures and/or general working
      capital; and
  o
              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 “Item 1A. Risk Factors”
in this document and in our Annual Report on Form 10-K for the year ended
December 31, 2007.
 
 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 100%-owned subsidiary, IET, Inc., unless otherwise
expressly stated or the context otherwise requires.
 
 OVERVIEW
AND OUTLOOK
 
 Integrated
Environmental Technologies, Ltd. is a manufacturing company that designs and
builds equipment incorporating innovative technologies which are focused on the
enhancement of the environment and the health, safety, and well-being of current
and future generations.  Our EcaFlo® Division designs, manufactures,
markets, sells, and installs proprietary Electro-Chemical Activation (ECA)
equipment in the United States and throughout the world.  The
Essential Oils Division offers a cost-effective, safe, efficient and superior
method of obtaining bioactive compounds and oils from plants.
 
 We
evolved from a development-stage company to an income-generating original
equipment manufacturing company.  We have focused our attentions on
several critical issues:
 
 ·
              Raising
      equity capital;
 ·
              Developing
      our ability to construct EcaFlo®
equipment;
 ·
              Developing
      and enhancing our testing protocol with researchers at Coastal Carolina
      University, and independent companies
      and laboratories;
 ·
              Developing
      a relationship and entering into an agreement with
    Benchmark;
 ·
              Researching
      market application areas and identifying and establishing distributorship
      agreements;
 ·
              Continuing
      to develop and maintain relationships with university and independent
      laboratories for research assistance on EcaFlo® applications;
      and
 ·
              Furthering
      the process of building a brand identity and sales track record through
      the appearance at various trade and professional shows and
      conferences.
  10
  We
have incurred losses since inception.  For the six months ended June
30, 2008, we had a net loss of $693,294 as compared to a net loss of $1,224,703
for the six months ended June 30, 2007.  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 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 for oilfield operations
with our industry partner and licensee, Benchmark Energy Products, we anticipate
experiencing positive cash flows from operations in future
quarters.  Debt borrowings may be considered from time to time if
needed.
 
 On June 20, 2007, we executed a Stock
Acquisition Agreement with Benchmark Performance Group, Inc.
(“Benchmark”).  Pursuant to the Stock Acquisition Agreement, Benchmark
agreed to purchase 35,000,000 shares of our common stock for a total purchase
price of $3,500,000 (“Purchase Price”) or $0.10 per share.  The
purchase price will be paid in seven (7) installments over a period of 30
months.  As of June 30, 2008, four installments ($1,500,000) have been
paid.
 
 In connection with the Stock
Acquisition Agreement, we entered into an Exclusive License and Distribution
Agreement with Benchmark, wherein we granted the exclusive, world-wide right,
license and authority to market, sell and distribute for use in the manufacture
of fluids and solutions in Oilfield Applications to Benchmark.
 
 Results
of Operations for the Three Months Ended June 30, 2008 and 2007
 
 The
following table summarizes selected items from the statement of operations at
June 30, 2008 compared to June 30, 2007.
 
 SALES
AND COST OF GOODS SOLD:
 
 Three
      Months Ended
                June
      30,
              
              
              Increase
      (Decrease)2008
              
              
              2007
              
              
              $
              
              
              
              %Sales
              
              $
              1,347
              
              
              $
              118,289
              
              
              $
              (116,942
              )
              
              
              (98.9
              %)Cost
      of Goods Sold
              
              
              1,086
              
              
              
              45,801
              
              
              
              (44,715
              )
              
              
              (97.6
              %)Gross
      Profit
              
              
              261
              
              
              
              72,488
              
              
              
              (72,227
              )
              
              
              (99.6
              %)Gross
      Profit Percentage of Sales
              
              
              19
              %
              
              
              61
              %
              
              
              --
              
              
              
              (42
              %)
 
  11
  Sales
 
 Our
sales for the three months ended June 30, 2008 were $1,347 compared to sales of
$118,289 in the three months ended June 30, 2007.  This resulted in a
decrease in sales of $116,942, or 98.9%, from the same period a year
ago.  Sales of EcaFlo® equipment and solutions have been severely
impaired during the period of time that the U.S. Environmental Protection Agency
(EPA) has been studying, reviewing and making determinations about our product
and the requirement for an EPA product registration for “EcaFlo®
Anolyte.”  By law, we have been required to restrict our marketing
claims and to cause no distribution of our product to occur other than on-site
generation and usage.  In addition, U.S. Statutes have prohibited us
from making any public announcements regarding the registration process, or that
it was occurring.  As of July 14, 2008, as written in a comprehensive
letter to us from the Director of the EPA’s Antimicrobial Division, we have been
notified that the EPA has agreed to expedite the review of our product and that
the anticipated Agency completion date is August 18, 2008.  We fully
expect sales of our EcaFlo® equipment and solutions to expand rapidly upon final
receipt of our product registration number.  We know of no further
data required by the EPA to complete the product registration
process.  According to our oilfield distributor and industry partner,
Benchmark Energy Products, Benchmark continues to market “Excelyte”TM
(Benchmark’s product name for EcaFlo® Anolyte), to the oil and gas industry,but the industry, which is
resistant to change, continues to use several “old technology” biocides
developed during the past 30 years.  Benchmark has spent significant time
and resources educating the industry about the benefits of ExcelyteTM vs. the
older biocides.  Testing has been conducted to confirm that the
biocide most widely used in the industry today is ineffective with current well
treatment practices and industry attempts to utilize increasingly poorer quality
water.  Benchmark has engaged a highly regarded oil and gas industry
biotechnology laboratory as an independent “expert” to help Benchmark mount a
“turnaround” in industry thinking concerning the dynamic required for biocides
to be effective with current well stimulation practices.  The findings
reported by this laboratory have validated that ExcelyteTM outperforms all other
biocides for the oil and gas industry, with the single largest benefit for the
oil and gas industry being that ExcelyteTM is the first totally “green”
biocide.
 
 Cost
of goods sold / Gross profit percentage of sales
 
 Our cost of goods sold for the three
months ended June 30, 2008 was $1,086, a decrease of $44,715, or 97.6% from
$45,801 for the three months ended June 30, 2007.  The decrease in our
cost of goods sold is as a direct result of a lack of EcaFlo® equipment
sales.  We are continuing to update and upgrade our product line and
we closely monitor the cost of all of our products.  We believe the
cost of sales will increase slightly less as a percentage of sales when we have
additional sales.  Gross profit margins decreased by 42% from the
prior fiscal quarter due to a lack of EcaFlo® equipment sales, since our pricing
structure allows for more profit on equipment sales than on replacement parts
and laboratory testing supplies.
  12
  EXPENSES:
 
 Three
      Months Ended
                June
      30,
              
              
              Increase
      (Decrease)2008
              
              
              2007
              
              
              $
              
              
              
              %Expenses:Professional
      andAdministrative
      fees
              
              $
              73,706
              
              
              $
              320,620
              
              
              $
              (246,914
              )
              
              
              (77
              %)Salary
              
              
              125,174
              
              
              
              153,387
              
              
              
              (28,213
              )
              
              
              (18
              %)Depreciation
      and amortization
              
              
              570
              
              
              
              570
              
              
              
              -
              
              
              
              -Office
      and miscellaneous expense
              
              
              108,073
              
              
              
              92,061
              
              
              
              16,012
              
              
              
              17
              %Total
      operating expenses
              
              
              307,523
              
              
              
              566,638
              
              
              
              (259,115
              )
              
              
              (46
              %)(Loss)
      from operations
              
              
              (307,262
              )
              
              
              (494,150
              )
              
              
              (186,888
              )
              
              
              (38
              %)Other
      income (expense):Finance
      fees
              
              
              (21,740
              )
              
              
              -
              
              
              
              21,740
              
              
              
              -Interest
      expense
              
              
              (67,510
              )
              
              
              (213,172
              )
              
              
              (145,662
              )
              
              
              (68
              %)Total
      other income (expense)
              
              
              (89,250
              )
              
              
              (213,172
              )
              
              
              (123,922
              )
              
              
              (58
              %)Net
      (loss)
              
              $
              (396,512
              )
              
              $
              (707,322
              )
              
              $
              (310,810
              )
              
              
              (44
              %)
 
 Professional
and Administrative Fees
 
 Professional
and administrative fees for the three months ended June 30, 2008 were $73,706, a
decrease of $246,914, or 77%, from $320,620 for the three months ended June 30,
2007.  The decrease in professional and administrative fees was the
result of reducing costs associated with outside professional services and
consultants while maintaining strong levels of support to meet the company’s
developing business.  Whenever possible, we are trying to reduce
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 months
ended June 30, 2008 was $125,174, a decrease of $28,213, or 18%, from $153,387
for the three months ended June 30, 2007.  The decrease in salary
expenses was the result of decreasing hourly employee payroll expenses and
reducing our engineering staff, while accomplishing the production necessary for
meeting the company’s sales of equipment.  We expect salary expense to
increase in the future as the Company grows and as sales volume
increases.  We may need to continue issuing stock and stock options in
exchange for services and adequate personnel compensation.
 
  13
  Depreciation
and Amortization Expenses
 
 Depreciation
and amortization expenses for both of the three months ended June 30, 2008 and
2007 were $570.  At this point in time, we anticipate our depreciation
expenses to remain stable.
 
 Office
and Miscellaneous
 
 Office and miscellaneous expenses for
the three months ended June 30, 2008 were $108,073, an increase of $16,012, from
$92,061 for the three months ended June 30, 2007.  The increase in
office and miscellaneous expenses was as a result of an increase in costs
associated with expenses such as equipment rental and health insurance, as well
as replacing some out-of-date office equipment.
 
 (Loss)
from Operations
 
 The loss from operations for the three
months ended June 30, 2008 was $307,262, versus a loss from operations of
$494,150 for the three months ended June 30, 2007, a change in loss from
operations of $186,888.  The decrease in the loss from operations in
the second quarter of 2008 was the result of reducing payroll and inventory
expenses, and our ability to produce EcaFlo® equipment more
efficiently.
 
 Finance
Fees and Interest Expense
 
 Finance fees and interest expense for
the three months ended June 30, 2008 were $89,250, as compared to $213,172 for
the same period in 2007.  Our finance fees and interest expense in
2008 were lower because of a decrease in loans requiring interest
payments.
 
 Net
(Loss)
 
 Our
net loss for the three months ended June 30, 2008 was $396,512, a decrease of
$310,810, or 44%, from $707,322 for the three months ended June 30,
2007.  We continue to have a net loss and believe the loss will be
reduced and profitability will be attained in future quarters as the sales of
our products increase.
 
 Results
of Operations for the Six Months Ended June 30, 2008 and 2007
 
 The
following table summarizes selected items from the statement of operations at
June 30, 2008 compared to June 30, 2007.
 
  14
  SALES
AND COST OF GOODS SOLD:
 
 Six
      Months Ended
                June
      30,
              
              
              Increase
      (Decrease)2008
              
              
              2007
              
              
              $
              
              
              
              %Sales
              
              $
              244,167
              
              
              $
              195,572
              
              
              $
              48,595
              
              
              
              25
              %Cost
      of Goods Sold
              
              
              85,819
              
              
              
              95,372
              
              
              
              (9,553
              )
              
              
              (10
              %)Gross
      Profit
              
              
              158,348
              
              
              
              100,200
              
              
              
              58,148
              
              
              
              58
              %Gross
      Profit Percentage of Sales
              
              
              65
              %
              
              
              51
              %
              
              
              --
              
              
              
              14
              %
 
 Sales
 
 Our
sales for the six months ended June 30, 2008 were $244,167 compared to sales of
$195,572 in the six months ended June 30, 2007.  This resulted in an
increase in sales of $48,595, or 25%, from the same period a year
ago.  Sales of EcaFlo® equipment and solutions have been severely
impaired during the period of time that the U.S. Environmental Protection Agency
(EPA) has been studying, reviewing and making determinations about our product
and the requirement for an EPA product registration for “EcaFlo®
Anolyte.”  By law, we have been required to restrict our marketing
claims and to cause no distribution of our product to occur other than on-site
generation and usage.  In addition, U.S. Statutes have prohibited us
from making any public announcements regarding the registration process, or that
it was occurring.  As of July 14, 2008, as written in a comprehensive
letter to us from the Director of the EPA’s Antimicrobial Division, we have been
notified that the EPA has agreed to expedite the review of our product and that
the anticipated Agency completion date is August 18, 2008.  We fully
expect sales of our EcaFlo® equipment and solutions to expand rapidly upon final
receipt of our product registration number.  We know of no further
data required by the EPA to complete the product registration process.According to our
oilfield distributor and industry partner, Benchmark Energy Products, Benchmark
continues to market “Excelyte”TM (Benchmark’s product name for EcaFlo® Anolyte),
to the oil and gas industry,but the industry, which is resistant to change, continues to use several
“old technology” biocides developed during the past 30
years.  Benchmark has spent significant time and resources educating
the industry about the benefits of ExcelyteTM vs. the older
biocides.  Testing has been conducted to confirm that the biocide most
widely used in the industry today is ineffective with current well treatment
practices and industry attempts to utilize increasingly poorer quality
water.  Benchmark has engaged a highly regarded oil and gas industry
biotechnology laboratory as an independent “expert” to help Benchmark mount a
“turnaround” in industry thinking concerning the dynamic required for biocides
to be effective with current well stimulation practices.  The findings
reported by this laboratory have validated that ExcelyteTM outperforms all other
biocides for the oil and gas industry, with the single largest benefit for the
oil and gas industry being that ExcelyteTM is the first totally “green”
biocide.
 
  15
  Cost
of goods sold / Gross profit percentage of sales
 
 Our cost of goods sold for the six
months ended June 30, 2008 was $85,819, a decrease of $9,553, or 10%, from
$95,372 for the six months ended June 30, 2007.  Our cost of goods
sold was higher in 2007 due to our FEM-3 cell replacement program.  We
are continuing to update and upgrade our product line and we closely monitor the
cost of all of our products.  We believe the cost of sales will
increase slightly less as a percentage of sales when we have additional
sales.  Gross profit margins increased by 14% from the prior fiscal
quarter because of the product mix of our sales and the decreased need for
conversions associated with our FEM-3 cell replacement program.
 
 EXPENSES:
 
 Six
      Months Ended
                June
      30,
              
              
              Increase
      (Decrease)2008
              
              
              2007
              
              
              $
              
              
              
              %Expenses:Professional
      andAdministrative
      fees
              
              $
              155,147
              
              
              $
              454,048
              
              
              $
              (298,901
              )
              
              
              (66
              %)Salary
              
              
              319,386
              
              
              
              388,695
              
              
              
              (69,309
              )
              
              
              (18
              %)Depreciation
      and amortization
              
              
              1,140
              
              
              
              1,140
              
              
              
              -
              
              
              
              -Office
      and miscellaneous expense
              
              
              181,689
              
              
              
              228,283
              
              
              
              (46,594
              )
              
              
              (20
              %)Bad
      debt expense
              
              
              37,746
              
              
              
              -
              
              
              
              37,746
              
              
              
              -Total
      operating expenses
              
              
              695,108
              
              
              
              1,072,166
              
              
              
              (377,058
              )
              
              
              (35
              %)(Loss)
      from operations
              
              
              (536,760
              )
              
              
              (971,966
              )
              
              
              (435,206
              )
              
              
              (45
              %)Other
      income (expense):Finance
      fees
              
              
              (26,740
              )
              
              
              -
              
              
              
              26,740
              
              
              
              -Interest
      expense
              
              
              (129,794
              )
              
              
              (252,737
              )
              
              
              (122,943
              )
              
              
              (49
              %)Total
      other expense
              
              
              (156,534
              )
              
              
              (252,737
              )
              
              
              (96,203
              )
              
              
              (38
              %)Net
      (loss)
              
              $
              (693,294
              )
              
              $
              (1,224,703
              )
              
              $
              (531,409
              )
              
              
              (43
              %)
 
 Professional
and Administrative Fees
 
 Professional
and administrative fees for the six months ended June 30, 2008 were $155,147, a
decrease of $298,901, or 66%, from $454,048 for the six months ended June 30,
2007.  The decrease in professional and administrative fees was the
result of reducing costs associated with outside professional services and
consultants while maintaining strong levels of support to meet the company’s
developing business.  Whenever possible, we are trying to reduce
outside consultants, but we will still need some assistance for areas of our
business in which we do not have sufficient in-house expertise..
 
  16
  Salary
Expenses
 
 Salary expenses for the six months
ended June 30, 2008 was $319,386, a decrease of $69,309, or 18%, from $388,695
for the six months ended June 30, 2007.  The decrease in salary
expenses was the result of decreasing hourly employee payroll expenses and
reducing our engineering staff, while accomplishing the production necessary for
meeting the company’s sales of equipment.  We expect salary expense to
increase in the future as the Company grows and as sales volume
increases.  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 both of the six months ended June 30, 2008 and
2007 were $1,140.  At this point in time we anticipate our
depreciation expenses to remain stable.
 
 Office
and Miscellaneous
 
 Office and miscellaneous expenses for
the six months ended June 30, 2008 were $181,689, a decrease of $46,594, from
$228,283 for the six months ended June 30, 2007.  Office and
miscellaneous expenses were higher in 2007 due to some one-time equipment
purchases made during that period of time.
  Bad
Debt
 
 We
did not incur bad debt expense during the six months ended June 30, 2007 as
compared to $37,746 being expensed during the six months ended June 30,
2008.  We have historically had limited write-offs as the result of
bad debts.  It is our policy to evaluate our customers’
creditworthiness prior to the sale of our products.
 
 (Loss)
from Operations
 
 The loss from operations for the six
months ended June 30, 2008 was $536,760, versus a loss from operations of
$971,966 for the six months ended June 30, 2007, a change in loss from
operations of $435,206.  The decrease in the loss from operations in
the second quarter of 2008 was the result of an increase in sales and a decrease
in professional and administrative fees and salary expenses.
 
 Finance
Fees and Interest Expense
 
 Finance fees and interest expense for
the six months ended June 30, 2008 were $156,534 as compared to $252,737 for the
same period in 2007.  Our finance fees and interest expense in 2007
were high because of temporary working capital loans that had high interest
rates and fees.
 
  17
  Net
(Loss)
 
 Our
net loss for the six months ended June 30, 2008 was $693,294, a decrease of
$531,409, or 43%, from $1,224,703 for the six months ended June 30,
2007.  We continue to have a net loss and believe the loss will be
reduced and profitability will be attained in future quarters as the sales of
our products increase.
 
 Operation
Plan
 
 The
technology that drives our short-term and long-term plans is electro-chemical
activation (ECA), which is the center point of our EcaFlo®
technology.  Our plan of operation focuses on continuing the process
of commercialization of EcaFlo®equipment
and EcaFlo® solutions, known as anolyte and catholyte.
 
 Our direct attention continues to be
focused on providing our EcaFlo® devices to the markets at-hand:  oil
and gas industry, food safety and agricultural applications, storm-water
treatment, water and wastewater treatment, and other hard surface
sanitation opportunities.  In many cases, clinical and laboratory
testing and research have now moved to field trials by
end-users.  Anticipated positive results in field testing should
result in increased sales in future quarters.
 
 Liquidity
and Capital Resources
 
 The
following table summarizes total current assets, total current liabilities and
working capital at June 30, 2008 compared to December 31, 2007.
 
 June
      30,
              
              
              December
      31,
              
              
              Increase
      / (Decrease)2008
              
              
              2007
              
              
              $
              %Current
      Assets
              
              $
              380,861
              
              
              $
              437,094
              
              
              $
              (56,233
              )
              
              
              (13
              %)Current
      Liabilities
              
              
              677,618
              
              
              
              286,491
              
              
              
              (391,127
              )
              
              
              (137
              %)Working
      Capital (deficit)
              
              $
              (296,757
              )
              
              $
              150,603
              
              
              $
              447,360
              
              
              
              297
              %
 
 Liquidity
is a measure of a company’s ability to meet potential cash
requirements.  We have historically met our capital requirements
through the issuance of stock, by borrowings, and through sales-generated
revenue.  In the future, we anticipate we will be able to provide the
necessary liquidity we need by the revenues generated from the sales of our
products and the incremental equity investment, by contract from Benchmark
Performance Group, Inc.  We will continue to consider financing
opportunities with strategic industry partners outside of the oil and gas
industry.
 
  18
  As
of June 30, 2008, we continue to use traditional and/or debt financing, in
addition to sales-generated revenue, to provide the capital we need to run the
business.  In the future, we need 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.
 
 On
June 20, 2007, we entered into an investment agreement and contract with
Benchmark Performance Group, Inc.  The contract provides for an equity
investment of $3,500,000 over a period of 30 months and for technology fees paid
to IET per gallon of EcaFlo® fluids sold by Benchmark within the oil and gas
industry.  As, of June 30, 2008, we have received the fourth
installment of $500,000 for a total of $1,500,000 of the $3,500,000 equity
investment.
 
 Financing.  On
August 17, 2006, the Company received an unsecured loan of $25,000 from Robert
Lucas, at an interest rate of 19.99% per annum.  Pursuant to the note
agreement, the Company agreed to issue 100,000 shares of common stock as a loan
fee.  On April 3, 2007, the shares were issued.  As of June
30, 2008, the remaining principal balance of the note is $23,300.
 
 We borrowed $16,000 on January 18, 2008
for working capital from an officer of the company.  Interest on the
loan was $1,000.  The loan and interest were repaid on January 25,
2008.
 
 On
April 16, 2008, we entered into a loan agreement with an officer of the company
for the principal amount of $9,000.  In addition, we agreed to pay a
flat fee of $500 as interest consideration.  The principal and
interest were repaid in full on May 13, 2008.
 
 On April 23, 2008, we entered into a
Securities Purchase Agreement with AD Capital, LLC, wherein we agreed to sell
and AD Capital agreed to purchase up to an aggregate of $150,000 in principal
amount of debentures.  Pursuant to the agreement, we issued 150,000
warrants exercisable at $0.05 per share, expiring in five years (4/23/13) and
150,000 warrants exercisable at $0.25 per share, expiring in five years
(4/23/13).  The warrants and $10,000 were issued to AD Capital as
payment in full for fees associated with the convertible debenture in the amount
of $150,000.  The debenture was convertible by AD Capital only in the
event of default by the Company in repayment of the $150,000 on or before June
25, 2008.  On May 5, 2008, we repaid the $150,000 to AD Capital;
therefore the convertible debenture is null and void.  AD Capital
retains the warrants as agreed.
 
 On June 18, 2008, we entered into a
loan agreement with a stockholder of the Company for the principal amount of
$50,000.  Pursuant to the loan agreement, we agreed to repay the
principal amount plus a flat interest fee of $2,500 by July 5,
2008.  On July 16, 2008 and August 7, 2008, we paid $30,000 and
$12,500 toward the loan, respectively.
 
  19
  On July 15, 2008, we entered into a
promissory note with The Morton Fishman Revocable Trust for the principal amount
of $150,000.  In consideration for the loan, we agreed to pay The
Morton Fishman Revocable Trust, from the proceeds of the loan, $10,000 in
administration fees and $2,000 in legal fees associated with the
transaction.  In addition, we agreed to issue warrants to purchase
200,000 shares of our common stock, exercisable for $0.05 per share and expiring
2 years from issuance (on 7/15/10).  Pursuant to the promissory note,
we promised to pay The Morton Fishman Revocable Trust the principal sum of
$150,000 together with interest of 16% per annum on or before August 27,
2008.  The note may be extended for an additional 45 days from August
27, 2008 by notifying The Morton Fishman Revocable Trust in writing and paying
$5,000 and interest due through August 27, 2008.
 
 Satisfaction
of our cash obligations for the next 12 months.
 
 As
of June 30, 2008, our cash balance was $24,956.  Our plan for
satisfying our cash requirements for the next twelve months is through
sales-generated income, proceeds from our stock acquisition agreement with
Benchmark, additional sales of our common stock, third-party financing, and/or
traditional bank financing.  We intend to make appropriate plans to
insure sources of additional capital in the future to fund growth and expansion,
and may consider additional equity or debt financing or credit
facilities.
 
 Since
inception, we have financed cash flow requirements through debt financing and
the issuance of common stock for cash and services.  As we continue to
expand operational activities, we may continue to experience net negative cash
flows from operations, pending receipt of sales or development fees, and will be
required to obtain additional financing to fund operations through common stock
offerings and debt borrowings, giving consideration to loans and working
diligently to move sales ahead to the extent necessary to provide working
capital.
 
 We
may continue to incur operating losses over the majority or some portion of the
next twelve months.  Our lack of operating history makes predictions
of future operating results difficult to ascertain.  Our prospects
must be considered in light of the risks, expenses, and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving technology markets.  Such risks
include, but are not limited to, an evolving and unpredictable business model
and the management of growth.  To address these risks we must, among
other things, implement and successfully execute our business and marketing
strategy, continue to develop and upgrade technology and products, respond to
competitive developments, and continue to attract, retain and motivate qualified
personnel.  There can be no assurance that we will be successful in
addressing such risks, and the failure to do so can have a material adverse
effect on our business prospects, financial condition and results of
operations.
 
 As
a result of our cash requirements and our lack of working capital, although not
anticipated, we may continue to issue stock in exchange for loans and/or equity,
which may have a substantial dilutive impact on our existing
stockholders.
 
  20
  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.  The Company’s ability to continue
as a going concern is dependent on attaining profitable
operations.  The Company's 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 its 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 the Company be
unable to continue existence.
 
 Summary
of product and research and development that we have accomplished and that we
will continue to perform for the term of our plan.
 
 EcaFlo®
Division
 
 As
a result of positive laboratory test results from the Water Quality Lab at
Coastal Carolina University, in combination with internal profit margin
comparisons between prototype EcaFlo® devices, and utilizing a reputable United
States source of electrolytic cells and their respective markets, we have been
able to make decisions regarding market entry with our own specifically designed
and engineered devices.  Our engineering department has worked with
AquaStel, our new supplier, in order to develop prototype EcaFlo® equipment that
features the larger volume cells.  Equipment design
and construction of several EcaFlo® models (C-101, C-102 and C-104) is
complete and pricing has been developed to reflect the upgrades we have made in
our equipment.  Vital testing results have significantly improved our
ability to complete our goals ahead of time and enter our markets with specific
EcaFlo® devices with a firm confidence level, in addition to allowing us the
opportunity to modify existing EcaFlo® equipment to meet customer
demand.
 
 Current
research initiatives are centered on providing specific water quality regulatory
agencies with reports that will serve to quell any question that may arise
regarding the potential of negative impact on the environment (i.e.: estuary)
associated with the use of EcaFlo® anolyte and
catholyte solutions.  We are finding that, through the use of
test data and technical expertise, we are able to better educate environmental
regulators and gain their support and endorsement for certain ECA applications
within the storm water treatment arena, the petroleum industry, and with food
and beverage safety control agencies.  At petroleum industry trade
shows, our marketing and sales department personnel presented test results
showing potential customers that aliquots of petroleum well “frac” waters
treated with EcaFlo® device-generated anolyte solution showed bacterial kill in
less than 5 minutes.  Furthering that data, our approach is to point
out that the use of EcaFlo® solutions to obtain these successful results can
eliminate the need for voluminous regulatory compliance paperwork and the higher
cost associated with the use of traditional biocidal chemicals that are
currently used to treat “frac” water.
  21
  We
are continuing our research to identify opportunities where we can provide our
innovative technology in value-added services within the food and beverage
production and processing industry, medical and healthcare markets, the
hospitality industry, as well as in homeland defense applications.
 
 We
are continuing to work together with Coastal Carolina University, as well as
independent laboratories and other universities associated with several of our
customers’ specific research requirements, to develop a more comprehensive
approach to documenting test results that pertain to the use of EcaFlo®solutions
in a plethora of applications.
 
 Further
research and development efforts will be implemented with our strategic
university partners, going concerns within the oil and gas and food safety
industries, and with nationally-accredited research labs.  We view
research and development as an integral portion of our product development plan
and will use the measurable outcomes from research projects as catalysts for
market development.  The results of this research guide us in
determining what to further implement into our EcaFlo® equipment
designs.
 
 On May 7, 2008, we announced that as a
result of two invitations to showcase our equipment at the Chemical Biological
Incident Response Force’s Indian Head Base (Maryland), our EcaFlo® equipment and
solutions were accepted to be listed on the United States Department of Homeland
Security’s website.
 
 Significant
changes in the number of employees.
 
 We
currently employ 9 full-time, permanent employees.  These employees
are engaged in management, marketing and sales, engineering, production and
administrative services.  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.
 
 Consultants
 
 John Sanders. On May 29,
2007, we entered into a consulting agreement with John Sanders, wherein Mr.
Sanders agreed to assist the Company with corporate development in order to
enhance the Company’s shareholder value.  The term of the agreement
began on May 29, 2007 and terminated on May 28, 2008.  We agreed to
pay Mr. Sanders the equivalent of $2,500 per month by issuing 50 units of our
10% convertible debenture (includes 150,000 restricted shares of common stock
and 100,000 Series “C” Warrants, exercisable at $0.25 per share through December
31, 2008) and to pay for mutually agreed upon travel and expenses incurred in
the performance of the agreement.  The 50 units were issued to Mr.
Sanders on June 28, 2007.
 
 CBG Advanced Studies, Inc. On
September 7, 2007, we entered into a consulting agreement with CBG Advanced
Studies, Inc. (“CBG”), wherein CBG agreed to assist the Company in developing
appropriate and effective market penetration plans relative to the use of our
EcaFlo® equipment and solutions within U.S. military and civilian
decontamination market areas.  The term of the agreement began on
September 7, 2007 and will terminate on August 31, 2008.  We agreed to
compensate CBG with 30,000 shares of our restricted common stock on
a
  22
  quarterly
basis and $2,000 per month for the first three (3) months, and to pay for
mutually agreed upon travel and expenses incurred in the performance of the
agreement.
 
 TEN Associates,
LLC.  On March 3, 2008, we entered into a consulting agreement
with TENAssociates, LLC (Tom
Nelson), wherein TENAssociates agreed to
provide the Company with investor relations services.  The term of the
agreement began on March 3, 2008 and  terminated on June 3,
2008.  We agreed to compensate TENAssociates with $3,000
per month for the three months.
 
 Duke Van
Kalken.On June 30, 2008, we entered into a contractor
agreement with Duke Van Kalken, President of Aquastel, for a period of one
year.  Mr. Van Kalken will provide assistance to the Company with
marketing and sales, and will be paid a commission on equipment sales as
compensation.
 
 Exclusive License and
Distribution Agreement
 
 On
June 20, 2007, in connection with the Stock Acquisition Agreement with
Benchmark, we entered into an Exclusive License and Distribution Agreement,
wherein we granted the exclusive, worldwide right, license, and authority to
market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in
Oilfield Applications to Benchmark Energy Products. The agreement provides for
special pricing of equipment to Benchmark and per-gallon technology fees, paid
to IET on the EcaFlo® fluids sold by Benchmark, for a five-year period
consistent with the license period.
 
 Supply Agreement with D2W2,
LLC
 
 On June 6, 2008, we entered into a
supply agreement with D2W2, LLC, wherein D2W2 agreed to purchase our products
(certain electro-chemical activation equipment) for resale. The term of the
agreement commenced on June 6, 2008 and will continue for two years and shall
automatically renew for a full five year term provided satisfactory marketing,
testing and sales progress is made by D2W2, and, shall continue thereafter, year
to year, upon the same terms and conditions, unless either party notifies the
other that it wishes to renegotiate or terminate.
 
 Exclusive Supply Agreement
with Aquastel, Inc.
 
 On August 22, 2006, we entered into a
supply agreement with Aquastel, Inc., wherein Aquastel agreed to supply us with
C-50 and C-100 cells on an exclusive basis in the United States.  The
term of the agreement is for 3 years, terminating on August 22,
2009.  At the end of the term, the parties will attempt to renegotiate
in good faith to extend the agreement.
 
 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
  23
  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.  We are in discussions with Benchmark relative to the fact that
Benchmark’s own trucking group prefers to pick up the EcaFlo® equipment that is
ordered and paid for, in order to deliver the equipment to their own
locations.  We believe that the sale has occurred when the equipment
is on our loading dock awaiting pick-up by Benchmark, but will obtain written
resolution before future sales are recorded in this manner.
 
 Off-Balance
Sheet Arrangements.
 
 As
of June 30, 2008, 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, 2007 and 2006, our three largest customers represented 52%,
11%, and 7%, and 35%, 16%, and 14% 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 collectibility 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.
 
 Item
4. 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
  24
  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 June 30, 2008, 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.
  25
  We
have minimal operating history, which raises substantial doubt 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, the continuation of payments
      from Benchmark pursuant to our agreement 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 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,
now that we are commencing production in the EcaFlo® Division.
 
 As
we move forward in production stage business operations, even with our good
faith efforts, potential investors have a high possibility of losing their
investment.
 
 Due
to the intrinsic nature of our business, we expect to see growth in competition
and the development of new and improved technologies within the realm of
electro-chemical activation processes and products.  While we will
always keep a close eye on technological advancement in these areas, management
forecasts are not necessarily indicative of our ability to compete with newer
technology, as it may develop.  Management forecasts should not be
relied upon as an indication of future performance.  While management
believes its estimates of projected occurrences and events are within the
timetable of its business plan, our actual results may differ substantially from
those that are currently anticipated.
  26
  We
will need additional capital in the future to finance our planned growth, which
we may not be able to raise or it may only be available on terms unfavorable to
us or our stockholders, which may result in our inability to fund our working
capital requirements and harm our operational results.
 
 Based on our current proposed plans and
assumptions, we anticipate that we will need additional capital to fund our
operations.  Furthermore, the commercialization expenses of our
EcaFlo® Division will be substantial, i.e., in excess of the amount of cash that
we currently have.  Accordingly, we will have to (i) obtain additional
debt or equity financing in order to fund the further development of our
products and working capital needs, and/or (ii) enter into a strategic alliance
with a larger company to provide our required funding.  As a result of
our low-priced stock, and our continuous need for additional capital, we may
consider issuing significant amounts of our common stock in exchange for either
debt or equity.  The continued issuance of our common stock would have
a substantial dilutive impact on our current stockholders.  If we are
unable to obtain additional equity or debt financing, we may be forced to
terminate operations.
 
 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.
 
  27
  Our
stock is thinly traded; as a result you may be unable to sell at or near ask
prices or at all if you need to liquidate your 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, early-stage 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 you 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.
 
 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 of 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 CEO, president and
chairman.  The loss of Mr. Prince, whose knowledge, leadership and
technical expertise upon which 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 his 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 Mr. Prince.  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.
  28
  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 of directors 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.
 
 Pursuant
to the Stock Acquisition Agreement with Benchmark, we agreed that throughout the
period commencing with the closing date and ending October 31, 2009, Benchmark
shall have the right and ability to maintain an equity position in the Company
equal to the equity position it would own upon the issuance of shares to it
following payment of the seventh installment if, between the date of closing and
the date of such payment and issuance of shares, we were to issue no additional
shares of our common stock (approximately 40.61%) to any other
party.  If we default pursuant to the anti-dilution language in the
agreement (considered a “Warrant Right Event”) then we will be obligated to
issue to Benchmark a warrant entitling it to purchase, at $0.10 per share, such
additional number of shares of our common stock as would, upon exercise, make
Benchmark the holder of the same total percentage of all our outstanding equity
securities as it held prior to the Warrant Right Event. The warrants will be
exercisable at any time through October 31, 2009.
 
 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.
 
 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 and
directors 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.
   29
  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,
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 one late
filing reported by FINRA.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
 On April 23, 2008, we issued to AD
Capital, LLC 150,000 warrants exercisable at $0.05 per share, expiring in five
years (4/23/13) and 150,000 warrants exercisable at $0.25 per share, expiring in
five years (4/23/13) pursuant to the Securities Purchase Agreement dated April
23, 2008.  We believe that the issuance of the warrants was exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933 by virtue of Section 4(2).  The recipient of
the warrants was afforded an opportunity for effective access to files and
records of the Company that contained the relevant information needed to make
its investment decision, including the Company’s financial statements and 34 Act
reports.  We reasonably believe that the recipient, immediately prior
to issuing the warrants, had such knowledge and experience in our financial and
business matters that it was capable of evaluating the merits and risks of its
investment.  The recipient had the opportunity to speak with our
president and directors on several occasions prior to its investment
decision.
 
 On
May 19, 2008, we issued 5,000,000 shares of our common stock to Benchmark
Performance Group, Inc., pursuant to our Stock Acquisition Agreement dated June
20, 2007.  We believe that the issuance of the shares was exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2).  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 its
investment decision, including the Company’s financial statements and 34 Act
reports.  We reasonably believe that the recipient,
  30
  immediately
prior to issuing the shares, had such knowledge and experience in our financial
and business matters that it was capable of evaluating the merits and risks of
its investment.  The recipient had the opportunity to speak with our
president and directors on several occasions prior to its investment
decision.
 
 Subsequent
Issuances
 
 On July 15, 2008, we agreed to issue
warrants to purchase 200,000 shares of our common stock, exercisable for $0.05
per share and will expire 2 years from issuance to The Morton Fishman Revocable
Trust pursuant to the promissory executed on July 15, 2008.  We
believe that the issuance of the warrants was exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2).  The recipient of
the warrants was afforded an opportunity for effective access to files and
records of the Company that contained the relevant information needed to make
its investment decision, including the Company’s financial statements and 34 Act
reports.  We reasonably believe that the recipient, immediately prior
to issuing the warrants, had such knowledge and experience in our financial and
business matters that it was capable of evaluating the merits and risks of its
investment.  The recipient had the opportunity to speak with our
president and directors on several occasions prior to its investment
decision.
 
 On
July 18, 2008, we issued 30,000 shares of our restricted common stock to Gerald
H. Turley pursuant to his consulting agreement dated September 7,
2007.  We believe that the issuance of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2).  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 its
investment decision, including the Company’s financial statements and 34 Act
reports.  We reasonably believe that the recipient, immediately prior
to issuing the shares, had such knowledge and experience in our financial and
business matters that he was capable of evaluating the merits and risks of its
investment.  The recipient had the opportunity to speak with our
president and directors on several occasions prior to his investment
decision.
 
 Issuer
Purchases of Equity Securities
 
 The Company did not repurchase any of
its equity securities during the quarter ended June 30, 2008.
 
 Item
3. Defaults Upon Senior Securities.
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 We did not submit any matters to a vote
of our security holders during the second quarter of 2008.
  31
  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)
              
              3/10/083(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)
              
              1/25/02
  32
  
 Incorporated
      by referenceExhibit
                number
              
              Exhibit
      description
              
              Filed
                herewith
              
              Form
              
              Period
                ending
              
              Exhibit
      No.
              
              Filing
                date3(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)
              
              3/10/0810.1
              
              License
      Agreement among Integrated Environmental Technologies Ltd.,
      Electro-Chemical Technologies Ltd. and Laboratory of Electrotechnology
      Ltd. – Dated September 4, 2003
              
              
              
              10-QSB
              
              9/30/03
              
              10.8
              
              11/19/0310.2
              
              Supply
      Agreement – Dated September 4, 2003
              
              
              
              10-QSB
              
              9/30/03
              
              10.9
              
              11/19/0310.3
              
              Letter
      Agreement between SPDG Naturol Ltd. and Integrated Environmental
      Technologies Ltd. – Dated October 14, 2003
              
              
              
              10-QSB
              
              9/30/03
              
              10.10
              
              11/19/0310.4
              
              Collaborative
      Agreement with Integrated Environmental Technologies Ltd. and Coastal
      Carolina University – Dated December 11, 2003
              
              
              
              8-K
              
              
              
              10.2
              
              1/08/0410.5
              
              Contract
      of Sale – JMW Investments – Dated January 2, 2004
              
              
              
              8-K
              
              
              
              10.1
              
              3/1/0410.6
              
              Consultant
      and Employee Stock Compensation Plan – Dated January 21,
    2004
              
              
              
              S-8
              
              
              
              10.3
              
              1/22/0410.7
              
              Letter
      of Intent with Pentagon Technical Services – Dated June 15,
      2004
              
              
              
              10-QSB
              
              6/30/04
              
              10
              
              8/23/0410.8
              
              Amendment
      to License and Supply Agreement with Electro-Chemical
      Technologies
              
              
              
              10-QSB
              
              9/30/04
              
              10
              
              11/12/0410.9
              
              Consulting
      Agreement of Joseph Schmidt, dated November 18, 2004.
              
              
              
              8-K
              
              
              
              10.1
              
              1/07/0510.10
              
              Letter
      Amending Joseph Schmidt’s Consulting Agreement.
              
              
              
              8-K
              
              
              
              10.2
              
              1/07/0510.11
              
              Consulting
      Agreement of XXR Consulting, Inc., dated December 8, 2004.
              
              
              
              8-K
              
              
              
              10.3
              
              1/07/0510.12
              
              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
              
              3/30/0510.15
              
              Employment
      Agreement of Steve Johnson – Dated February 10, 2005
              
              
              
              10-KSB
              
              12/31/04
              
              10.7
              
              3/30/0510.16
              
              DaVinci-Franklin
      Fund I, LLC – Dated April 1, 2005
              
              
              
              8-K
              
              
              
              10.1
              
              4/13/0510.17
              
              Agreement
      with Red River Capital Partners dated June 14, 2006
              
              
              
              10-QSB
              
              6/30/06
              
              10
              
              8/14/06
  33
  
 Incorporated
      by referenceExhibit
                number
              
              Exhibit
      description
              
              Filed
                herewith
              
              Form
              
              Period
                ending
              
              Exhibit
      No.
              
              Filing
                date10.18
              
              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
              
              8/21/0710.20
              
              Registration
      Rights Agreement dated June 21, 2007
              
              
              
              8-K
              
              
              
              10.3
              
              8/21/0716
              
              Letter
      of Andersen, Andersen & Strong, L.C. regarding change in certifying
      accountant – Dated April 18, 2002
              
              
              
              8-K
              
              
              
              16
              
              4/26/0231
              
              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
Prince_____________________
 William
E. Prince, Chief Executive Officer
 And
Principal Financial Officer (On behalf of
 the
registrant and as principal accounting
 officer)
 
 Date:
September 18, 2008
 
  34