UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________________





FORM
10-Q





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





For
the quarterly period ended September 30, 2008


or




o TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





FOR
THE TRANSITION FROM ______ TO ______.





Commission
File Number: 0-32323


_______________________







INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.


(Exact
name of small business issuer as specified in its charter)





Nevada
              
              20-1217659(State
      or other Jurisdiction of Incorporation or Organization)
              
              (I.R.S.
      EmployerIdentification
      No.)1151
      Harbor Bay Parkway, Suite 202
                Alameda,
      CA
              
              94502(Address
      of principal executive offices)
              
              (Zip
      code)





Issuer’s telephone
number: (510) 814-3778





Indicate
by check mark whether the registrant (1) has 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 xNo o





Indicate
by check mark whether the registrant is a large accelerated filer, an
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 o
              Accelerated
      filer oNon-accelerated
      filer o
              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 oNo x




APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
THE PRECEDING FIVE YEARS




Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes oNo o




APPLICABLE
ONLY TO CORPORATE ISSUERS




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:  As of November 11, 2008, there
were 677,651,865 outstanding shares of the Registrant's Common Stock, $0.00001
par value.










INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.


Report
on Form 10-Q





For
the Quarter Ended September 30, 2008





INDEX





PagePART
      I – FINANCIAL
      INFORMATION
                                                    3Item 1. Financial
      Statements.
                                                    3Condensed Consolidated Balance Sheets
                                                    3Condensed Consolidated Statements of
      Operations
                                                    5Condensed Consolidated Statements of Cash
      Flows
                                                    7Notes
                                                    9Item 2. Management’s Discussion and Analysis or Plan of
      Operation
                                                    29Item 3. Quantitative and Qualitative Disclosures about Market
      Risk
                                                    37Item 4. Controls and Procedures
                                                    37PART
      II – OTHER
      INFORMATION
                                                    38Item 1. Legal Proceedings
                                                    38Item
      1A. Risk factors
                                                    38Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
                                                    38Item 3. Defaults Upon Senior Securities
                                                    38Item 4. Submission of Matters to a Vote of Security
      Holders
                                                    38Item 5. Other Information
                                                    38Item 6. Exhibits
                                                    39SIGNATURES
                                                    40





2


PART
I – FINANCIAL INFORMATION





Item1 – Condensed Consolidated Financial Statements




INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.


(A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
CONSOLIDATED BALANCE SHEETS


September
      30, 2008
                                            
                                            
                                            December
      31, 2007(Unaudited)ASSETSCash
                                            
                                            $
                                            3,561
                                            
                                            
                                            $
                                            32,970Deposit
      on Wuhan Wufeng Machinerey Company
                                            
                                            
                                            161,500
                                            
                                            
                                            
                                            -Deposit
      on Suining Rosetop Project
                                            
                                            
                                            -
                                            
                                            
                                            
                                            350,000Other
      current assets
                                            
                                            
                                            7,220
                                            
                                            
                                            
                                            1,765Total
      current assets
                                            
                                            
                                            172,281
                                            
                                            
                                            
                                            384,735Fixed
      assets, net of depreciation
                                            
                                            
                                            1,723
                                            
                                            
                                            
                                            2,766Other
      assets
                                            
                                            
                                            5,405
                                            
                                            
                                            
                                            5,380Goodwill
                                            
                                            
                                            1,303,277
                                            
                                            
                                            
                                            1,303,277Total
      assets
                                            
                                            $
                                            1,482,686
                                            
                                            
                                            $
                                            1,696,158








See
accompanying notes to condensed consolidated financial
statements.





3




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (CONTINUED)
 
 September
      30, 2008
                                            
                                            
                                            December
      31, 2007(Unaudited)LIABILITIES
      & STOCKHOLDERS' (DEFICIT) EQUITYLIABILITIESAccounts
      payable and accrued expenses
                                            
                                            $
                                            135,653
                                            
                                            
                                            $
                                            40,825Accrued
      expenses - related parties
                                            
                                            
                                            3,053
                                            
                                            
                                            
                                            77,426Notes
      payable, net
                                            
                                            
                                            2,474
                                            
                                            
                                            
                                            -Notes
      payable to shareholders, net
                                            
                                            
                                            162,792
                                            
                                            
                                            
                                            135,253Total
      current liabilities
                                            
                                            
                                            303,972
                                            
                                            
                                            
                                            253,504Long
      term notes payable, net
                                            
                                            
                                            33,164
                                            
                                            
                                            
                                            115,834Long
      term notes payable to shareholders, net
                                            
                                            
                                            355,298
                                            
                                            
                                            
                                            23,103Derivative
      Liability
                                            
                                            
                                            928,372
                                            
                                            
                                            
                                            -Total
      long term liabilities
                                            
                                            
                                            1,316,834
                                            
                                            
                                            
                                            138,937Total
      liabilities
                                            
                                            
                                            1,620,806
                                            
                                            
                                            
                                            392,441Commitment
      & Contingency
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Minority
      Interest
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -STOCKHOLDERS'
      (DEFICIT) EQUITYPreferred
      A stock, $250 par value, 10,000 shares authorized;96
      shares issued and outstanding
                                            
                                            
                                            24,000
                                            
                                            
                                            
                                            24,000Preferred
      C stock, no par value, 1,000,000 shares authorized;1,000,000
      and 200,000 shares issued and outstanding
                                            
                                            
                                            1,000
                                            
                                            
                                            
                                            200Preferred
      D stock,  $.001 par value, 10,000,000 shares
      authorized;35,000
      and 50,000 shares issued and outstanding
                                            
                                            
                                            35
                                            
                                            
                                            
                                            50Preferred
      E stock, $.001 par value, 50,000 shares authorized;28,000
      and 350,000 shares issued and outstanding
                                            
                                            
                                            28
                                            
                                            
                                            
                                            350Preferred
      F stock, $.001 par value, 3,000,000 shares authorized;20,000
      and 0 shares issued and outstanding
                                            
                                            
                                            20
                                            
                                            
                                            
                                            -Common
      stock; $.00001 par value, 1,950,000,000 shares authorized;608,455,802
      and 68,198,914 issued and outstanding
                                            
                                            
                                            6,085
                                            
                                            
                                            
                                            682Additional
      paid-in capital
                                            
                                            
                                            8,519,859
                                            
                                            
                                            
                                            7,853,981Accumulated
      deficit - Prior to reentering development stage
                                            
                                            
                                            (5,534,336
                                            )
                                            
                                            
                                            (5,534,336
                                            )Accumulated
      deficit - From inception of reentering development stage
      on  4/1/2007
                                            
                                            
                                            (3,154,725
                                            )
                                            
                                            
                                            (1,041,137
                                            )Other
      comprehensive income
                                            
                                            
                                            (86
                                            )
                                            
                                            
                                            (73
                                            )Total
      stockholders' (deficit) equity
                                            
                                            
                                            (138,120
                                            )
                                            
                                            
                                            1,303,717Total
      liabilities and stockholders' (deficit) equity
                                            
                                            $
                                            1,482,686
                                            
                                            
                                            $
                                            1,696,158








See
accompanying notes to condensed consolidated financial statements.
 
 4
 INTERNATIONAL BUILDING TECHNOLOGIES GROUP,
INC.


(A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)





Three
      Months Ended September 30,
                                                
                                                
                                                Nine
      Months Ended September 30,
                                                
                                                
                                                Cumulative
      Since Reentering Development Stage
                                                  4/1/2007
      -2008
                                                
                                                
                                                2007
                                                
                                                
                                                2008
                                                
                                                
                                                2007
                                                
                                                
                                                9/30/2008Retail
      sales
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -Cost
      of sales
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Revenues
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Operating
      expenses:Selling,
      general and administrative
                                                
                                                
                                                162,906
                                                
                                                
                                                
                                                201,013
                                                
                                                
                                                
                                                560,785
                                                
                                                
                                                
                                                358,623
                                                
                                                
                                                
                                                1,227,392Depreciation
      and amortization
                                                
                                                
                                                154
                                                
                                                
                                                
                                                2,013
                                                
                                                
                                                
                                                1,043
                                                
                                                
                                                
                                                2,174
                                                
                                                
                                                
                                                4,547Total
      operating expenses
                                                
                                                
                                                163,060
                                                
                                                
                                                
                                                203,026
                                                
                                                
                                                
                                                561,828
                                                
                                                
                                                
                                                360,797
                                                
                                                
                                                
                                                1,231,939Operating
      loss
                                                
                                                
                                                (163,060
                                                )
                                                
                                                
                                                (203,026
                                                )
                                                
                                                
                                                (561,828
                                                )
                                                
                                                
                                                (360,797
                                                )
                                                
                                                
                                                (1,231,939
                                                )Other
      income (expense):Interest
      income
                                                
                                                
                                                1
                                                
                                                
                                                
                                                6
                                                
                                                
                                                
                                                23
                                                
                                                
                                                
                                                35
                                                
                                                
                                                
                                                380Interest
      expense
                                                
                                                
                                                (200,308
                                                )
                                                
                                                
                                                (207,926
                                                )
                                                
                                                
                                                (576,257
                                                )
                                                
                                                
                                                (375,570
                                                )
                                                
                                                
                                                (885,842
                                                )Lost
      on settlement
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (23,500
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (23,500
                                                )Loss
      on Investment
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (35,000
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (35,000
                                                )Gain
      on extinguishment of debt
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                50,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (20,843
                                                )Change
      in fair value of derivative liability
                                                
                                                
                                                (928,372
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (928,372
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (928,372
                                                )Minority
      interest in net loss of subsidiary
                                                
                                                
                                                -
                                                
                                                
                                                
                                                6,356
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                12,750
                                                
                                                
                                                
                                                15,000Other
      income (expense)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                597
                                                
                                                
                                                
                                                500
                                                
                                                
                                                
                                                1,792
                                                
                                                
                                                
                                                3,550Total
      other income (expense)
                                                
                                                
                                                (1,128,679
                                                )
                                                
                                                
                                                (200,967
                                                )
                                                
                                                
                                                (1,512,606
                                                )
                                                
                                                
                                                (360,993
                                                )
                                                
                                                
                                                (1,874,627
                                                )Loss
      from continuing operations
                                                
                                                $
                                                (1,291,739
                                                )
                                                
                                                $
                                                (403,993
                                                )
                                                
                                                $
                                                (2,074,434
                                                )
                                                
                                                $
                                                (721,790
                                                )
                                                
                                                $
                                                (3,106,566
                                                )








See
accompanying notes to condensed consolidated financial
statements.


5


INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED) 
(CONTINUED)


Three
      Months Ended September 30,
                                                    
                                                    
                                                    Nine
      Months Ended September 30,
                                                    
                                                    
                                                    Cumulative
      Since Reentering Development Stage
                                                      4/1/2007
      -2008
                                                    
                                                    
                                                    2007
                                                    
                                                    
                                                    2008
                                                    
                                                    
                                                    2007
                                                    
                                                    
                                                    9/30/2008Loss
      from continuing operations
                                                    
                                                    $
                                                    (1,291,739
                                                    )
                                                    
                                                    $
                                                    (403,993
                                                    )
                                                    
                                                    $
                                                    (2,074,434
                                                    )
                                                    
                                                    $
                                                    (721,790
                                                    )
                                                    
                                                    $
                                                    (3,106,566
                                                    )Discontinued
      operations:Loss
      from operations of discontinued business
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (9,250
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (199,377
                                                    )
                                                    
                                                    
                                                    (20,063
                                                    )Income
      on disposal of assets
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    33,228
                                                    
                                                    
                                                    
                                                    61,058(Loss)
      Income on discontinued operations
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (9,250
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (166,149
                                                    )
                                                    
                                                    
                                                    40,995Net
      loss
                                                    
                                                    
                                                    (1,291,739
                                                    )
                                                    
                                                    
                                                    (413,243
                                                    )
                                                    
                                                    
                                                    (2,074,434
                                                    )
                                                    
                                                    
                                                    (887,939
                                                    )
                                                    
                                                    
                                                    (3,065,571
                                                    )Preferred
      dividend
                                                    
                                                    
                                                    (29,862
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (39,154
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (89,154
                                                    )Net
      loss attributable to common shareholders
                                                    
                                                    
                                                    (1,321,601
                                                    )
                                                    
                                                    
                                                    (413,243
                                                    )
                                                    
                                                    
                                                    (2,113,588
                                                    )
                                                    
                                                    
                                                    (887,939
                                                    )
                                                    
                                                    
                                                    (3,154,725
                                                    )Other
      comprehensive incomeForeign
      Currency Translation
                                                    
                                                    
                                                    (17
                                                    )
                                                    
                                                    
                                                    (151
                                                    )
                                                    
                                                    
                                                    (13
                                                    )
                                                    
                                                    
                                                    (502
                                                    )
                                                    
                                                    
                                                    (86
                                                    )Comprehensive
      loss
                                                    
                                                    $
                                                    (1,321,618
                                                    )
                                                    
                                                    $
                                                    (413,394
                                                    )
                                                    
                                                    $
                                                    (2,113,601
                                                    )
                                                    
                                                    $
                                                    (888,441
                                                    )
                                                    
                                                    $
                                                    (3,154,811
                                                    )Net
      loss per common share - basic and dilutedContinuing
      operations
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.04
                                                    )Discontinued
      operations
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    (0.00
                                                    )
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    (0.01
                                                    )Net
      loss per common share
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.01
                                                    )
                                                    
                                                    $
                                                    (0.05
                                                    )Weighted
      average common shares outstanding:Basic
      and Diluted
                                                    
                                                    
                                                    209,299,466
                                                    
                                                    
                                                    
                                                    29,738,264
                                                    
                                                    
                                                    
                                                    247,492,082
                                                    
                                                    
                                                    
                                                    16,554,890










See
accompanying notes to condensed consolidated financial statements.


6




INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)





Nine
      Months Ended September 30,
                                                              
                                                              
                                                              Cumulative
      Since Reentering Development Stage
                                                                4/1/2007
      -2008
                                                              
                                                              
                                                              2007
                                                              
                                                              
                                                              9/30/2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss from continuing operations
                                                              
                                                              $
                                                              (2,074,434
                                                              )
                                                              
                                                              $
                                                              (721,790
                                                              )
                                                              
                                                              $
                                                              (3,106,566
                                                              )Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
                                                              
                                                              
                                                              1,043
                                                              
                                                              
                                                              
                                                              2,174
                                                              
                                                              
                                                              
                                                              4,548Notes
      issued for services
                                                              
                                                              
                                                              40,000
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              40,000Amortization
      of debt discounts
                                                              
                                                              
                                                              44,464
                                                              
                                                              
                                                              
                                                              48,094
                                                              
                                                              
                                                              
                                                              128,471Gain
      (Loss) on extinguishment of debt
                                                              
                                                              
                                                              50,000
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (20,843
                                                              )Loss
      on Investment in Rosstop Project
                                                              
                                                              
                                                              35,000
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              35,000Interest
      expense associated with beneficial conversion feature
                                                              
                                                              
                                                              460,543
                                                              
                                                              
                                                              
                                                              201,333
                                                              
                                                              
                                                              
                                                              744,464Change
      in fair value of derivative liability
                                                              
                                                              
                                                              928,372
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              928,372Director
      stock based compensation
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              50,000Common
      stock issued for services
                                                              
                                                              
                                                              67,892
                                                              
                                                              
                                                              
                                                              174,349
                                                              
                                                              
                                                              
                                                              386,061Common
      stock issued for settlement
                                                              
                                                              
                                                              13,500
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              13,500Common
      stock issued for interest payment on debt
                                                              
                                                              
                                                              37,711
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              55,147Minority
      interest in net loss of subsidiary
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (15,000
                                                              )Changes
      in assets and liabilities:Prepaid
      expenses
                                                              
                                                              
                                                              5,320
                                                              
                                                              
                                                              
                                                              8,114
                                                              
                                                              
                                                              
                                                              1,715Accounts
      payable and accrued expenses
                                                              
                                                              
                                                              (26,913
                                                              )
                                                              
                                                              
                                                              75,568
                                                              
                                                              
                                                              
                                                              13,020Net
      cash used in continuing operations
                                                              
                                                              
                                                              (417,502
                                                              )
                                                              
                                                              
                                                              (212,158
                                                              )
                                                              
                                                              
                                                              (742,111
                                                              )Net
      income (loss) from discontinued operations
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (166,149
                                                              )
                                                              
                                                              
                                                              40,995Net
      cash provided (used) by in discontinued operations
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              3,710
                                                              
                                                              
                                                              
                                                              (83,796
                                                              )Net
      cash used in operating activities
                                                              
                                                              
                                                              (417,502
                                                              )
                                                              
                                                              
                                                              (374,597
                                                              )
                                                              
                                                              
                                                              (784,912
                                                              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Deposit
      on investment
                                                              
                                                              
                                                              (161,500
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (161,500
                                                              )Net
      cash used in continuing operations
                                                              
                                                              
                                                              (161,500
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (161,500
                                                              )Net
      cash provided by discontinued operations
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              13,061
                                                              
                                                              
                                                              
                                                              -Net
      cash provided (used) by in investing activities
                                                              
                                                              $
                                                              (161,500
                                                              )
                                                              
                                                              $
                                                              13,061
                                                              
                                                              
                                                              $
                                                              (161,500
                                                              )








See
accompanying notes to condensed consolidated financial statements.




7




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED) 
(CONTINUED)





Nine
      Months Ended September 30,
                                    
                                    
                                    Cumulative
      Since Reentering Development Stage
                                      4/1/2007
      -2008
                                    
                                    
                                    2007
                                    
                                    
                                    9/30/2008CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from related party notes payable
                                    
                                    $
                                    200,000
                                    
                                    
                                    $
                                    20,000
                                    
                                    
                                    $
                                    280,000Accrued
      expenses - related parties
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (6,000
                                    )Proceeds
      from notes payable
                                    
                                    
                                    163,000
                                    
                                    
                                    
                                    346,000
                                    
                                    
                                    
                                    416,530Repayments
      of notes payable
                                    
                                    
                                    (13,194
                                    )
                                    
                                    
                                    (20,000
                                    )
                                    
                                    
                                    (13,194
                                    )Minority
      interest
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (12,750
                                    )
                                    
                                    
                                    -Proceeds
      from issuance of preferred stock
                                    
                                    
                                    20,800
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    20,800Proceeds
      from issuance of common stock
                                    
                                    
                                    179,000
                                    
                                    
                                    
                                    36,409
                                    
                                    
                                    
                                    180,464Proceeds
      from issuance of common stock for asset purchase
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    6,206Proceeds
      from exercise of stock options
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,375Net
      cash provided by financing activities
                                    
                                    
                                    549,606
                                    
                                    
                                    
                                    369,659
                                    
                                    
                                    
                                    889,181Effect
      of exchange rate changes on cash
                                    
                                    
                                    (13
                                    )
                                    
                                    
                                    (502
                                    )
                                    
                                    
                                    (86
                                    )Cash
      and cash equivalents:Increase
      (decrease) in cash
                                    
                                    
                                    (29,409
                                    )
                                    
                                    
                                    7,621
                                    
                                    
                                    
                                    (57,317
                                    )CASH,
      beginning of period
                                    
                                    
                                    32,970
                                    
                                    
                                    
                                    7,200
                                    
                                    
                                    
                                    60,878CASH,
      end of period
                                    
                                    $
                                    3,561
                                    
                                    
                                    $
                                    14,821
                                    
                                    
                                    $
                                    3,561SUPPLEMENTAL
      DISCLOSURES:Cash
      paid for interest
                                    
                                    $
                                    2,629
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    2,629Cash
      paid for income taxes
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Non-cash
      discontinued operation activities:Employee
      stock based compensation
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    30,698Issuance
      of common stock issued for services
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    11,133Issuance
      of common stock for debt & accrued expenses
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    36,534Non-cash
      financing and investing activities:Issuance
      of note for accrued expenses
                                    
                                    $
                                    40,000
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    83,798Issuance
      of common stock for services
                                    
                                    $
                                    67,892
                                    
                                    
                                    $
                                    174,349
                                    
                                    
                                    $
                                    386,061Issuance
      of common stock for payment of debt
                                    
                                    $
                                    292,131
                                    
                                    
                                    $
                                    55,534
                                    
                                    
                                    $
                                    387,630Issuance
      of common stock for settlement
                                    
                                    $
                                    13,500
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    13,500Issuance
      of Preferred E Stock for deposit on the Rosetop Project
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    350,000
                                    
                                    
                                    $
                                    350,000Cancelation
      of Rosetop project and related Preferred E Stock
                                    
                                    $
                                    (315,000
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (315,000
                                    )Issuance
      of common stock for Purchase of Company
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    1,300,000











8




INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008




Note
1:  Organization, Basis of Presentation and Significant Accounting
Policies





Organization





International
Building Technologies Group, Inc. (OTCBB: INBG) (the “Company”) is a developer
and provider of a panel based building technology which can be used in a variety
of ways to erect buildings up to six stories tall without the need of a
traditional wood or steel frame structure.  The panel based building
technology is also versatile in its use and can be used to create unique
architectural design elements. Management believes that the Company’s panel
based building technology allows for the rapid, cost effective construction of
residential, commercial, and high-rise buildings utilizing materials that are
greater in strength and appearance, economical and
eco-friendly.  Based on standard building codes prescribed by
authorities worldwide, the Company’s technology meet and exceed the minimum
requirements.  The Company also provides customers with architectural
design, panel supply, installation supervision, engineering, training, and
technical support. The Company has offices in Shanghai, China and Alameda,
California.





Basis
of Financial Statement Presentation





The
accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission.  Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted in accordance with
such rules and regulations.  The information furnished in the interim
condensed consolidated financial statements includes normal recurring
adjustments and reflects all adjustments, which, in the opinion of management,
are necessary for a fair presentation of such financial
statements.  Although management believes the disclosures and
information presented are adequate to make the information not misleading, these
interim condensed consolidated financial statements should be read in
conjunction with the Company’s most recent audited financial statements and
notes thereto included in its December 31, 2007 Annual Report on Form
10-KSB.  Operating results for the period ended September 30, 2008 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2008.





Certain
amounts in the financial statements for nine months ended September 30, 2008
have been reclassified to conform to the presentation of the financial
statements as a whole. These reclassifications did not result in any change to
the previously reported total assets, net loss or stockholders’
equity.




Translation
of Non-U.S. Currency Amounts






Assets
and liabilities of non-U.S. subsidiaries that operate in a local currency
environment are translated to U.S. dollars at year-end exchange rates. Income
and expense items are translated at weighted-average rates of exchange
prevailing during the year. Translation adjustments are recorded in Other
Comprehensive Income not affecting retained earnings within stockholders’
(deficit)/equity.




Inventories,
plant, rental machines and other property-net, and other non-monetary assets and
liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars,
or whose economic environment is highly inflationary, are translated at
approximate exchange rates prevailing when the company acquired the assets or
liabilities. All other assets and liabilities are translated at the quarter
ended September 30, 2008 exchange rates. Cost of sales and depreciation are
translated at historical exchange rates. All other income and expense items are
translated at the weighted-average rates of exchange prevailing during the
year.





Current
and historical exchange rates are not indicative of what future exchange rates
will be and should not be construed as such.


9




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008





Relevant
exchange rates used in the preparation of the financial statements of the
subsidiary are as follows for the quarter ended September 30, 2008 (denoted in
Hong Kong dollars per one U.S. dollar):





2008Current
      exchange rate at September 30, 2008
                      $ 
      7.7659 HKDYear
      to Date Weighted average exchange rate
                      $ 
      7.797
HKD





Significant
Accounting Policies





Significant
accounting policies have not changed from the Company’s Annual Report on Form
10-KSB for the year ended December 31, 2007.




Note
2:  Material Events




Rescission
of Asset Sale and Purchase Agreement of the Rose Top Grade Project





Effective
March 31, 2008, signed April 23, 2008, the Company and Suining Yinfa
Construction and Engineering Co., Ltd., both agreed that it was in their best
interest to rescind the Asset Sale and Purchase Agreement of the Rose Top Grade
Project due to the underperformance of the assets and the inability of the
sellers to record transactions as necessary to permit preparation of financial
statements in conformity with US GAAP.  Please see Note 7 –
Acquisitions and Investments.





Acquisition
of Wuhan Wufeng Machinery Manufacturing Company, Ltd.




On April
16, 2008, the Company entered into a definitive agreement to acquire a 92% stake
in Wuhan Wufeng Machinery Manufacturing Company, Ltd. (“Machinery Co.”) from
Wuhan Intepower Company, Ltd., a China Corporation (“Seller”) pursuant to a
Stock Sale and Purchase Agreement.  The closing of this acquisition
will occur as soon as the audit of the books and accounts of the Machinery Co.
is completed to the satisfaction of the Company and requisite governmental
approvals are obtained.  On June 24, 2008, the Company received
requisite governmental approvals to proceed with this
transaction.  Currently, the auditors are performing the audit of the
Machinery Company and the audit is expected to be completed
soon.  Please see Note 7 – Acquisitions and Investments.




Note
3:  Going Concern





The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.  The Company’s
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow from operations to meet its obligations on a timely basis
and/or obtain financing as may be required.  As of September 30, 2008,
the Company has incurred net losses from operations prior to reentering the
development stage and has an accumulated deficit of $5,534,336.  Since
reentering the development stage on April 1, 2007, the Company has an
accumulated deficit of $3,154,725 as of September 30, 2008.  The
Company has a working capital deficit of $131,691 as of September 30,
2008.





During
the next 12 months, the Company’s foreseeable cash requirements will relate to
continual development of the operations of its business, maintaining its good
standing and making the requisite filings with the Securities and Exchange
Commission, and the payment of expenses associated with reviewing or
investigating any potential business ventures.


10


INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008






The
Company may experience a cash shortfall and be required to raise additional
capital. Historically, it has relied upon internally generated funds and funds
from the sale of shares of stock and loans from its shareholders and private
investors to finance its operations and growth. Management may raise additional
capital through future public or private offerings of the Company’s stock or
through loans from private investors, although there can be no assurance that it
will be able to obtain such financing.  The Company’s failure to do so
could have a material and adverse affect upon it and its
shareholders.  However, the Company is strategically positioning
itself with contracts and business ventures that can significantly contribute to
its bottom line and the continuous development of its panel
business.





Note
4:  Notes Payable & Debt Discounts





The
unaudited chart below summarizes the Notes Payable & Debt Discounts of the
Company as of September 30, 2008.  This chart should be reviewed in
conjunction with the details following the chart.





Terms
                                  
                                  AmountShort Term Notes Payable:10.301%
      Interest; principal of $2,474; monthly payments of $1,254; due on
      12/1/2008
                                  
                                  $
                                  2,474Total
      Short Term Notes Payable
                                  
                                  $
                                  2,474Short Term Notes Payable to
      Shareholders:-0%
      Interest; principal of $3,000; monthly payments of $3,000; convertible to
      common stock based on 60% of average price; due on
12/31/08
                                  
                                  $
                                  3,000-0%
      Interest; principal of $3,000; monthly payments of $3,000; convertible to
      common stock based on 60% of average price; due on
12/31/08
                                  
                                  
                                  3,000-10%
      Interest; principal of $89,868; monthly payments of $4,396; convertible to
      common stock based on 75% of average price; due on
    6/30/2009.
                                  
                                  
                                  89,868-5%
      Interest; principal of $75,773; monthly payments of $4,387; convertible to
      common stock based on 70% of average price; due on 7/1/2009, net of
      unamortized discount related to the debt discount of
    $15,992
                                  
                                  
                                  59,781-10%
      Interest; principal of $15,000; convertible to common stock based on 60%
      of average price; due on 08/01/09; net of unamortized discount related to
      the debt discount of $ 12,534
                                  
                                  
                                  2,466-10%
      Interest; principal of $13,000; convertible to common stock based on 60%
      of average price; due on 08/01/09; net of unamortized discount related to
      the debt discount of $ 10,863
                                  
                                  
                                  2,137-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 09/03/09; net of unamortized discount related to
      the debt discount of $ 7,460
                                  
                                  
                                  2,540Total
      Short Term Notes Payable to Shareholders
                                  
                                  $
                                  162,792Long Term Notes Payable :-10%
      Interest; principal of $50,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $35,984
                                  
                                  
                                  14,016-10%
      Interest; principal of $50,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $35,984
                                  
                                  
                                  14,016


11




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,197
                                  
                                  
                                  2,803-10%
      Interest; principal of $15,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $12,671
                                  
                                  
                                  2,329Total
      Long Term Notes Payable
                                  
                                  $
                                  33,164Long Term Notes Payable to
      Shareholders:-10%
      Interest; principal of $12,500; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,990
                                  
                                  
                                  4,510-10%
      Interest; principal of $33,849; convertible to common stock based on 60%
      of average price; due on 12/31/2009.
                                  
                                  
                                  33,849-10%
      Interest; principal of $16,212; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $2,211
                                  
                                  
                                  14,001-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,174
                                  
                                  
                                  2,826-10%
      Interest; principal of $9,458; convertible to common stock based on 60% of
      average price; due on 12/31/2009, net of unamortized discount related to
      the debt discount of $3,888
                                  
                                  
                                  5,570-10%
      Interest; principal of $37,133; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $14,300
                                  
                                  
                                  22,833-10%
      Interest; principal of $115,878; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $39,877
                                  
                                  
                                  76,001-10%
      Interest; principal of $32,017; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $12,704
                                  
                                  
                                  19,313-10%
      Interest; principal of $50,240; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $30,309
                                  
                                  
                                  19,931-10%
      Interest; principal of $77,717; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $23,358
                                  
                                  
                                  54,359-10%
      Interest; principal of $39,048; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $24,571
                                  
                                  
                                  14,477-10%
      Interest; principal of $41,016; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $23,289
                                  
                                  
                                  17,727-10%
      Interest; principal of $25,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $16,606
                                  
                                  
                                  8,394






12




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008




-10%
      Interest; principal of $7,209; convertible to common stock based on 60% of
      average price; due on 12/31/2009, net of unamortized discount related to
      the debt discount of $3,800
              
              
              3,409-10%
      Interest; principal of $20,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $13,891
              
              
              6,109-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $6,635
              
              
              3,365-10%
      Interest; principal of $25,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $17,908
              
              
              7,092-10%
      Interest; principal of $70,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $32,457
              
              
              37,543-10%
      Interest; principal of $10,642; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $6,653
              
              
              3,989Total
      Long Term Notes Payable to Shareholders
              
              $
              355,298




Short
Term Notes Payable





On March
1, 2008 the Company entered into a $10,800 note for a prepaid expense in the
amount of $14,900.  A down payment in the amount of $4,100 was paid in
cash.  The $10,800 note carries interest at an annual percentage rate
of 10.60% pursuant to which the Company is obligated to make 9 monthly principal
and interest payments of $1,254 commencing April 1, 2008 with a final payment
December 1, 2008.   As of September 30, 2008, the balance of the
note was $2,474.





Short
Term Note Payable – Shareholders





On May 8,
2007 the Company amended an earlier Promissory Note for $129,240 ($121,920 in
principal and $7,320 accrued interest).  Furthermore, on May 8, 2007
the Company bifurcated the Note and entered into two separate
Notes:  (i) one for $100,000 with 5% interest pursuant to which
the Company is obligated to make 24 monthly principal and interest payments of
$4,387 commencing July 1, 2007 with final payment July 1, 2009 and
(ii) a second Note for $29,240 with 5% interest pursuant to which the
Company is obligated to make 24 monthly principal and interest payments of
$1,283 commencing July 1, 2007 with final payment July 1, 2009 (this second Note
is payable to a shareholder).  At any time after giving notice, the
Holder has the option to convert all or part of the accrued interest and
remaining principal of either note based on 70% of the average of the lowest 5
closing bid prices in the past 20 trading days immediately preceding such
conversion so long as the total number of shares issued to Holder will be such
that the number of shares beneficially owned by Holder will be less than 4.99%
of the outstanding common shares of the Company.  The Company has
determined that these modified terms are substantially different than the
original terms as defined in the Emerging Issues Task Force No. 96-19, “Debtor’s
Accounting for a Modification or Exchange of Debt Instruments” (“EITF 96-19”),
and, therefore, this renegotiation result in the recognition of a $129,240 loss
as of the date of the amendment of the note.  A debt discount of
$129,240 was calculated in accordance with EITF 00-27, and is being amortized
over the life of the debenture.  The amortization is being recorded as
interest expense and totaled $15,066 for the quarter ended September 30, 2008
and $113,247 for the period from inception to


13




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


September
30, 2008.  During the quarter, the note Holders converted a total of
$10,000 of principal and interest payments.  As of September 30, 2008,
the second note in the amount of $29,240 has been paid in full.  The
balance of the remaining note is $75,773.





On August
21, 2006, the Company issued a $250,000 convertible note payable with an
interest rate of 10% to a shareholder and an entity owned by such shareholder in
exchange for the retirement of the shareholder’s Series B preferred stock and
all related accrued interest.  On March 14, 2007, the Note was amended
with the monthly payments of $4,395 or more deferred until June 1, 2007 and the
due date extended from August 30, 2007 to May 30, 2008.  On March 26,
2007, the Note was bifurcated into two separate notes with all prior unpaid
principal and interest rolled up into these two notes.  On April 26,
2008, the parties agreed to extend the maturity of the note to June 30,
2009.  At any time after giving notice, the Holder has the option to
convert all or part of the remaining balance of the note into common stock of
the Company based on 75% of the average of the lowest five closing bid prices in
the past 20 trading days immediately preceding such conversion so long as such
conversion shall not exceed 4.99% of the then outstanding shares of common stock
of the Company.  A debt discount of $239,556 was calculated in
accordance with Emerging Issues Task Force No. 00-27, “Application of Issue No.
98-5 to Certain Convertible Instruments” (“EITF 00-27”), and is being amortized
over the life of the debenture.  The amortization is being recorded as
interest expense and totaled $7,743 for the quarter ended September 30, 2008 and
$239,556 for the period from inception to September 30, 2008.  During
the quarter, the note holders converted the note into common stock in the amount
of $45,615 for the payment of principal and interest.  During the
second quarter of 2007, one of the two notes was fully paid off and as of
September 30, 2008 the principal balance on the remaining note was
$89,868.  The Company is current with the payments on the remaining
note.





On
January 22, 2008, the Company converted $40,000 in accounts payable into two no
interest bearing $40,000 Promissory Note, $20,000 each, with monthly payments of
$3,000 on each note to be paid no later than August 1, 2008.  The
maturity date of the note has been extended until December 31,
2008.  At any time, the Payee may convert all or part of the remaining
principal balance and accrued interest into shares of the Company’s Common Stock
based on 60% of the average of the lowest three closing bid prices in the past
20 trading days immediately preceding such conversions so long as such
conversions shall not exceed 4.99% of the then outstanding common stock of the
Company.  In relation to the convertible features of this note, a debt
discount of $40,000 was calculated in accordance with EITF 00-27 and is being
amortized over the life of the debenture.  The amortization is being
recorded as interest expense and was fully amortized as of the second quarter
2008.  Had the two notes included a fair market value interest rate,
the interest amount would be immaterial and therefore the Company chose not to
apply APB No.21 treatment to this transaction.   During the
quarter, the note Holders converted a total of $10,000 or $5000 each of the
principal payments.  As of September 30, 2008, the balance of the two
notes was $6,000 or $3,000 each.





On August
1, 2008, the Company entered into two Promissory Notes totaling $28,000 to be
paid no later than August 1, 2009 with an interest rate of 10%.  At
any time, the Payees may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest five closing bid prices in the past 10 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible features of these notes, a total debt discount of
$28,000 was calculated in accordance with EITF 00-27 and is being amortized over
the lives of these debentures.  The amortization is being recorded as
interest expense and totaled $4,603 for the quarter ended September 30, 2008 and
for the period from inception to September 30, 2008.  No payments were
due or made during the quarter.





On
September 3, 2008, the Company entered into a Promissory Note for $10,000 to be
paid no later than September 3, 2009 with an interest rate of 10%.  At
any time, the Payee may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest five closing bid prices in the past 10 trading days
immediately


14




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


preceding
such conversion so long as such conversions shall not exceed 4.99% of the then
outstanding common stock of the Company.  In relation to the
convertible feature of this note, a debt discount of $8,056 was calculated in
accordance with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being recorded as interest expense and
totaled $596 for the quarter ended September 30, 2008 and for the period from
inception to September 30, 2008.  No payments were due or made during
the quarter.





Long
Term Notes Payable/Long Term Notes Payable Shareholders





On May
21, 2007 the Company entered into a $122,500 Secured Promissory Note at the rate
of 11% per annum due March 20, 2008.  On December 31, 2007, the
Company and the Payee amended the note to change the interest rate to 10%,
exclude incentive payments, extend the due date to December 31, 2009, and to
insert a conversion clause which allows the Payee to convert all or part of the
remaining principal balance and accrued interest into the Company’s Common Stock
based on 50% of the average of the lowest three closing bid prices in the past
five trading days immediately preceding such conversion so long as such
conversions shall not exceed 4.99% of the then outstanding Common Stock of the
Company.  Accrued interest was also rolled up into the amended note
for a new note balance of $130,735.  The Company has determined that these
modified terms are not substantially different than the original terms as
defined in EITF 96-19, and, therefore, this renegotiation did not result in the
recognition of a gain or loss.  In relation to the convertible feature
of this note, a debt discount of $82,976 was calculated in accordance with EITF
00-27 and is being amortized over the life of the debenture.  The
amortization is being recorded as interest expense and totaled $16,791 for the
quarter ended September 30, 2008 and $43,098 for the period from inception to
September 30, 2008.  Initially, the Company’s President, Kenneth
Yeung, personally borrowed the money and invested the amount into the
Company.  Due to a change in the business, the Company decided on May
21, 2007 to assume the note and entered into a promissory note with the
lender.  The Note is secured with the Preferred Series C shares owned
by the President.





In
connection with this transaction, 490,000 warrants to purchase shares of the
common stock of the Company at $0.25 were issued with an expiration date of May
20, 2012.  Utilizing the Black-Scholes valuation model and the
following assumptions: estimated volatility of 211.36%, a contractual life of
fiveyears, a zero
dividend rate, 4.71% risk free interest rate, and the fair value of common stock
of $0.10 per share at date of grant, the Company determined the allocated fair
value of the warrant to be $47,759.  The Company has recorded this
amount as a debt discount and is amortizing the debt discount over the term of
this Note. The amortization is being recorded as interest expense and totaled
has been fully amortized as of March 31, 2008.  The warrant
amortization totaled $12,736 as of the nine months ended September 30,
2008.  During the quarter, the note Holder converted a total of
$11,976 of principal and interest payments.  As of September 30, 2008,
the balance of the note was $115,878.





On May
21, 2007, the Company entered into a Promissory Note for $30,000 to be paid no
later than March 20, 2008 with an interest rate of 11%.  On December
31, 2007, the Company and the Payee amended the note to change the interest rate
to 10%, exclude incentive payments, extend the due date to December 31, 2009,
and to insert a conversion clause which allows the Payee to convert all or part
of the remaining principal balance and accrued interest into the Company’s
Common Stock based on 50% of the average of the lowest three closing bid prices
in the past five trading days immediately preceding such conversion so long as
such conversions shall not exceed 4.99% of the then outstanding Common Stock of
the Company.  Accrued interest was also rolled up into the amended
note for a new note balance of $32,017.  The Company has determined that
these modified terms are not substantially different than the original terms as
defined in EITF 96-19, and, therefore, this renegotiation did not result in the
recognition of a gain or loss.  In relation to the convertible feature
of this note, a debt discount of $20,321 was calculated in accordance with EITF
00-27 and is being amortized over the life of the debenture.  The
amortization is being recorded as interest expense and totaled $2,557 for the
quarter ended September 30, 2008 and $7,617 for the period from inception to
September 30, 2008.  Initially, the


15




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Company’s
President, Kenneth Yeung, personally borrowed the money and invested the amount
into the Company.  Due to a change in the business, the Company
decided on May 21, 2007 to assume the note and entered into a promissory note
with the lender.  The Note is secured with the Preferred Series C
shares owned by the President.





In
connection with this transaction, 120,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of May 20,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 211.36%, a contractual life of fiveyears, a zero dividend
rate, 4.71% risk free interest rate, and the fair value of common stock of $0.10
per share at date of grant, the Company determined the allocated fair value of
the warrant to be $11,696.  The Company has recorded this amount as a
debt discount and is amortizing the debt discount over the term of this Note.
The amortization is being recorded as interest expense and has been fully
amortized as of March 31, 2008.  The warrant amortization totaled
$3,119 as of the nine months ended September 30, 2008.   No
payments were due or made during the quarter.





On May
21, 2007, the Company entered into a Promissory Note for $97,500 to be paid no
later than May 20, 2008 with an interest rate of 11%.  On December 31,
2007, the Company and the Payee amended the note to change the interest rate to
10%, exclude incentive payments, extend the due date to December 31, 2009, and
to insert a conversion clause which allows the Payee to convert all or part of
the remaining principal balance and accrued interest into the Company’s Common
Stock based on 50% of the average of the lowest three closing bid prices in the
past five trading days immediately preceding such conversion so long as such
conversions shall not exceed 4.99% of the then outstanding Common Stock of the
Company.  Accrued interest was also rolled up into the amended note
for a new note balance of $104,054.  The Company has determined that these
modified terms are not substantially different than the original terms as
defined in EITF 96-19, and, therefore, this renegotiation did not result in the
recognition of a gain or loss.  In relation to the convertible feature
of this note, a debt discount of $66,042 was calculated in accordance with EITF
00-27 and is being amortized over the life of the debenture.  The
amortization is being recorded as interest expense and totaled $15,577 for the
quarter ended September 30, 2008 and $42,684 for the period from inception to
September 30, 2008.





In
connection with this transaction, 390,000 warrants to purchase the common stock
of the Company at $0.25 were issued with an expiration date of May 21,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 211.36%, a contractual life of fiveyears, a zero dividend
rate, 4.71% risk free interest rate, and the fair value of common stock of $0.10
per share at date of grant, the Company determined the allocated fair value of
the warrant to be $38,012.  The Company has recorded this amount as a
debt discount and is amortizing the debt discount over the term of this Note.
The amortization is being recorded as interest expense and was fully amortized
as of the second quarter 2008.  The warrant amortization totaled
$12,736 as of the nine months ended September 30, 2008.  During the
quarter, the note Holder converted a total of $11,976 of principal and interest
payments.  As of September 30, 2008, the balance of the note was
$77,717.





On May
22, 2007 the Company entered into a Convertible Promissory Note for $50,000 to
be paid no later than March 21, 2008 with 11% interest rate per
annum.  On December 31, 2007, the Company and the Payee amended the
note to change the interest rate to 10%, exclude incentive payments, change the
conversion rate to 60% instead of 50%, and extended the due date to December 31,
2009.  The Company has determined that these modified terms are
substantially different than the original terms as defined in EITF 96-19, and,
therefore, this renegotiation did result in the recognition of a $37,649 gain as
of the date of the amendment of the note.  At any time, the Payee may
convert all or part of the remaining principal balance and accrued interest into
shares of the Company’s Common Stock based on 60% of the average of the lowest
three closing bid prices in the past 20 trading days immediately preceding such
conversion so long as such conversions shall not exceed 4.99% of the then
outstanding common stock of the Company.  In relation to this
convertible feature, a debt discount of $30,506 was calculated in accordance
with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being


16




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


recorded
as interest expense and totaled $2,182 for the quarter ended September 30, 2008
and $30,506 for the period from inception to September 30,
2008.  During the third quarter, the note holder converted a total of
$12,000 in principal and interest payments.  The balance of the note
as of September 30, 2008 is $33,849.





In
connection with this transaction, 200,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of May 21,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 211.36%, a contractual life of fiveyears, a zero dividend
rate, 4.76% risk free interest rate, and the fair value of common stock of $0.10
per share at date of grant, the Company determined the allocated fair value of
the warrant to be $19,494.  The Company has recorded this amount as a
debt discount and is amortizing it over the term of this Note. The amortization
is being recorded as interest expense and has been fully amortized as of March
31, 2008. The warrant amortization totaled $5,263 as of the nine months ended
September 30, 2008.





On June
1, 2007, the Company entered into a Promissory Note for $10,000 to be paid no
later than June 1, 2008 with an interest rate of 11%.  On December 31,
2007, the Company and the Payee amended the note to change the interest rate to
10%, exclude incentive payments, extend the due date to December 31, 2009, and
to insert a conversion clause which allows the Payee to convert all or part of
the remaining principal balance and accrued interest into the Company’s Common
Stock based on 50% of the average of the lowest three closing bid prices in the
past five trading days immediately preceding such conversion so long as such
conversions shall not exceed 4.99% of the then outstanding Common Stock of the
Company.  Accrued interest was also rolled up into the amended note
for a new note balance of $10,642.  The Company has determined that these
modified terms are substantially different than the original terms as defined in
EITF 96-19, and, therefore, this renegotiation result in the recognition of a
$4,511 loss as of the date of the amendment of the note.  In relation
to the convertible feature of this note, a debt discount of $10,642 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $1,339 for the quarter ended September 30, 2008 and $3,989 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On
September 17, 2007, the Company entered into a Convertible Promissory Note for
$36,000 to be paid no later than August 28, 2008 with 11% interest per annum. On
December 31, 2007, the Company and the Payee amended the note to change the
interest rate to 10%, exclude incentive payments, change the conversion rate to
60% instead of 50%, and extended the due date to December 31,
2009.  Accrued interest was also rolled up into the amended note for a
new note balance of $37,133.  The Company has determined that these
modified terms are substantially different than the original terms as defined in
EITF 96-19, and, therefore, this renegotiation did result in the recognition of
a $11,913 gain as of the date of the amendment of the note.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to this convertible feature, a debt discount of $32,839 was calculated
in accordance with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being recorded as interest expense and
totaled $2,879 for the quarter ended September 30, 2008 and $18,539 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





In
connection with this transaction, 144,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of September 17,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 299.55%, a contractual life of fiveyears, a zero dividend
rate, 4.21% risk free interest rate, and the fair value of common stock of $0.02
per share at date of grant, the Company determined the allocated fair value of
the warrant to be $3,161.  The Company has recorded this amount as a
debt discount and is amortizing the debt discount over the term of this


17




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Note. The
amortization is being recorded as interest expense and totaled $538 for the
quarter and $2,206 as of the nine months ended September 30,
2008.  The warrant has been fully amortized as of September 30,
2008.





On
September 17, 2007, the Company entered into a Convertible Promissory Note for
$30,000 to be paid no later than August 28, 2008 with 11% interest per annum. On
December 31, 2007, the Company and the Payee amended the note to change the
interest rate to 10%, exclude incentive payments, change the conversion rate to
60% instead of 50%, and extended the due date to December 31,
2009.  Accrued interest was also rolled up into the amended note for a
new note balance of $30,629.  The Company has determined that these
modified terms are substantially different than the original terms as defined in
EITF 96-19, and, therefore, this renegotiation did result in the recognition of
a $10,433 gain as of the date of the amendment of the note.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to this convertible feature, a debt discount of $27,366 was calculated
in accordance with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being recorded as interest expense and
totaled $12,104 for the quarter ended September 30, 2008 and $25,155 for the
period from inception to September 30, 2008.  During the third
quarter, the note holder converted a total of $12,000 in principal and interest
payments.  The balance of the note as of September 30, 2008 is
$16,212.





In
connection with this transaction, 120,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of September 17,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 299.55%, a contractual life of fiveyears, a zero dividend
rate, 4.21% risk free interest rate, and the fair value of common stock of $0.02
per share at date of grant, the Company determined the allocated fair value of
the warrant to be $2,634.  The Company has recorded this amount as a
debt discount and is amortizing the debt discount over the term of this Note.
The amortization is being recorded as interest expense and totaled $448 for the
quarter and $1,838 as of the nine months ended September 30,
2008.  The warrant has been fully amortized as of September 30,
2008.





On
October 5, 2007, the Company entered into a Promissory Note for $60,000 to be
paid no later than August 5, 2008 with an interest rate of 13.2%.  On
December 31, 2007, the Company and the Payee amended the note to change the
interest rate to 10%, exclude incentive payments, extend the due date to
December 31, 2009, and to insert a conversion clause which allows the Payee to
convert all or part of the remaining principal balance and accrued interest into
the Company’s Common Stock based on 50% of the average of the lowest three
closing bid prices in the past five trading days immediately preceding such
conversion so long as such conversions shall not exceed 4.99% of the then
outstanding Common Stock of the Company.  Accrued interest was also
rolled up into the amended note for a new note balance of $61,870.  The
Company has determined that these modified terms are substantially different
than the original terms as defined in EITF 96-19, and, therefore, this
renegotiation result in the recognition of a $25,524 loss as of the date of the
amendment of the note.  In relation to the convertible feature of this
note, a debt discount of $58,512 was calculated in accordance with EITF 00-27
and is being amortized over the life of the debenture.  The
amortization is being recorded as interest expense and totaled $18,153 for the
quarter ended September 30, 2008 and $33,942 for the period from inception to
September 30, 2008.





In
connection with this transaction, 240,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of August 5,
2012.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 332.74%, a contractual life of fiveyears, a zero dividend
rate, 4.33% risk free interest rate, and the fair value of common stock of
$0.014 per share at date of grant, the Company determined the allocated fair
value of the warrant to be $3,358.  The Company has recorded this
amount as a debt discount and is amortizing the debt discount over the term of
this


18




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Note. The
amortization is being recorded as interest expense and totaled $392 for the
quarter and $2,406 as of the nine months ended September 30,
2008.  The warrant has been fully amortized as of September 30,
2008.   During the quarter, the note holder converted a total of
$23,389 in principal and interest payments.  The balance of the note
is $39,048 as of September 30, 2008.





On
November 21, 2007, the Company entered into a Convertible Promissory Note for
$50,000 to be paid no later than November 21, 2008 with 11% interest per annum.
On December 31, 2007, the Company and the Payee amended the note to change the
interest rate to 10%, exclude incentive payments, change the conversion rate to
60% instead of 50%, and extended the due date to December 31,
2009.  Accrued interest was also rolled up into the amended note for a
new note balance of $50,603.  The Company has determined that these
modified terms are substantially different than the original terms as defined in
EITF 96-19, and, therefore, this renegotiation did result in the recognition of
a $18,083 gain as of the date of the amendment of the note.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to this convertible feature, a debt discount of $50,183 was calculated
in accordance with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being recorded as interest expense and
totaled $14,460 for the quarter ended September 30, 2008 and $26,954 for the
period from inception to September 30, 2008.  During the third
quarter, the note holder converted a total of $12,300 in principal and interest
payments.  The balance of the note as of September 30, 2008 is
$41,016.





In
connection with this transaction, 200,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of November 21, 2012.
 Utilizing the Black-Scholes valuation model and the following assumptions:
estimated volatility of 332.74%, a contractual life of fiveyears, a zero dividend
rate, 3.4% risk free interest rate, and the fair value of common stock of
$0.0021 per share at date of grant, the Company determined the allocated fair
value of the warrant to be $419.  The Company has recorded this amount
as a debt discount and is amortizing the debt discount over the term of this
Note.  The amortization is being recorded as interest expense and
totaled $105 for the quarter and $360 period from inception to September 30,
2008.





On
November 30, 2007, the Company entered into a Convertible Promissory Note for
$50,000 to be paid no later than November 30, 2008 with 11% interest per
annum.  On December 31, 2007, the Company and the Payee amended the
note to change the interest rate to 10%, exclude incentive payments, change the
conversion rate to 60% instead of 50%, and extended the due date to December 31,
2009.  Accrued interest was also rolled up into the amended note for a
new note balance of $50,240.  The Company has determined that these
modified terms are not substantially different than the original terms as
defined in EITF 96-19, and, therefore, this renegotiation did not result in the
recognition of a gain or loss.  At any time, the Payee may convert all
or part of the remaining principal balance and accrued interest into shares of
the Company’s Common Stock based on 60% of the average of the lowest three
closing bid prices in the past 20 trading days immediately preceding such
conversion so long as such conversions shall not exceed 4.99% of the then
outstanding common stock of the Company.  In relation to this
convertible feature, a debt discount of $47,842 was calculated in accordance
with EITF 00-27 and is being amortized over the life of the
debenture.  The amortization is being recorded as interest expense and
totaled $6,021 for the quarter ended September 30, 2008 and $17,932 for the
period from inception to September 30, 2008.  No payments were made or
due during the quarter.





In
connection with this transaction, 200,000 warrants to purchase the common stock
of the Company at $.25 were issued with an expiration date of November 30, 2012.
 Utilizing the Black-Scholes valuation model and the following assumptions:
estimated volatility of 332.74%, a contractual life of fiveyears, a zero dividend
rate, 3.41% risk free interest rate, and the fair value of common stock of
$0.012 per share at date of grant, the Company determined the allocated fair
value of the warrant to be $2,398.  The Company has recorded this
amount as a debt discount and is amortizing the debt discount over the term of
this Note.  The amortization is being recorded as interest expense and
totaled $600 for the quarter and $1,998 for the period from inception to
September 30, 2008.


19




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


On
January 16, 2008, the Company entered into a Promissory Note for $12,500 to be
paid no later than December 31, 2009 with an interest rate of 10%.  At
any time, the Payee may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $12,500 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $1,608 for the quarter ended September 30, 2008 and $4,510 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On
January 16, 2008, the Company entered into a Promissory Note for $17,500 to be
paid no later than December 31, 2009 with an interest rate of 10%.  At
any time, the Payee may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $17,500 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $9,549 for the quarter ended September 30, 2008 and $13,612 for the
period from inception to September 30, 2008.  During the third
quarter, the note holder converted a total of $9,000 in principal and interest
payments.  The balance of the note as of September 30, 2008 is
$9,458.





On
February 12, 2008, the Company entered into a Promissory Note for $25,000 to be
paid no later than December 31, 2009 with an interest rate of 10%.  At
any time, the Payee may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $25,000 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $3,343 for the quarter ended September 30, 2008 and $8,394 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On
February 27, 2008, the Company entered into a Promissory Note for $10,000 to be
paid no later than December 31, 2009 with an interest rate of 10%.  At
any time, the Payee may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $10,000 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $4,357 for the quarter ended September 30, 2008 and $6,200 for the
period from inception to September 30, 2008.  During the third
quarter, the note holder converted a total of $3,360 in principal and interest
payments.  The balance of the note as of September 30, 2008 is
$7,209.





On March
13, 2008, the Company entered into a Promissory Note for $20,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of


20




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


$20,000
was calculated in accordance with EITF 00-27 and is being amortized over the
life of the debenture.  The amortization is being recorded as interest
expense and totaled $2,797 for the quarter ended September 30, 2008 and $6,109
for the period from inception to September30, 2008.  No payments were
due or made during the quarter.





On March
18, 2008, the Company entered into a Promissory Note for $10,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $9,481 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $1,336 for the quarter ended September 30, 2008 and $2,846 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On April
2, 2008, the Company entered into a Promissory Note for $25,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $25,000 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $3,605 for the quarter ended September 30, 2008 and $7,092 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On April
3, 2008, the Company entered into a Promissory Note for $10,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $10,000 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $1,444 for the quarter ended September 30, 2008 and $2,826 for the
period from inception to September 30, 2008.  No payments were due or
made during the quarter.





On April
5, 2008, the Company entered into three Promissory Notes totaling $110,000 to be
paid no later than December 31, 2009 with an interest rate of 10%.  At
any time, the Payees may convert all or part of the remaining principal balance
and accrued interest into shares of the Company’s Common Stock based on 60% of
the average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible features of these notes, a total debt discount of
$110,000 was calculated in accordance with EITF 00-27 and is being amortized
over the lives of these debentures.  The amortization is being
recorded as interest expense and totaled $15,937 for the quarter ended September
30, 2008 and $30,835 for the period from inception to September 30,
2008.  No payments were due or made during the quarter.





On April
24, 2008, the Company entered into a Promissory Note for $70,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest three closing bid prices in the past 20 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt  discount of


21




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


$43,750
was calculated in accordance with EITF 00-27 and is being amortized over the
life of the debenture.  The amortization is being recorded as interest
expense and totaled $6,534 for the quarter ended September 30, 2008 and $11,293
for the period from inception to September 30, 2008.  No payments were
due or made during the quarter.





On July
8, 2008, the Company entered into a Promissory Note for $15,000 to be paid no
later than December 31, 2009 with an interest rate of 10%.  At any
time, the Payee may convert all or part of the remaining principal balance and
accrued interest into shares of the Company’s Common Stock based on 60% of the
average of the lowest five closing bid prices in the past 10 trading days
immediately preceding such conversion so long as such conversions shall not
exceed 4.99% of the then outstanding common stock of the Company.  In
relation to the convertible feature of this note, a debt discount of $15,000 was
calculated in accordance with EITF 00-27 and is being amortized over the life of
the debenture.  The amortization is being recorded as interest expense
and totaled $2,329 for the quarter ended September 30, 2008 and for the period
from inception to September 30, 2008.  No payments were due or made
during the quarter.




22




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Note
5:  Stockholder's Equity





Common
Stock




During
the quarter ended September 30, 2008, the Company issued a total of 354,079,186
shares of common stock valued at $316,813 for consulting services, repayment of
debt, and for cash payment detailed in the following chart.




Date
      of Issue
                                
                                Number
      of Shares Issued
                                
                                
                                Aggregate
                                  Sales
      Price
                                
                                Nature
      of Transaction07/08/2008
                                
                                
                                12,068,332
                                
                                
                                $
                                12,068
                                
                                In
      exchange for debt repayment07/11/2008
                                
                                
                                56,300,000
                                
                                
                                $
                                56,300
                                
                                In
      exchange for debt repayment07/11/2008
                                
                                
                                30,612,243
                                
                                
                                $
                                15,000
                                
                                In
      exchange for preferred stock conversion07/29/2008
                                
                                
                                86,930,571
                                
                                
                                $
                                72,000
                                
                                In
      exchange for cash payment07/31/2008
                                
                                
                                9,000,000
                                
                                
                                $
                                9,000
                                
                                In
      exchange for debt repayment08/01/2008
                                
                                
                                36,951,265
                                
                                
                                $
                                31,557
                                
                                In
      exchange for debt repayment08/01/2008
                                
                                
                                7,000,000
                                
                                
                                $
                                7,000
                                
                                In
      exchange for preferred stock conversion08/14/2008
                                
                                
                                13,043,884
                                
                                
                                $
                                25,000
                                
                                In
      exchange for cash payment08/27/2008
                                
                                
                                17,629,390
                                
                                
                                $
                                16,660
                                
                                In
      exchange for debt repayment08/29/2008
                                
                                
                                7,465,007
                                
                                
                                $
                                11,198
                                
                                In
      exchange for consulting services09/04/2008
                                
                                
                                6,875,000
                                
                                
                                $
                                10,000
                                
                                In
      exchange for cash payment09/18/2008
                                
                                
                                24,609,743
                                
                                
                                $
                                11,320
                                
                                In
      exchange for debt repayment09/19/2008
                                
                                
                                8,000,000
                                
                                
                                $
                                3,360
                                
                                In
      exchange for debt repayment09/22/2008
                                
                                
                                5,238,095
                                
                                
                                $
                                10,000
                                
                                In
      exchange for cash payment09/29/2008
                                
                                
                                5,500,000
                                
                                
                                $
                                5,000
                                
                                In
      exchange for cash payment09/29/2008
                                
                                
                                26,855,656
                                
                                
                                $
                                21,350
                                
                                In
      exchange for debt repaymentTotal
                                
                                
                                354,079,186
                                
                                
                                $
                                316,813
  On August
11, 2008, the Company amended its articles of incorporation to increase its
authorized capital stock to two billion shares, consisting of (a) one billion
nine hundred fifty million (1,950,000,000) shares of common stock par value
$0.00001 per share and (b) fifty million (50,000,000) shares of preferred stock
par value $0.001 per share issuable in one or more series.





During
the quarter ended June 30, 2008, the company issued 12,910,053 shares of common
stock valued at $24,413 for consulting services.  The Company also
issued 84,287,855 shares of common stock valued at $68,480 for the repayment of
debt and 44,085,526 shares of common stock valued at $57,000 in exchange for
cash payment.





During
the quarter ended March 31, 2008, the Company issued 8,846,122 shares of common
stock valued at $32,283 for consulting services.  The Company also
issued 33,048,146 shares of common stock valued at $62,036 for repayment of
debt.





On
January 14, 2008, the Company signed a settlement agreement whereby the Company
agreed to pay a previous shareholder $10,000 in cash and 3,000,000 shares of the
Company’s common stock (without registration under the Securities Act of 1933)
as additional and final consideration for the Series B Preferred shares he sold
back to the Company.  The value of the shares at the date of issuances
is $13,500.  Total Settlement cost of $23,500 was expensed during the
period ended March 31, 2008.





Amendment to Common Stock
Par Value


On May
22, 2008, the Company amended the articles of incorporation by adjusting the par
value of the common stock from $0.001 to $0.00001. All shareholder equity
accounts have been restated to reflect the adjustment to the par value as of the
earliest date presented in the financial statements.


23




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008







Preferred
Stock





On August
11, 2008, the Company amended all Preferred stock by increasing the authorized
shares to 50,000,000 shares and amending the par value of the preferred stocks
to $0.001.





Series
C Preferred Stock


On August
28, 2008, the Company amended Series C Preferred stock to increase the
authorized shares to 3,000,000 shares par value $0.001 and decreased the
conversion rights to state that upon written request from the Company and at
management’s discretion,  holders of Series C stock agree to convert
each share of Series C stock into $2.00 worth of the Company’s common
stock.  On September 15, 2008, the Company sold 800,000 shares of
Series C stock to its CEO, Kenneth Yeung, for $800 cash.  At this time
management does not intend on converting any shares of Series Preferred C into
common stock of the company.





Series
D Preferred Stock


On July
11, 2008, 15,000 shares of Series D Preferred stock was converted into
30,612,243 shares of the Company’s common stock valued at $15,000.





Series
E Preferred Stock


Effective
March 31, 2008, the Company and Suining Yinfa Construction and Engineering Co.,
Ltd., both agreed that it was in their best interest to rescind the Asset Sale
and Purchase Agreement of the Rose Top Grade Project due to the underperformance
of the assets and the inability of the sellers to record transactions as
necessary to permit preparation of financial statements in conformity with US
GAAP.  Suining Yinfa agreed to return all 350,000 shares of the
Company’s Series E Preferred Stock as part of the rescission and the Company
agreed to compensate Suining Yinfa for their work and time in connection with
this transaction with 35,000 shares of the Company’s Series E Preferred
Stock.    The Company issued the 35,000 shares of Series E
Preferred Stock on April 22, 2008.  Since the Series E Preferred Stock
has a convertible feature, a Preferred Dividend of $35,000 was calculated in
accordance with EITF 00-27.See
Note 7 – Acquisitions and Investments.





On July
25, 2008, the Company amended Series E Preferred stock to amend the conversion
terms of the series and to decrease the authorized shares to 50,000
shares.  Due to the amendment of the conversion feature of the
existing 35,000 shares of Series E Preferred Stock, a Preferred Dividend of
29,862 was calculated in accordance with EITF 00-27.





On August
1, 2008, 7,000 shares of Series E Preferred stock was converted into 7,000,000
shares of the Company’s common stock valued at $7,000.





Series
F Preferred Stock


On April
23, 2008, the Company designated a new series of preferred stock called the
Series F Preferred stock with the following attributes:





a.
            Authorized
      Shares: 3,000,000


b.
              Dividends:
      8% annual dividends, at management’s
discretion


c.
              Liquidation
      Rights: Yes


d.
              Voting
      Rights: None


e.
              Conversion
      Rights: Six months after issuance each share of Series F Preferred Stock
      is convertible to $1.00 worth of common stock based on 90% of the average
      closing sales prices for the 5 trading days preceding
      conversion.


24


INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008






On June
30, 2008, the Company issued a total of 20,000 shares of Series F Preferred
Stock for $20,000 cash paid as consideration for the shares. Since the Series F
Preferred Stock has a convertible feature, a Preferred Dividend of $4,154 was
calculated in accordance with EITF 00-27.





NOTE
6:  DISCONTINUED OPERATIONS




At the
end of the first quarter of 2007 the Company discontinued all operations related
to the motor sports business due to increased manufacturer’s prices, slowing
retail sales, increased competition from online auction sites and the
consolidation of the die cast industry.  This includes operations by
its wholly owned subsidiaries Scottsdale Diecast, Inc. (“SDI”) and Quadriga
Motorsports, Inc. (“Quadriga”).  The Company has since shifted focus
to developing and manufacturing lightweight panel technology.  No
income tax expense has been recorded related to the discontinued operations
given the Company’s net operating loss carry forwards and related valuation
allowances.  Prior year financial statements for 2007 have been
reclassified to present the operations of the motor sports business as
discontinued operations.  There is no activity in the current year as
of September 30, 2008 related to the motor sports business.





As of
September 30, 2008 and 2007 there were $0 of  assets and liabilities
included in Assets Held for Sale and Liabilities Held for Sale that relates to
our motor sports business.





The
following amounts, related to our motor sports business, have been segregated
from Continuing Operations and included in Discontinued Operationsin the Consolidated
Statements of Operations:





2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007Gross
      profit
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        (57
                        )Operating
      expensesSelling,
      general and administrative
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        170,039Depreciation
      and amortization
                        
                        
                        -
                        
                        
                        
                        9,250
                        
                        
                        
                        -
                        
                        
                        
                        11,745Total
      operating expenses
                        
                        
                        -
                        
                        
                        
                        (9,250
                        )
                        
                        
                        -
                        
                        
                        
                        (181,784
                        )Other
      Income (expense):Interest
      expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (12,642
                        )Gain
      on extinguishment of debt
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        37,405Loss
      on sale of assets
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (4,177
                        )Other
      income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (4,894
                        )Total
      other income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        15,692Gain
      (loss) from discontinuing operations
                        
                        $
                        -
                        
                        
                        $
                        (9,250
                        )
                        
                        $
                        -
                        
                        
                        $
                        (166,149
                        )





25




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


NOTE
7 – ACQUISITIONS AND INVESTMENTS





International
Building Technologies, Inc.





On May 2,
2007, Motorsports Emporium, Inc. (“Motorsports”) entered into a Stock Sale and
Purchase Agreement with Axia Group, Inc. (“Axia”), International Building
Technologies, Inc. (“IBT”) and its Hong Kong subsidiary International Building
Technologies Co., Ltd. (“IBT LTD”), pursuant to which Motorsports acquired
50,000,000 shares of IBT’s common stock (or approximately 80% of IBT’s issued
and outstanding common stock) from Axia for consideration of $2,300,000
consisting of a (i) $1,000,000 Convertible Note and (ii) 20,000,000 common
shares of Motorsports valued at $1,300,000.  Subsequently, on
September 27, 2007, the Company and Axia Group renegotiated the terms and agreed
to rescind the $1,000,000 Convertible Promissory Note changing the purchase
price to $1,300,000.  The value of the 20,000,000 common shares issued
was determined based on the average market price of Motorsport’s common shares
over the 2-day period before and the terms of the acquisition were agreed to and
announced.





IBT owns
the rights to manufacture and sell light weight building panels used in
construction all over the world.  The building panels can be used in a
variety of ways to erect buildings up to six stories tall without the need of a
traditional wood or steel frame structure.  It is also versatile in
its use and can be used to create unique architectural design
elements.  Management believes that the Company’s panel based building
technology allows for the rapid, cost effective construction of residential,
commercial, and high-rise buildings utilizing materials that are greater in
strength and appearance, economical and eco-friendly.  Based on
standard building codes prescribed by authorities worldwide, the Company’s
technology meet and exceed the minimum requirements.  The Company also
provides customers with architectural design, panel supply, installation
supervision, engineering, training, and technical support.  IBT Hong
Kong has contractual rights and business relationships to do business in
China.





The
acquisition has been accounted for as a purchase in accordance with Statement of
Financial Accounting Standard No. 141 Business Combinations. The
total purchase price was allocated as follows:




Cash
                            
                            $
                            6,207Fixed
      assets
                            
                            
                            6,271Other
      assets
                            
                            
                            3,539Current
      liabilities
                            
                            
                            (4,294
                            )Minority
      Interest
                            
                            
                            (15,000
                            )Goodwill
                            
                            
                            1,303,277Purchase
      price
                            
                            $
                            1,300,000








None of
the $1,302,994 of goodwill is subject to amortization, but an annual impairment
test.  The Company conducted an annual impairment test on the goodwill
and concluded that the there is no impairment on the asset as of December 31,
2007.





Suining
Yinfa Construction and Engineering Co. – Rose Top Grade Project





In July
2007, our wholly owned subsidiary, International Building Technologies, Co.,
Ltd. (“IBT LTD”), a Hong Kong corporation, entered into an Asset Sale and
Purchase Agreement with China based Suining Yinfa Construction & Engineering
Co, Ltd. (“Suining Yinfa”) for 51% interest in a Chinese building projected
named Rose Top Grade (“Rose Best”) Project.  The Rose Best Project is
located in the


26




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Sichuan
Province of China and consists of four upscale residential apartment buildings
with a total building area of approximately 49,500 square meters (537,000 sq
feet).  The Company purchased 51% of the Rose Best Project from
Suining Yinfa for a $350,000 USD convertible promissory note, payable July
2009.  On December 12, 2007, the Company converted the note into
350,000 shares of the Company’s Series E Preferred stock.





Effective
March 31, 2008, signed April 23, 2008, both parties agreed that it was in their
best interest to rescind the Asset Sale and Purchase Agreement due to the
underperformance of the assets and the inability of the sellers to record
transactions as necessary to permit preparation of financial statements in
conformity with US GAAP.  Suining Yinfa agreed to return all 350,000
shares of the Company’s Series E Preferred Stock as part of the rescission and
the Company agreed to compensate Suining Yinfa for their work and time in
connection with this transaction with 35,000 shares of the Company’s Series E
Preferred Stock.    The value of the 35,000 shares of the
Company’s Series E Preferred Stock is valued at $35,000.  Each share
of the Company’s Series E Preferred Stock is convertible to One Dollar worth of
the Company’s common stock.  The compensation to Suining Yinfa has
been expensed as of March 31, 2008 on the condensed consolidated statement of
operations.





Acquisition
of Wuhan Wufeng Machinery Manufacturing Company, Ltd.




On April
16, 2008, the Company entered into a definitive agreement to acquire a 92% stake
in Wuhan Wufeng Machinery Manufacturing Company, Ltd. (“Machinery Co.”) from
Wuhan Intepower Company, Ltd., a China Corporation (“Seller”) pursuant to a
Stock Sale and Purchase Agreement.  After transferring a 4% stake to
certain management personnel of the Machinery Co. at the close of the
transaction, the Company will own a net interest of 88% of the equity securities
of the Machinery Company.  The closing of this acquisition will occur
as soon as the audit of the books and accounts of the Machinery Co. is completed
to the satisfaction of the Company and requisite governmental approvals are
obtained.  On June 24, 2008, the Company received requisite
governmental approvals to proceed with this transaction and during the third
quarter, the Company engaged PCAOB approved SEC auditors Albert Wong &
Company to perform the audit of the Machinery Company.  Currently, the
auditors are performing the audit of the Machinery Company and the audit is
expected to be completed soon.   As of September 30, 2008, the
Company has paid the 10% cash down payment on the acquisition.  The
convertible notes for the balance of the acquisition will be finalized pending
the completion of the audit.






The
Machinery Co. currently offers several lines of machineries and equipments which
can be retooled to manufacture the panel production machineries that the Company
endeavors to sell and utilize in several planned projects in China and other
countries. The Machinery Co. currently has state of the art tools, experienced
engineers, capability to design new lines of equipment, as well as strong
customer service and after-sales support. Strategically, this acquisition will
strongly support the Company’s ability to supply the market for building panels
and panel machineries in China and throughout the world.






The
purchase consideration to be paid by the Company to the Seller will be
approximately U.S. $1,500,000, consisting of cash for 10% of the purchase
consideration, and three (3) Convertible Promissory Notes representing the
balance of the purchase consideration.  At the Seller's option the
notes are convertible into shares of the Company’s common stock at a value
equivalent to the notes.




NOTE
8:  DERIVATIVE LIABILITY





As of
September 30, 2008, the common stock equivalents of the Company on all
convertible debentures and preferred stock exceeded the total common stock
available for issuance by approximately by 3,496,583,611 shares.  The
Company’s Chief Executive Officer, Kenneth Yeung, holds 1,000,000 shares of
Series C Preferred Stock that are convertible into 2,222,222,222 common shares
of the Company.


27




INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 Notes
to the Condensed Consolidated Financial Statements
 September
30, 2008


Unless
and until there is enough authorized common stock available to cover all common
stock equivalents, Mr. Yeung will not convert any of his preferred shares.
Furthermore, the stock is only convertible upon management’s
discretion.  Management currently does not intend on converting such
stock.  Also, warrant options are not included in common stock
equivalents since the exercise price of $0.25 for the warrant exceeds the fair
value of common stock of $0.0009 per share on 9/30/2008.  The
remaining common stock equivalent of 1,274,361,389 shares has been accounted for
as a derivative liability.  Accordingly, the excess common stock
equivalents exceeding the total common stock available for issue is marked to
market through earnings at the end of each reporting
period.  Utilizing the Black-Scholes valuation model and the following
assumptions: estimated volatility of 302.7%, a contractual life of half ayear, a zero dividend
rate, 1.6% risk free interest rate, exercise price of $0.00043 and the fair
value of common stock of $0.0009 per share as of September 30, 2009, the Company
determined the allocated fair value of the derivative liability.  The
Company reflected an expense of $928,372, representing the initial fair value of
excess common stock equivalents exceeding the total common stock available for
issuance.





NOTE
9:  SUBSEQUENT EVENTS





Stock
Issuances




The
Company issued the following Common Stocks after the end of the quarter ended
September 30, 2008 and prior to the filing of these financial
statements.





The
Company issued 51,000,000 shares of common stock valued at $24,000 for repayment
of debt.





The
Company issued 24,992,938 shares of common stock valued at $7,994 for consulting
services accrued in the past.





The
Company issued 8,203,125 shares of common stock valued at $3,500 in exchange for
Preferred Series “E” Conversion.





Convertible Promissory
Notes





The
Company issued the following Notes Payable after the quarter ended September 30,
2008 and prior to the filing of these financial statements.  The
October 9, 2008 promissory note carries a conversion rate of 60% based on the
average of the five lowest closing bid prices within the 10 trading days
preceding the conversion.  The October 28th and
29th
promissory notes have conversion features consisting of a 65% conversion rate
based on the average of the 20 closing bid prices preceding the conversion. No
conversion shall exceed 4.99% of the then outstanding common stock of the
Company.  The October 9, 2008 note is convertible at any
time.  The October 28th and
29th
notes are convertible after six months.





Date
                                
                                Amount
                                
                                MaturityOctober
      9, 2008
                                
                                $
                                11,000
                                
                                October
      9, 2009October
      28, 2008
                                
                                $
                                5,000
                                
                                October
      28, 2009October
      29, 2008
                                
                                $
                                15,000
                                
                                December
      31, 2009Total
                                
                                $
                                31,000







28


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





For a
description of our significant accounting policies and an understanding of the
significant factors that influenced our performance during the quarter ended
September 30, 2008, this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” should be read in conjunction with the
Consolidated Financial Statements, including the related notes, appearing in
Item 1 of this Quarterly Report, as well as the Company’s Annual Report on Form
10-KSB for the year ended December 31, 2007.




Cautionary Forward - Looking
Statement




The
foregoing discussion, as well as the other sections of this Quarterly Report on
Form 10-Q, contains forward-looking statements that reflect our current views
with respect to future events and financial results.  Forward-looking
statements usually include the verbs “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “projects,” “understands” and other verbs
suggesting uncertainty.  We remind readers that forward-looking
statements are merely predictions and therefore inherently subject to
uncertainties and other factors which could cause the actual results to differ
materially from the forward-looking statements.  Such factors and
uncertainties include, but are not limited to the following:





-        the
volatile and competitive nature of the industry,


-        the
uncertainties surrounding the rapidly evolving markets in


which
we compete,


-        the
uncertainties surrounding technological change of the industry,


-        our
dependence on its intellectual property rights,


-        the
success of marketing efforts by third parties,


-        the
changing demands of customers, and


-        the
arrangements with present and future customers and third


parties.





Should
one or more of these risks or uncertainties materialize or should any of the
underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated.





General





Prior to
December 1, 2004 the Company was known as Ten Stix, Inc. and changed its name to
MotorSports Emporium, Inc. on December 1, 2004 under the laws of the State of
Nevada to engage in the motor sports industry targeting enthusiasts
participating in die cast collecting, automobile restoration, purchase of
high-performance accessories, motor sports related collectibles, driver’s
apparel, race venues and product licensing.  On July 12, 2007, the
Company reported in a Definitive Schedule 14C that the Company was going to
change its name to International Building Technologies Group, Inc. to better
reflect its change of business from motor sports related to building and
construction of lightweight panels.  On July 17, 2007 the Company
amended its articles of incorporation to change its name to International
Building Technologies Group, Inc. effective on August 6,
2007.  According to Statement of Financial Accounting Standards No. 7,
“Accounting and Reporting by Development Stage Enterprises,” the Company has
reentered the development stage.  The Company devotes most of its
efforts to establishing a new business, raising capital, establishing sources of
supply, acquiring property, plant, equipment, and other operating
assets.  The Company’s shares of common stock trade on the OTC
Bulletin Board under the symbol “INBG.OB”.




Our
principal executive offices are located at 1151 Harbor Bay Parkway, Suite 202,
Alameda, CA 94502.  Our telephone number is (510) 814-3778 and
facsimile number is (510) 814-0366.  More information regarding our
products and the Company is available on our website at
www.ibtgi.com.





29


Executive
Overview





In 2004,
we entered the motor sports industry selling die cast model cars.  In
2005 we created several divisions to sell race worn memorabilia (helmets, gloves
and racing suits), automotive related art and high performance brake
fluid.  Additionally, in 2006 we created a car wash product named
after a well-known racing legend.  Up until the end of our first
quarter in 2007 we continued to focus our efforts on our high performance brake
fluid and specialty car care product lines, however due to a change in control
and certain events, we changed our business operations to better reflect
management’s experience and our expertise in the light weight panel industry
where we can better concentrate on global construction and engineering
projects.  At the end of the first quarter of 2007 we divested
ourselves from the motor sports business and transitioned into the business of
lightweight panel construction through our subsidiary International Building
Technologies, Inc. (“IBT”) and its wholly owned subsidiary International
Building Technologies, Co. Ltd. (“IBT Hong Kong”).





The
Company is a developer and provider of a superior panel based building
technology which allows for the rapid, cost effective construction of
residential, commercial, and high-rise buildings utilizing materials that are
superior in strength and appearance, economical and eco-friendly.  The
Company provides customers with architectural design, panel supply, installation
supervision, engineering, training, and technical support.





We
currently have signed Memorandums of Understanding and are negotiating contracts
for various projects throughout China.  Our endeavors include an
entire new town, luxury condominiums, resorts, social interest homes, and
standard industrial buildings.  We strive to establish fully
operational panel facilities throughout China, where they are building more
square feet of new housing, commercial, and industrial buildings than any other
country.





In July
2007, we executed an agreement to purchase a 51% interest in a Chinese building
project named the Rose Top Grade (Rose Best) Project.  However, due to
the underperformance of the Project along with the Seller’s inability to record
transactions as necessary to permit preparation of financial statements in
conformity with US GAAP, both parties decided to rescind the agreement and
return consideration paid in 2008.





In
December 2007, the Company signed a Memorandum of Understanding to acquire a
China based machinery manufacturing company.  The Machinery Company
has net assets worth approximately US $2.5 million and revenues of approximately
US $3.5 million for the year 2007.  The Machinery Company currently
offers several lines of machineries and equipments which can be retooled to
manufacture the panel production machineries that the Company endeavors to sell
and utilize in several planned projects in China and other
countries.  In April 2008, the Company executed a definitive agreement
to acquire the Machinery Company.  In June 2008, the China Government
granted approval for our Company to acquire the Machinery Company.  In
August 2008, the Company engaged a Hong Kong based Audit firm, Albert Wong &
Company, to audit the acquisition of the Machinery Company.  Albert
Wong & Company is a PCAOB approved SEC auditor.  Currently, the
auditors are performing the audit of the Machinery Company and the audit is
expected to be completed soon.





We have
been incurring selling, general and administrative expenses primarily to develop
our existing businesses, improve our current infrastructure to address
anticipated growth and identify and evaluate complementary business development
opportunities and marketing.  The development of these businesses has
led to recent operating losses and cash outflows.  However, we believe
the Company is strategically positioning itself with contracts and business
ventures that can significantly contribute to the continuous development of its
panel business and the Company’s bottom line.





30


Recent
Developments





Rescission
of Rose Top Project




In July
2007, IBT Hong Kong, entered into an Asset Sale and Purchase Agreement with
China based Suining Yinfa Construction & Engineering Co, Ltd. (“Suining
Yinfa”) for 51% interest in a Chinese building project named Rose Top Grade
(“Rose Best”) Project.  The Rose Best Project is located in the
Sichuan Province of China and consists of four upscale residential apartment
buildings with a total building area of approximately 49,500 square meters
(537,000 square feet).  The Company purchased 51% of the Rose Best
Project from Suining Yinfa for a convertible promissory note of US $350,000,
which was converted to 350,000 shares of the Company’s Series E preferred stock
on December 12, 2007.





Effective
March 31, 2008, both parties agreed that it was in their best interest to
rescind the Asset Sale and Purchase Agreement due to the underperformance of the
assets and the inability of the sellers to record transactions as necessary to
permit preparation of financial statements in conformity with US
GAAP.  Suining Yinfa agreed to return all 350,000 shares of the
Company’s Series E Preferred Stock as part of the rescission and the Company
agreed to compensate Suining Yinfa for their work and time in connection with
this transaction with 35,000 shares of the Company’s Series E Preferred
Stock.





Acquisition
of Wuhan Machinery Company




In
December 2007, the Company signed a Memorandum of Understanding to acquire a
machinery manufacturing company in Wuhan, Hubei Province of
China.  According to audited financial information prepared in
accordance with China accounting standards, the Machinery Company has net assets
worth approximately US $2.5 million and revenues of approximately US $3.5
million for the year 2007.  The Machinery Company currently offers
several lines of machineries and equipments which can be retooled to manufacture
the panel production machineries that the Company endeavors to sell and utilize
in several planned projects in China and other countries.  The
Machinery Company also has state of the art tools, experienced engineers,
capability to design new lines of equipment, as well as strong customer service
and after-sales support. Strategically, this acquisition will strongly support
INBG’s ability to supply the market for building panels and panel machineries in
China and throughout the world.





The
Company signed a definitive agreement to acquire the Machinery Co. on April 16,
2008.  The purchase consideration to be paid by the Company to the
Seller will be approximately U.S. $1,500,000, consisting of cash for 10% of the
purchase consideration, and three (3) Convertible Promissory Notes representing
the balance of the purchase consideration. At the Seller's option the notes are
convertible into shares of INBG common stock at a value equivalent to the
notes.  The Company received approval from the China Government to
acquire the Machinery Company on June 24, 2008.  In August 2008, the
Company engaged a Hong Kong based Audit firm, Albert Wong & Company, to
audit the acquisition of the Machinery Company.  Albert Wong &
Company is a PCAOB approved SEC auditor.  Currently, the auditors are
performing the audit of the Machinery Company and the audit is expected to be
completed soon.   As of September 30, 2008, the Company has paid
the 10% cash down payment on the acquisition.  The convertible notes
for the balance of the acquisition will be finalized pending the completion of
the audit.





Discontinued
Operations





At the
end of the first quarter of 2007 the Company discontinued all operations related
to the motor sports business due to increased manufacturer’s prices, slowing
retail sales, increased competition from online auction sites and the
consolidation of the die cast industry.  This includes operations by
its wholly owned subsidiaries Scottsdale Diecast, Inc. (“SDI”) and Quadriga
Motorsports, Inc. (“Quadriga”).


31


The
Company has since shifted focus to developing and manufacturing lightweight
panel technology.  The Company has subsequently disposed of all assets
related to the motor sports business in the first quarter of 2007.  No
income tax expense has been recorded related to the discontinued operations
given the Company’s net operating loss carry forwards and related valuation
allowances.  All activity during fiscal year 2007 related to the motor
sports business has been reclassified to present the operations as discontinued
operations.  There was no motor sports related business for the nine
months ended September 30, 2008.




Critical
Accounting Policies





The
methods, estimates and judgments we use in applying our accounting policies have
a significant impact on the results we report in our financial statements, which
we discuss under the heading "Results of Operations" following this section of
our MD&A.  Some of our accounting policies require us to make
difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain.  Our most critical
accounting estimates include Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,
which impacts the Statement of Operations.





We
believe the following critical accounting policies reflect the significant
estimates and assumptions used in the preparation of our consolidated financial
statements:





Accounting
for Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios.




The
company carries notes with convertible features embedded and accounted for them
under the Financial Accounting Standards Board’s Emerging issues Task Force
(“EITF”) 00-27.




EITF
00-27 requires the Company to calculate the fair value of stock-based embedded
convertible feature in notes as a debt discount, also known as a beneficial
conversion feature (“BCF”).   The convertible notes allow the
note holder to convert the note into common shares of the company at a specified
discounted rate.   The value of the debt discount is calculated
on the date of the note issuance using the intrinsic value
method.  Essentially, the debt discount equates to the difference
between the note and the fair market value of the stocks if the entire note were
to be converted.    The debt discount is accreted as an
Interest Expense ratably on a straight-line basis over the requisite service
period.




Translation
of Non-U.S. Currency Amounts




Assets
and liabilities of non-U.S. subsidiaries that operate in a local currency
environment are translated to U.S. dollars at year-end exchange rates. Income
and expense items are translated at weighted-average rates of exchange
prevailing during the year. Translation adjustments are recorded in Other
Comprehensive Income not affecting retained earnings within stockholders’
(deficit)/equity.




Inventories,
plant, rental machines and other property-net, and other non-monetary assets and
liabilities of non-U.S. subsidiaries and branches that operate in U.S. dollars,
or whose economic environment is highly inflationary, are translated at
approximate exchange rates prevailing when the company acquired the assets or
liabilities. All other assets and liabilities are translated at the quarter
ended September 30, 2008 exchange rates. Cost of sales and depreciation are
translated at historical exchange rates. All other income and expense items are
translated at the weighted-average rates of exchange prevailing during the
year.


32


Current
and historical exchange rates are not indicative of what future exchange rates
will be and should not be construed as such.





Relevant
exchange rates used in the preparation of the financial statements of the
subsidiary are as follows for the quarter ended September 30, 2008 (denoted in
Hong Kong dollars per one U.S. dollar):




2008Current
      exchange rate at September 30, 2008
                        $ 
      7.7659 HKDYear
      to Date Weighted average exchange rate
                        $ 
      7.797
HKD




Results
      of Operations





The
results of operations in the prior year are not indicative of the performance in
neither the current period nor future periods.  This is due to the
change in business from an exclusive die cast merchandising business to
developing and manufacturing lightweight panel technology.  The
discontinued operations of all activities related to the motor sports business
in the first quarter ended March 31, 2007 is reflected as Discontinued
Operations on the Statement of Operations.





Three
months ended September 30, 2008 and 2007





Since
discontinuing the prior business and re-entering the development stage as of
April 1, 2007 the Company’s results of operations has changed.  There
are no revenues during the current development stage as we are in the process of
starting our manufacturing process.  There were no revenues in the
quarters ended September 30, 2008 and 2007.  Going forward, after the
completion of the ongoing audit and upon acquisition of the Machinery Company,
the Company expects to report revenues generated by the Machinery
Company.





Operating
Expenses for current operations totaled $163,060 for the quarter ended September
30, 2008 compared to $203,026 for the quarter ended September 30,
2007.  The decrease of $39,966 in Operating Expenses between quarters
ended September 30, 2008 and 2007 is mostly attributed to decreased professional
fees related to the shift in business focus from the motor sports business to
the panel manufacturing business.  However, upon completion of the
acquisition of the Machinery Company, the Company expects operating expenses to
increase due to the costs associated with operating the Machinery
Company.





The most
significant change in our results of operations is the change in fair value of
derivative.  As of September 30, 2008 the total change in fair value
of derivative expense is $928,372.  This is a non-cash item that
recognizes the change of the value of the derivative liability as it is marked
to market at the end of each period.  The derivative liability is
calculated using the Black-Scholes Model to account for the excess common stock
equivalent exceeding the total common stock available for issuance (See Note 8 –
Notes Payable & Debt Discounts in Item 1).  This value will change
as the value of the Company’s common stock fluctuates.  However,
management is working to mitigate this issue and to reduce or eliminate this
expense.





As of
September 30, 2008, Interest Expense totaled $200,308 and $207,926 for the three
months ended September 30, 2007.  The decrease of $7,618 in Interest
Expense is due to the payment of principal with stock and cash, and a reduced
interest rate negotiated in 2007 (See Note 4 – Notes Payable & Debt
Discounts in Item 1).   Included in the interest expense is the
non-cash amortization of the beneficial conversion features (“BCF”) of the
debentures and warrants.  Total BCF and warrant amortization of
$159,926 and $96,929 for the respective quarters ended September 30, 2008 and
2007 represents the majority of the Interest expense in each respective
period.  Non-cash expenses such as BCFs and Warrants make up the
majority of the difference between current year and prior year interest
expense.  As the Company continues to grow its business, and until the
Company can generate enough revenues and income to support its operations, the
Company is going to continue to seek funding from outside
sources.


33


Nine
months ended September 30, 2008 and 2007





There
were no revenues in the nine months ended September 30, 2008 and
2007.  Going forward, after the completion of the ongoing audit and
upon acquisition of the Machinery Company, the Company expects to report
revenues generated by the Machinery Company.





Operating
Expenses for current operations totaled $561,828 for the nine months ended
September 30, 2008 compared to $360,797 for the nine months ended September 30,
2007.  Operating expenses consists mostly of Consulting and Contract
Labor expense, Officer Salaries, and Professional fees.  These
increased costs over the prior year are attributed the winding down of the motor
sports business in the prior year versus the continued operating cost of
developing the panel manufacturing business.  However, upon completion
of the acquisition of the Machinery Company, the Company expects operating
expenses to increase due to the costs associated with operating the Machinery
Company.





The most
significant change in our results of operations is the change in fair value of
derivative.  As of September 30, 2008 the total change in fair value
of derivative expense is $928,372.  This is a non-cash item that
recognizes the change of the value of the derivative liability as it is marked
to market at the end of each period.  The derivative liability is
calculated using the Black-Scholes Model to account for the excess common stock
equivalent exceeding the total common stock available for issuance (See Note 8 –
Notes Payable & Debt Discounts in Item 1).  This value will change
as the value of the Company’s common stock fluctuates.  However,
management is working to mitigate this issue and to reduce or eliminate this
expense.





As of
September 30, 2008, Interest Expense totaled $576,257 and $375,570 for the nine
months ended September 30, 2007.  The increase of $200,687 in Interest
Expense is largely due to the issuances of new debt with non-cash interest
expenses such as accretion of warrants and accretion on debt discounts, payment
of principal with stock and cash and a reduced interest rate negotiated in 2007
(See Note 4 – Notes Payable & Debt Discounts in Item
1).   Included in the interest expense is the non-cash
amortization of the beneficial conversion features (“BCF”) of the debentures and
warrants.  Total BCF and warrant amortization of $450,171 and $215,514
for the respective quarters ended September 30, 2008 and 2007 represents the
majority of the Interest expense in each respective period.  Non-cash
expenses such as BCFs and Warrants make up the majority of the difference
between current year and prior year interest expense.  As the Company
continues to grow its business, and until the Company can generate enough
revenues and income to support its operations, the Company is going to continue
to seek funding from outside sources.





In 2008,
the Company reported expenses related to a settlement totaling
$23,500.  This settlement is related to a previous shareholder dispute
that occurred in the prior year.  The Company decided to settle rather
than to deal with the legal and investigative costs related to this
matter.  The consideration paid consisted of $10,000 cash and
3,000,000 common shares of the Company valued at $13,500.  See Note 5
– Stock Holder’s Equity in Item 1.





Effective
March 31, 2008,the company rescinded the Asset Sale and Purchase Agreement on
the Rose Top Grade Project due to the underperformance of the assets and the
inability of the sellers to record transactions as necessary to permit
preparation of financial statements in conformity with US
GAAP.  Suining Yinfa agreed to return all 350,000 shares of the
Company’s Series E Preferred Stock as part of the rescission and the Company
agreed to compensate Suining Yinfa for their work and time in connection with
this transaction with 35,000 shares of the Company’s Series E Preferred
Stock.    The value of the 35,000 shares of the Company’s
Series E Preferred Stock is valued at $35,000.  Each share of the
Company’s Series E Preferred Stock is convertible to One Dollar worth of the
Company’s common stock (See Note 7 – Acquisitions and Investments in Item
1).


34


For the
nine months ended September 30, 2008, the Company has a $50,000 gain on forgiven
accrued expenses.  This expense was related to unpaid consulting fees
owed.  A portion of the accrued expenses, equating to $50,000, was
forgiven in accordance to the signed agreement between the consultant and the
Company.





Liquidity
and Capital Resources





During
the next 12 months, our foreseeable cash requirements will relate to continuing
to develop the operations of our wholly owned subsidiaries and business
divisions, maintaining our good standing and making the requisite filings with
the Securities and Exchange Commission, and the payment of expenses associated
with reviewing or investigating any potential business
venture.  Additionally, we may experience a cash shortfall and be
required to raise additional capital.  In the quarter ended September
30, 2008 and year ended December 31, 2007 we relied on funds from the sale of
shares of stocks and loans from our shareholders and private investors to
finance our operations and growth.  Management may raise additional
capital through future public or private offerings of our stock or through loans
from private investors, although there can be no assurance that we will be able
to obtain such financing.  Our failure to do so could have a material
and adverse affect upon us and our shareholders.





Currently
we are in the process of acquiring the Wuhan Manufacturing Company with a
purchase price of approximately U.S. $1,500,000.  As of September 30,
2008, the Company has paid the 10% cash down payment on the
acquisition.  The remaining balance will be paid for with convertible
notes pending the completion of the audit.  Terms of the note will be
determined upon completion of the audit.





The
unaudited chart below summarizes our debt (see Note 4 – Notes Payable & Debt
Discounts in Item 1).




Terms
                                        
                                        AmountShort Term Notes Payable:10.301%
      Interest; principal of $2,474; monthly payments of $1,254; due on
      12/1/2008
                                        
                                        $
                                        2,474Total
      Short Term Notes Payable
                                        
                                        $
                                        2,474Short Term Notes Payable to
      Shareholders:-0%
      Interest; principal of $3,000; monthly payments of $3,000; convertible to
      common stock based on 60% of average price; due on
12/31/08
                                        
                                        $
                                        3,000-0%
      Interest; principal of $3,000; monthly payments of $3,000; convertible to
      common stock based on 60% of average price; due on
12/31/08
                                        
                                        
                                        3,000-10%
      Interest; principal of $89,868; monthly payments of $4,396; convertible to
      common stock based on 75% of average price; due on
    6/30/2009.
                                        
                                        
                                        89,868-5%
      Interest; principal of $75,773; monthly payments of $4,387; convertible to
      common stock based on 70% of average price; due on 7/1/2009, net of
      unamortized discount related to the debt discount of
    $15,992
                                        
                                        
                                        59,781-10%
      Interest; principal of $15,000; convertible to common stock based on 60%
      of average price; due on 08/01/09; net of unamortized discount related to
      the debt discount of $ 12,534
                                        
                                        
                                        2,466-10%
      Interest; principal of $13,000; convertible to common stock based on 60%
      of average price; due on 08/01/09; net of unamortized discount related to
      the debt discount of $ 10,863
                                        
                                        
                                        2,137-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 09/03/09; net of unamortized discount related to
      the debt discount of $ 7,460
                                        
                                        
                                        2,540Total
      Short Term Notes Payable to Shareholders
                                        
                                        $
                                        162,792Long Term Notes Payable :-10%
      Interest; principal of $50,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $35,984
                                        
                                        
                                        14,016
  35
  -10%
      Interest; principal of $50,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $35,984
                                                  
                                                  
                                                  14,016-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,197
                                                  
                                                  
                                                  2,803-10%
      Interest; principal of $15,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $12,671
                                                  
                                                  
                                                  2,329Total
      Long Term Notes Payable
                                                  
                                                  $
                                                  33,164Long Term Notes Payable to
      Shareholders:-10%
      Interest; principal of $12,500; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,990
                                                  
                                                  
                                                  4,510-10%
      Interest; principal of $33,849; convertible to common stock based on 60%
      of average price; due on 12/31/2009.
                                                  
                                                  
                                                  33,849-10%
      Interest; principal of $16,212; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $2,211
                                                  
                                                  
                                                  14,001-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $7,174
                                                  
                                                  
                                                  2,826-10%
      Interest; principal of $9,458; convertible to common stock based on 60% of
      average price; due on 12/31/2009, net of unamortized discount related to
      the debt discount of $3,888
                                                  
                                                  
                                                  5,570-10%
      Interest; principal of $37,133; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $14,300
                                                  
                                                  
                                                  22,833-10%
      Interest; principal of $115,878; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $39,877
                                                  
                                                  
                                                  76,001-10%
      Interest; principal of $32,017; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $12,704
                                                  
                                                  
                                                  19,313-10%
      Interest; principal of $50,240; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $30,309
                                                  
                                                  
                                                  19,931-10%
      Interest; principal of $77,717; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $23,358
                                                  
                                                  
                                                  54,359-10%
      Interest; principal of $39,048; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $24,571
                                                  
                                                  
                                                  14,477-10%
      Interest; principal of $41,016; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $23,289
                                                  
                                                  
                                                  17,727-10%
      Interest; principal of $25,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $16,606
                                                  
                                                  
                                                  8,394-10%
      Interest; principal of $7,209; convertible to common stock based on 60% of
      average price; due on 12/31/2009, net of unamortized
                                                    discount
      related to the debt discount of $3,800
                                                  
                                                  
                                                  3,409
   36
  -10%
      Interest; principal of $20,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $13,891
                
                
                6,109-10%
      Interest; principal of $10,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $6,635
                
                
                3,365-10%
      Interest; principal of $25,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $17,908
                
                
                7,092-10%
      Interest; principal of $70,000; convertible to common stock based on 60%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $32,457
                
                
                37,543-10%
      Interest; principal of $10,642; convertible to common stock based on 50%
      of average price; due on 12/31/2009, net of unamortized discount related
      to the debt discount of $6,653
                
                
                3,989Total
      Long Term Notes Payable to Shareholders
                
                $
                355,298


Our
financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classifications of liabilities that
might be necessary should we be unable to continue our operations.




Off-Balance
Sheet Arrangements





As of the
date of this Quarterly Report, there are no off-balance sheet arrangements that
have 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.  The term "off-balance sheet arrangement"
generally means any transaction, agreement or other contractual arrangement to
which an entity unconsolidated with us is a party, under which the we have (i)
any obligation arising under a guarantee contract, derivative instrument or
variable interest; or (ii) a retained or contingent interest in assets
transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.





Material
Commitments





The
company currently has a material commitment to acquire Wuhan Manufacturing
Company for a purchase price of approximately U.S. $1,500,000.  As of
September 30, 2008, the Company has paid the 10% cash down payment on the
acquisition.  The remaining balance will be paid for with convertible
notes pending the completion of the audit.  Terms of the note will be
determined upon completion of the audit.





As of the
date of this Quarterly Report, we do not have any other material commitments
that are not reflected as liabilities on our consolidated balance sheet included
elsewhere in this report.





Item 3 – Quantitative and Qualitative Disclosures about Market
Risk





Not
Applicable





Item 4 - Controls and Procedures.





(a)  Evaluation of disclosure
controls and procedures.  Our principal executive officer and
principal financial officer have evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the 1934 Act as of the end of the period covered by this
quarterly report (“Evaluation Date”).  Based on such evaluation, our
Chief Executive Office and Chief Financial Officer has concluded that, as of the
Evaluation Date, our disclosure controls and procedures were
effective.


(b) Changes in internal
controls.  There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of evaluation by our principal executive officer and
principal financial officer.




37


PART
II – OTHER INFORMATION





Item1.  Legal Proceedings.




There
Company is not aware of any threatened or pending litigation against the
Company.





Item1A.  Risk Factors




There
have been no material changes from the risk factors described in our Annual
Report on Form 10KSB for the fiscal year ended December 31, 2007.





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




Since
September 30, 2008, the Company has issued the following securities without
registration under the Securities Act of 1933:




Date
      of Issue
                                  
                                  Number
      of Shares Issued
                                  
                                  
                                  Aggregate
                                    Sales
      Price
                                  
                                  Nature
      of Transaction07/08/2008
                                  
                                  
                                  12,068,332
                                  
                                  
                                  $
                                  12,068
                                  
                                  In
      exchange for debt repayment07/11/2008
                                  
                                  
                                  56,300,000
                                  
                                  
                                  $
                                  56,300
                                  
                                  In
      exchange for debt repayment07/11/2008
                                  
                                  
                                  30,612,243
                                  
                                  
                                  $
                                  15,000
                                  
                                  In
      exchange for preferred stock conversion07/29/2008
                                  
                                  
                                  86,930,571
                                  
                                  
                                  $
                                  72,000
                                  
                                  In
      exchange for cash payment07/31/2008
                                  
                                  
                                  9,000,000
                                  
                                  
                                  $
                                  9,000
                                  
                                  In
      exchange for debt repayment08/01/2008
                                  
                                  
                                  36,951,265
                                  
                                  
                                  $
                                  31,557
                                  
                                  In
      exchange for debt repayment08/01/2008
                                  
                                  
                                  7,000,000
                                  
                                  
                                  $
                                  7,000
                                  
                                  In
      exchange for preferred stock conversion08/14/2008
                                  
                                  
                                  13,043,884
                                  
                                  
                                  $
                                  25,000
                                  
                                  In
      exchange for cash payment08/27/2008
                                  
                                  
                                  17,629,390
                                  
                                  
                                  $
                                  16,660
                                  
                                  In
      exchange for debt repayment08/29/2008
                                  
                                  
                                  7,465,007
                                  
                                  
                                  $
                                  11,198
                                  
                                  In
      exchange for consulting services09/04/2008
                                  
                                  
                                  6,875,000
                                  
                                  
                                  $
                                  10,000
                                  
                                  In
      exchange for cash payment09/18/2008
                                  
                                  
                                  24,609,743
                                  
                                  
                                  $
                                  11,320
                                  
                                  In
      exchange for debt repayment09/19/2008
                                  
                                  
                                  8,000,000
                                  
                                  
                                  $
                                  3,360
                                  
                                  In
      exchange for debt repayment09/22/2008
                                  
                                  
                                  5,238,095
                                  
                                  
                                  $
                                  10,000
                                  
                                  In
      exchange for cash payment09/29/2008
                                  
                                  
                                  5,500,000
                                  
                                  
                                  $
                                  5,000
                                  
                                  In
      exchange for cash payment09/29/2008
                                  
                                  
                                  26,855,656
                                  
                                  
                                  $
                                  21,350
                                  
                                  In
      exchange for debt repaymentTotal
                                  
                                  
                                  354,079,186
                                  
                                  
                                  $
                                  316,813
  During
the quarter ended June 30, 2008, the company issued 12,910,053 shares of common
stock valued at $24,413 for consulting services.  The Company also
issued 84,287,855 shares of common stock valued at $68,480 for the repayment of
debt and 44,085,526 shares of common stock valued at $52,786 in exchange for
cash payment.





During
the quarter ended March 31, 2008, the Company issued 8,846,122 shares of common
stock valued at $32,283 for consulting services, 33,048,146 shares of common
stock valued at $62,036 for repayment of debt and 3,000,000 shares of common
stock valued at $13,500 for a settlement.




The above
shares of common stock were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.





Item 3.  Defaults Upon Senior Securities.




None.





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




None.





Item5.  Other Information.




None.


38


Item 6.  Exhibits




(a) Exhibits










Exhibit
      No.
              Description3.11
              Certificate
      of Amendment to Articles of Incorporation to change the par value of the
      Company’s common stock to $0.00001 filed on May 22,
  2008




4.11
            Certificate
      of Designation of Series F Preferred Stock of the Company filed with the
      Secretary of State of Nevada on April 23,
2008.




4.21
            Certificate
      of Amendment to Articles of Incorporation to change the total authorized
      shares and conversion terms of Series E Preferred Stock of the Company
      filed with the Secretary of State of Nevada on July 28,
    2008.




4.31
            Certificate
      of Amendment to Articles of Incorporation to change the total authorized
      capital stock of the Company filed with the Secretary of State of Nevada
      on August 11, 2008.




4.4
            Amendment
      to Certificate of Designation After Issuance of Class or Series to to
      change the total authorized shares and conversion terms of Series E
      Preferred Stock of the Company filed with the Secretary of State of Nevada
      on August 28, 2008.




10.12
            Stock
      Sale and Purchase Agreement by and between International Building
      Technologies Group, Inc. and Wuhan Interpower Co., Ltd. executed on April
      17, 2008.




10.23
            Rescission
      to the Asset Sale Purchase Agreement by and between International Building
      Technologies Group, Inc. and Suining Yinfa Construction and Engineering
      Co., Ltd., executed April 23, 2008.




10.31
            English
      translation of the Approval of Wuhan Bureau of Commerce on Issues
      Concerning Mergers & Acquisitions of Wuhan Wufeng Machinery
      Manufacturing Co., Ltd. by Foreign Investors and Establishing Enterprises
      with Foreign Investment




31.1
            Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302
      of the Sarbanes-Oxley
      Act of 2002.




32.14
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley
      Act of 2002.





1Previously
filed as an exhibit to the Company’s Current Report on Form 10Q dated August 13,
2008 and incorporated herein by reference thereto.


2
Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated
April 21, 2008 and incorporated herein by reference thereto.


3
Previously filed as an exhibit to the Company’s Current Report on Form 8-K dated
April 29, 2008 and incorporated herein by reference thereto.


4 In
accordance with SEC Release No. 34-47986, this Exhibit is hereby furnished to
the Securities and Exchange Commission as an accompanying document and is not
deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that Section, nor shall it be
deemed incorporated by reference into any filing under the Securities Act of
1933.


39


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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.





INTERNATIONAL
BUILDING TECHNOLOGIES GROUP, INC.











Date:  November
      11, 2008
                /s/ Kenneth YeungKenneth
      YeungPresident,
      Chief Financial Officer







40