**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




**(Mark
      One)**




**ý** **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES**


**EXCHANGE
      ACT OF 1934**




**For
      the quarterly period ended June 30, 2008**




**o** **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES**


**EXCHANGE
      ACT OF 1934**




**For
      the transition period from _________to__________**




**Commission
      file number 000-27783**




**VISTA
      INTERNATIONAL TECHNOLOGIES, INC.**


(Name
      of
      Small Business Issuer in its Charter)




**Delaware**
            
            **84-1572525**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)




**4704
      Harlan Street, Suite 685, Lakeside, CO 80212**


(Address
      of principal executive offices) (Zip Code)




Issuer’s
      telephone number: **** **(303)
      690-8300**




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or 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 ý No 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
        definitions of “large accelerated filer,” “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act (Check One).
  Large
        accelerated filer  ̈ Accelerated
        filer  ̈ Non-accelerated
        filer  ̈ Smaller
        reporting company x
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Act) o
        Yes   x
        No
  Applicable
        only to issuers involved in bankruptcy proceedings during the preceding five
        years




Check
      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 o No o




Applicable
      only to corporate issuers




State
      the
      number of shares outstanding of each of the issuer’s class of common equity, as
      of the latest practicable date: July 29, 2008, 97,031,893 shares of common
      stock, $0.001 par value.




**Transitional
      Small Business Disclosure Format (Check One)
      Yes** **o** **No** **ý**







**VISTA
      INTERNATIONAL TECHNOLOGIES, INC.**





TABLE
                OF CONTENTS




PART
                    I.
                FINANCIAL
                    INFORMATIONItem
                    1
                Financial
                    Statements (unaudited)Condensed
                    Consolidated Balance Sheets as of June 30, 2008 and December
                    31,
                    2007
                F-1Condensed
                    Consolidated Statements of Operations for the Three and Six Months
                    ended
                    June 30, 2008 and 2007
                F-2Condensed
                    Consolidated Statements of Cash Flows for the Six Months ended
                    June 30,
                    2008 and 2007
                F-3Notes
                    to Condensed Consolidated Financial Statements
                F-4Item
                    2.
                Management’s
                    Discussion and Analysis or Plan of Operation
                1Item
                    4T.
                Controls
                    and Procedures
                6PART
                    II.
                OTHER
                    INFORMATION
                7Item
                    1.
                Legal
                    Proceedings
                7Item
                    2.
                Unregistered
                    Sales of Equity Securities And Use of Proceeds
                7Item
                    3.
                Defaults
                    Upon Senior Securities
                7Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                7Item
                    5.
                Other
                    Information
                7Item
                    6.
                Exhibits
                7Signatures
                9









**Vista
      International Technologies, Inc.**


**Condensed
      Consolidated Balance Sheets**





**June
                30, 2008**
            
            **December
                31,****(unaudited)**
            
            **2007**ASSETSCurrent
                assetsCash
                and cash equivalents
            
            $
            6,919
            
            $
            9,017Accounts
                receivable
            
            
            —
            
            
            586Other
                assets
            
            
            130,871
            
            
            130,871Prepaid
                expenses
            
            
            65,492
            
            
            58,684Total
                current assets
            
            
            203,282
            
            
            199,158Deposits
            
            
            39,532
            
            
            39,160Property
                and equipment, net of accumulated depreciation
            
            
            619,239
            
            
            637,012Intangibles,
                net of accumulated amortization
            
            
            37,335
            
            
            39,474Total
                assets
            
            $
            899,388
            
            $
            914,804LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)Current
                liabilitiesAccounts
                payable and accrued liabilities
            
            $
            2,121,750
            
            $
            2,044,620Accrued
                compensation and payroll liabilities
            
            
            280,163
            
            
            121,774Accrued
                interest
            
            
            64,965
            
            
            42,591Notes
                payable and capital leases - current portion
            
            
            186,116
            
            
            152,274Notes
                payable - stockholder
            
            
            500,000
            
            
            500,000Total
                current liabilities
            
            
            3,152,994
            
            
            2,861,259Long-term
                portion of notes payable
            
            
            63,732
            
            
            71,351Total
                liabilities
            
            
            3,216,726
            
            
            2,932,610Stockholders’
                equity (deficit):Preferred
                stock, $0.001 par value, 10,000,000 shares authorized; none issued
                or
                outstanding
            
            
            -
            
            
            -Common
                stock, $0.001 par value; 200,000,000 shares authorized; 97,031,893
                and
                90,731,596shares
                issued and outstanding at June 30, 2008 and December 31, 2007,
                respectively
            
            
            91,481
            
            
            90,731Additional
                paid-in capital
            
            
            61,654,784
            
            
            61,257,476Common
                stock to be issued
            
            
            9,136
            
            
            5,891Accumulated
                deficit
            
            
            (64,072,739
            )
            
            (63,371,904
            )Total
                stockholders’ equity (deficit)
            
            
            (2,317,338
            )
            
            (2,017,806
            )Total
                liabilities and stockholders' equity (deficit)
            
            $
            889,388
            
            $
            914,804





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.


F-1





**Vista
      International Technologies, Inc.**


**Condensed
      Consolidated Statements of Operations**


**(Unaudited)**





**For
                the**
              **Three**
            
            **For
                the**
              **Three**
            
            **For
                the Six**
            
            **For
                the Six****Months**
              **Ended**
            
            **Months**
              **Ended**
            
            **Months**
              **Ended**
            
            **Months**
              **Ended****June
                30,**
            
            **June
                30,**
            
            **June
                30,**
            
            **June
                30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenues
            
            $
            888
            
            $
            96,118
            
            $
            6,637
            
            $
            304,315Cost
                of revenue
            
            
            77,225
            
            
            383,798
            
            
            185,469
            
            
            723,025Gross
                profit (loss)
            
            
            (76,337
            )
            
            (287,680
            )
            
            (178,832
            )
            
            (418,710
            )Operating
                expenses:Selling,
                general and administrative expenses
            
            
            229,511
            
            
            332,312
            
            
            563,295
            
            
            693,426Research
                and development expense
            
            
            -
            
            
            -
            
            
            -
            
            
            68,776Total
                operating expenses
            
            
            229,511
            
            
            332,312
            
            
            563,295
            
            
            762,202Loss
                from operations
            
            
            (305,848
            )
            
            (619,992
            )
            
            (742,127
            )
            
            (1,180,912
            )Other
                income (expense):Other
                income
            
            
            -
            
            
            -
            
            
            66,667
            
            
            -Gain
                on sale of fixed assets
            
            
            -
            
            
            18,481
            
            
            -
            
            
            26,662Interest
                expense
            
            
            (12,320
            )
            
            (10,350
            )
            
            (25,375
            )
            
            (13,732
            )Net
                loss
            
            $
            (318,168
            )
            $
            (611,861
            )
            $
            (700,835
            )
            $
            (1,167,982
            )Net
                loss per share, basic and diluted
            
            $
            (0.003
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )Weighted
                average common shares outstanding
            
            
            96,482,963
            
            
            90,731,596
            
            
            93,796,840
            
            
            90,731,596





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.


F-2





**Vista
      International Technologies, Inc.**


**Condensed
      Consolidated Statements of Cash Flows**


**(Unaudited)**





**For
                the Six**
            
            **For
                the Six****Months**
              **Ended**
            
            **Months**
              **Ended****June
                30,**
            
            **June
                30,****2008**
            
            **2007**Cash
                flows from operating activities:Net
                loss
            
            $
            (700,835
            )
            $
            (1,167,982
            )**Adjustments
                to reconcile net loss to net   cash used in operating
                activities:**Depreciation
                and amortization
            
            
            70,014
            
            
            180,722Other
                income
            
            
            (66,667
            )
            
            -Reserve
                for bad debt
            
            
            -
            
            
            8,078Disposition
                of equipment
            
            
            -
            
            
            (6,565
            )Interest
                expense
            
            
            -
            
            
            10,134Changes
                in operating assets and liabilities:(Increase)
                decrease in assets:Accounts
                receivable
            
            
            586
            
            
            100,734Prepaid
                expenses
            
            
            (6,808
            )
            
            -Other
                assets
            
            
            (372
            )
            
            44,972Increase
                (decrease) in liabilities:Accounts
                payable and accrued expenses
            
            
            305,812
            
            
            198,270**Net
                cash used in operating activities**
            
            
            (398,269
            )
            
            (631,637
            )Cash
                flows from investing activities:Proceeds
                from the sale of equipment
            
            
            -
            
            
            5,963Equipment
                and intangible asset purchases
            
            
            (50,102
            )
            
            (1,501
            )**Net
                cash provided by (used in ) investing activities**
            
            
            (50,102
            )
            
            4,462Cash
                flows from financing activities:Payments
                on debt
            
            
            (19,781
            )
            
            (67,398
            )Proceeds
                from common stock
            
            
            400,552
            
            
            -Proceeds
                from issuances of notes and loans
            
            
            65,502
            
            
            500,000**Net
                cash provided by (used in) financing activities**
            
            
            446,273
            
            
            432,602Net
                increase (decrease) in cash and cash equivalents
            
            
            (2,098
            )
            
            (194,573
            )Cash
                and cash equivalents, at beginning of period
            
            
            9,017
            
            
            257,868Cash
                and cash equivalents, at end of period
            
            $
            6,919
            
            $
            63,295Supplemental
                disclosure of cash flow information:Cash
                paid during the period for:Interest
            
            $
            1,528
            
            $
            5,365Taxes
            
            $
            5,000
            
            $
            10,000Non
                cash financing activity:Common
                stock issued for services
            
            $
            75,000
            
            $
            -





During
      the quarter ended June 30, 2007, the Company financed equipment with a note
      for
      $107,294.





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.


F-3




**Vista
      International Technologies, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


JUNE
      30,
      2008 and 2007


(Unaudited)




**1.
      Significant Accounting Policies and Nature of Operations:**




*Unaudited
      Interim Financial Statements*




The
      accompanying unaudited interim financial statements, which include the Company’s
      wholly owned subsidiaries, have been prepared by the Company in accordance
      with Article 8 of Regulation S-X of the Securities and Exchange
      Commission. The financial information has not been audited and should not be
      relied on to the same extent as audited financial statements. Certain
      information and footnote disclosures normally included in audited financial
      statements prepared in accordance with generally accepted accounting principles
      have been condensed or omitted. Accordingly, these interim financial statements
      should be read in conjunction with the Company’s financial statements and
      related notes as contained in Form 10-KSB for the year ended December 31, 2007.
      In the opinion of management, the interim financial statements reflect all
      adjustments, including normal recurring adjustments, necessary for fair
      presentation of the interim periods presented. The results of operations for
      the
      three and six months ended June 30, 2008 are not necessarily indicative of
      results of operations to be expected for the full year.




*Description
      of Business*




We
      are a
      renewable hydrocarbon-based waste-to-energy (WTE) company that provides
      municipalities and industries with solutions that divert waste from landfills
      while providing a clean alternative energy comparable to that of fossil fuels.
      Our primary focus is on our proprietary patented technology, the Thermal
      GasifierTM, which is a multi-stage gasification system designed to convert
      industrial and commercial waste, biomass, waste tires and other solid,
      hydrocarbon-based materials into “producer gas” that can be used to produce
      clean economical thermal and electrical energy, while exceeding the most
      stringent EPA and European Union emission regulations. We expect that our
      solutions will reduce air born carbon emission, claimed to contribute to global
      warming, that would otherwise be generated by these landfills or other fossil
      fuel based energy production.




Since
      1999 we have operated a tire fuel processing facility in Hutchins, Texas. Under
      Texas State regulations we are licensed as a tire processor and tire storage
      facility. We are paid a tipping fee (fee paid per tire received) for accepting
      waste tires. We process the waste tires into tire-derived-fuel at our facility.
      We sell the TDF product from our tire fuel processing operation to one major
      user, our primary customer, Geocycle, US, a wholly owned subsidiary of a large
      cement company located in Texas, which uses the tire-derived-fuel for firing
      its
      kilns, thereby displacing equal amounts of coal. During the three and six months
      ended June 30, 2008, our tire fuel processing business generated 100% of our
      revenue.




We
      plan
      to use our patented technology, the Thermal GasifierTM to create energy
      infrastructures and build, own and operate hydrocarbon-based waste-to-energy
      plants. The Company’s mission is to become an environmental partner with
      municipalities and commercial and industrial businesses for the diversion of
      readily available solid waste from landfills, while providing an economically
      cost effective, clean energy alternative to fossil fuels worldwide.




We
      plan
      to build energy infrastructures for certain industries that have a need to
      dispose of hydrocarbon-based materials and seek an independent source of energy
      in the form of heat, steam and/or electricity. These energy infrastructures
      would be built on a business’ premises (“inside the fence”) and can reduce the
      dependence a business has on fossil fuels and power from the local utility.
      In
      some cases, the energy infrastructures can become a business’ self sustaining
      utility. We plan to identify new and existing sites where we can build, own
      and
      operate hydrocarbon-based waste-to-energy plants through our own resources
      or in
      conjunction with joint venture partners.





Although
      we no longer provide technical assistance to the project owner of our two
      Thermal GasifiersTM in Cologna Veneta, Italy, we continue to utilize those units
      in our sales and marketing efforts. We also use the WTE plant in Cologna Veneta,
      Italy as “proof-of-process” and Thermal GasifierTM technology demonstration in
      our business development activities demonstrating a lower cost, clean dependable
      energy alternative to fossil fuels worldwide. We have recognized no revenue
      from
      the sale or delivery of our Thermal GasifiersTM during the three and six months
      ended June 30, 2008.





*Critical
      Accounting Policies*




The
      financial statements include the accounts of the company and its subsidiaries.
      All material inter-company accounts and transactions have been eliminated in
      consolidation. Certain prior period amounts have been reclassified to conform
      to
      the current period presentation with no effect on the net loss.




*Inventory*





Tire-derived-fuel
      (TDF) inventory is valued at its cost to produce a salable product using the
      first-in first-out method, but in an amount not to exceed realizable value,
      determined with respect to existing contractual sales prices, less costs to
      complete the waste tire processing. TDF inventory value at June 30, 2008 is
      zero.





The
      Thermal GasifiersTM which are built, owned and operated are valued at cost.
      Thermal GasifiersTM built as part of a joint venture arrangement are valued at
      cost, reduced by any contractual exposure to penalties contained in a contract
      which could be incurred if our Thermal GasifiersTM do not perform in accordance
      with contractual specifications. The Thermal GasifierTM inventory value at June
      30, 2008 is zero.


F-4





*Research
      and Development*




Research
      and development expenditures, all of which relate directly to the design and
      development of our Thermal GasifierTM technology, are expensed as incurred. For
      the three and six months ended June 30, 2008 and 2007, we incurred costs for
      third party engineering consulting and analysis and expensed $0 and $0; $0
      and
      $68,776, respectively.








*Property,
      Plant and Equipment and Related Depreciation*




Property,
      plant and equipment purchased or constructed is recorded at cost. Direct costs,
      such as labor and materials, and indirect costs, such as overhead used during
      construction are capitalized. Major units of property replacements or
      improvements are capitalized and minor items are expensed. Gain or loss is
      recorded in income for the difference between the net book value relative to
      proceeds received, if any, when the asset is sold or retired. Depreciation
      is
      provided for using the straight-line method. Estimated useful lives of the
      assets used in the computation of depreciation are as follows:




Machinery
                and equipment
            
            
            5
                yearsBuildings
            
            
            15
                yearsVehicles
            
            
            5
                years




*Long-Lived
      Assets*




In
      accordance with the Financial Accounting Standards Board’s (“FASB”) Statement of
      Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets”, the Company reviews its long-lived assets,
      including intangible assets, for impairment whenever events or changes in
      circumstances indicate that the related carrying amount may not be recoverable.
      Recovery of assets to be held and used is measured by a comparison of the
      carrying amount of the assets to the future net cash flows expected to be
      generated by the asset. If such assets are considered to be impaired, the
      impairment to be recognized is measured by the amount by which the carrying
      amount of the assets exceeds the fair value of the assets. Assets to be disposed
      of are reported at the lower of the carrying amount or fair value less the
      cost
      to sell. Management uses significant judgments, assumptions and estimates to
      calculate future cash flows expected to be generated by the assets under
      impairment review.




*Revenue
      Recognition*




Our
      tire
      fuel processing facility recognizes revenue in two ways. First when waste tires
      are accepted at the facility we receive a disposal fee (“tipping fees”) and
      secondly from the sale of processed tire-derived-fuel. The revenues from tipping
      fees are fully earned when the waste tires are accepted at the facility and
      the
      processed tire-derived-fuel revenues are recognized when the TDF is delivered
      to
      the end user. Internal quality controls are in place to ensure that the
      tire-derived-fuel meets the standards required in the contracts for delivery
      to
      our customers. This quality control reduces the risk of significant returns
      and
      allowances of tire-derived-fuel sold. Sales returns are reprocessed and added
      back to the existing production of tire-derived-fuel. Sales returns are booked
      based on the Company’s historical experience.




We
      recognize revenue from the sale of our Thermal GasifiersTM upon completion,
      delivery and customer acceptance, using the completed contract method of
      accounting. We have recognized no revenue from the sale of our Thermal
      GasifiersTM as of June 30, 2008.




*Net
      Income (Loss) Per Common Share*




SFAS
      No.
      128, “Earnings Per Share” requires presentation of basic (loss) or earnings per
      share (“Basic EPS”) and diluted (loss) or earnings per share (“Diluted
      EPS”).




The
      computation of basic loss per share is computed by dividing loss available
      to
      common stockholders by the weighted average number of outstanding common shares
      during the period. Diluted loss per share gives effect to all dilutive potential
      common shares outstanding during the period. The computation of diluted EPS
      does
      not assume conversion, exercise or contingent exercise of securities that would
      have an anti-dilutive effect on earnings. During the periods presented, we
      had
      no potentially dilutive securities outstanding.




*Use
      of Estimates*




The
      preparation of our financial statements in conformity with generally accepted
      accounting principles requires our management to make estimates and assumptions
      that affect the amounts reported in the financial statements and accompanying
      notes. Actual results could differ from those estimates.


F-5





**2.
      Notes Payable**





At
      June
      30, 2008, the Company had the following promissory notes
      outstanding:




**2008**9%
                promissory note payable to a stockholder
            
            $
            500,0003.68%
                installment note, secured by equipment
            
            
            79,7843.35%
                installment note, secured by equipment
            
            
            13,3067.9%
                unsecured promissory note
            
            
            58,9529.09%
                capital lease, secured by software
            
            
            10,806Non-interest
                bearing unsecured promissory note due upon receipt of payments from
                the
                Italy thermal gasifier project owner at 20% of amount received
            
            
            70,00015%
                promissory notes payable to individuals, due on demand
            
            
            17,000Total
                debt:
            
            $
            749,848Current
                portion:
            
            
            (686,116
            )Long-term
                portion:
            
            $
            63,732





On
      April
      4, 2007 and April 16, 2007, we borrowed $100,000 and $200,000 respectively
      from
      a shareholder, Mr. Richard Strain. On May 31, 2007, we borrowed an additional
      $200,000 from Mr. Strain. The loans bear interest at the annual rate of 9%,
      with
      interest payable quarterly. The April 4, 2007 and April 16, 2007 notes were
      payable on or before September 30, 2007. The May 31, 2007 note was due on or
      before November 30, 2007. We have obtained agreement to repay the notes from
      Mr.
      Strain at such time we have sufficient operating capital to make repayment.
      The
      loans are secured by a first priority security interest in our
      assets.





**3.
      Related Party Transactions**





During
      the six months ended June 30, 2008, the Company received $325,552 in cash from
      Vista International, Inc. for our operations for which we have an obligation
      to
      issue 3,255,528 shares of our common stock. These shares are classified as
      common stock to be issued on our June 30, 2008 consolidated balance
      sheet.





On
      April
      10, 2008, the Company issued an aggregate of 5,550,297 restricted shares of
      its
      common stock to Vista International, Inc., for cash and payment of expenses
      of
      approximately $561,000 during the year ended December 31, 2007 pursuant to
      a
      Definitive Agreement for equity investment executed on January 31, 2008. In
      connection with the purchase of restricted securities, Vista International,
      Inc.
      filed a Form 4 with the Commission.





On
      April
      4, 2007 and April 16, 2007, we borrowed $100,000 and $200,000 respectively
      from
      a shareholder, Mr. Richard Strain. On May 31, 2007, we borrowed an additional
      $200,000 from Mr. Strain. The loans bear interest at the annual rate of 9%,
      with
      interest payable quarterly. The April 4, 2007 and April 16, 2007 were payable
      before September 30, 2007. The May 31, 2007 note was due before November 30,
      2007. We may prepay the notes at any time without penalty. The loans are secured
      by a first priority security interest in our assets.





**4.
      Business Segments**




The
      Company conducts business in two separate facilities presently managed as two
      energy operating business segments, tire fuel processing and alternative energy.
      The location and use of our facilities are shown as follows:




• tire
      fuel processing operation in Hutchins, Texas, and


• renewable energy and waste to energy (WTE) engineering and corporate offices
      in
      Lakeside, Colorado.


F-6




For
      the
      six months ended June 30, 2008:





Fuel
              Processing
            
            Renewable
              Energy
                and
              WTE
            
            TotalRevenue
            
            $
            6,637
            
            $
            -
            
            $
            6,637Significant
                non-cash expenditures:Depreciation
                and amortization
            
            $
            70,014
            
            $
            -
            
            $
            70,014Net
                income (loss)
            
            $
            (754,357
            )
            $
            53,522
            
            $
            (700,835
            )Capital
                expenditures
            
            $
            50,102
            
            $
            -
            
            $
            50,102Total
                assets as of June 30, 2008
            
            $
            889,388
            
            $
            -
            
            $
            889,388





For
      the six months ended June 30, 2007:





Fuel
              Processing
            
            Renewable
              Energy
                and
              WTE
            
            TotalRevenue
            
            $
            304,315
            
            $
            -
            
            $
            304,315Significant
                non-cash expenditures:Depreciation
                and amortization
            
            $
            130,831
            
            $
            49,891
            
            $
            180,722Net
                (loss)
            
            $
            (1,111,781
            )
            $
            (56,201
            )
            $
            (1,167,982
            )Capital
                expenditures
            
            $
            1,501
            
            $
            -
            
            $
            1,501Total
                assets as of June 30, 2007
            
            $
            1,334,083
            
            $
            84,705
            
            $
            1,418,787





**5.
      Stockholders’ Equity**





**Preferred
      Stock**





The
      Company has 10,000,000 shares of preferred stock, $0.001 par value, authorized
      for issuance. Our board of directors is vested with the authority to provide
      for
      the issuance of and terms of the preferred shares. No preferred shares have
      been
      issued and no terms have been provided at June 30, 2008.





**Common
      Stock**





Six
      months ended June 30, 2008





On
      January 31, 2008, we executed an agreement with Vista International, Inc.,
      our
      majority shareholder, to provide $2,000,000 of working capital in exchange
      for
      our common stock at a value of $0.10 per common share. The value of our common
      stock at closing on the date of the agreement was $0.12. The agreement
      formalized a verbal agreement with Vista International, Inc. which, through
      December 31, 2007, provided an investment of approximately $561,000 in cash
      and
      payment of expenses for our operations for which we have an obligation to issue
      5,606,360 shares of our common stock. On April 10, 2008, 5,550,297 shares of
      common stock were issued and Vista International, Inc. has filed a Form 4 with
      the Commission.





On
      January 28, 2008, the company issued an aggregate of 750,000 restricted shares
      of its common stock to American Capital Venture, Inc. (and its affiliates)
      (collectively “ACV”) for an investor relations services contract. Under the
      contract, ACV was to plan, coordinate, establish and manage an investor
      relations program for the benefit of the Company. In connection with the sale
      of
      restricted securities, the company filed a Form D with the
      Commission.





During
      the six months ended June 30, 2008, the Company received $325,552 in cash from
      Vista International, Inc. for our operations for which we have an obligation
      to
      issue 3,255,528 shares of our common stock. These shares are classified as
      common stock to be issued on our June 30, 2008 consolidated balance
      sheet.





Six
      months ended June 30, 2007





On
      December 5, 2006, we entered into an agreement with Bailey-Jamar, LLC, under
      which Bailey-Jamar agreed to provide the company with $7,500,000 in capital
      through an equity investment by a joint venture consisting of Bailey-Jamar
      and a
      co-venturer to be identified by Bailey-Jamar in the future. Brad E. Bailey,
      the
      company’s Chief Executive Officer, was a principal member of Bailey-Jamar.
      Bailey-Jamar was not able to identify a joint venture party prior to the
      expiration of this agreement on February 28, 2007. No funds were received as
      a
      result of this agreement and no shares were issued.





**6.
      Income Tax**





On
      March 20,
      2008, the company received notification from the Internal Revenue Service of
      the
      filing of a federal tax lien in the approximate amount of $120,000 related
      to
      late payment of federal income tax, penalty and interest on the September 30,
      2005 corporate income tax return of Nathaniel Energy Oklahoma Holdings
      Corporation. Nathaniel Energy Oklahoma Holdings Corporation was required to
      file
      a short period federal income tax return for 2005 as the company acquired a
      49%
      minority interest of Nathaniel Energy Oklahoma Holdings Corporation on that
      date
      from Mr. Richard Strain, the company’s majority shareholder and debt holder at
      that time. Nathaniel Energy Oklahoma Holdings Corporation filed a consolidated
      return for the remainder of the 2005 tax year with Nathaniel Energy Corporation.
      The short period return gave rise to a federal income tax liability of
      approximately $200,000. The company made installments against this tax liability
      of $115,000 during the fiscal years 2006 through June 30, 2008. We are currently
      working with the Internal Revenue Service to resolve this
      matter.


F-7





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




**FORWARD
      LOOKING STATEMENTS**




Certain
      information contained in this report may include “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995,
      and
      is subject to the safe harbor created by that act. The safe harbor created
      by
      the Securities Litigation Reform Act will not apply to certain “forward looking
      statements” because we issued “penny stock” (as defined in Section 3(a)(51) of
      the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange Act)
      during the three year period preceding the date(s) on which those forward
      looking statements were first made, except to the extent otherwise specifically
      provided by rule, regulation or order of the Securities and Exchange Commission.
      We caution readers that certain important factors may affect our actual results
      and could cause such results to differ materially from any forward-looking
      statements which may be deemed to have been made in this Report or which are
      otherwise made by or on behalf of us. For this purpose, any statements contained
      in this report that are not statements of historical fact may be deemed to
      be
      forward-looking statements. Without limiting the generality of the foregoing,
      words such as “may”, “will”, “expect”, “believe”, “explore”, “consider”,
“anticipate”, “intend”, “could”, “estimate”, “plan”, or “continue” or “hope” or
      the negative variations of those words or comparable terminology are intended
      to
      identify forward-looking statements. Factors that may affect our results
      include, but are not limited to, the risks and uncertainties associated
      with:




·
            Our
                ability to raise capital necessary to implement our business
                plan.





·
            Our
                ability to finance and complete planned projects and facilities
                upgrades.





·
            Our
                ability to execute our business plan and commercialize the Thermal
                GasifierTM technology, including building Thermal GasifiersTM that meet
                customers’ specifications and that meet local regulatory environmental and
                permit requirements.





·
            Risks
                related to dependency on a small number of
                customers.





·
            Our
                ability to satisfy our customers’
expectations.





·
            Our
                ability to employ and retain qualified management and
                employees.





·
            Changes
                in government regulations which are applicable to our business including
                rules related to use of TDF under the Clean Air Act as well as the
                new
                Energy Independence and Security Act
                2007.





·
            The
                availability of a consistent, economically viable, and sustainable
                waste
                stream supply to fuel the Thermal GasifierTM
                operations.





·
            Changes
                in the demand for our products and services, including the impact
                from
                changes in governmental regulation and funding for alternative
                energy.





·
            The
                degree and nature of our competition, including the reliability and
                pricing of traditional energy sources, economic viability of other
                alternative energy sources such as wind and solar
                power.





·
            Changes
                in domestic and global regulation related to greenhouse gas and carbon
                emissions.





·
            Our
                ability to pay debt service on loans as they come
                due.





·
            Our
                ability to generate sufficient cash to pay our
                creditors.





·
            Disruption
                in the economic and financial conditions primarily from the impact
                of
                terrorist attacks in the United States and overseas, threats of future
                attacks, police and military activities and other disruptive worldwide
                political events.




We
      are
      also subject to other risks detailed from time to time in other Securities
      and
      Exchange Commission filings and elsewhere in this report. Any one or more of
      these uncertainties, risks and other influences could materially affect our
      results of operations and whether forward-looking statements made by us
      ultimately prove to be accurate. Our actual results, performance and
      achievements could differ materially from those expressed or implied in these
      forward-looking statements. We undertake no obligation to publicly update or
      revise any forward-looking statements, whether from new information, future
      events or otherwise.


1





**Company
      Overview**




Our
      mission is to provide a lower cost, clean dependable energy alternative to
      fossil fuels worldwide. We plan to focus on two major business models in the
      commercialization of our Thermal GasifierTM technology:  building, owning
      and operating waste-to-energy plants either on our own or with joint venture
      partners. We recognized no revenue from our Thermal GasifierTM business segment
      during the six months ended June 30, 2008. Our long term goal is to produce
      the
      majority of our revenue and cash flow from the commercialization of our Thermal
      GasifierTM technology. As a result, the majority of our resources will be focused
      on this business segment in the long term while we continue to operate our
      tire
      facility to generate positive cash flow. We continue to work on the completion
      of engineering drawings for the new generation Thermal GasifierTM. Once complete,
      we expect to obtain manufacturing quotes to build a portable unit for further
      testing and data gathering in support of business development
      activities.





Historically,
      we have not had difficulty finding potential project opportunities. Worldwide,
      industries and municipalities seek lower cost and clean energy alternatives
      to
      fossil fuels. Demand for these energy alternatives is expected to grow. A key
      to
      our success will be wisely choosing among project opportunities and focusing
      resources on projects with the greatest chance of success and returns for
      stockholders.





We
      are
      developing our internal resources, business alliances and advancing our business
      development activities to secure energy infrastructure and waste-to-energy
      facility opportunities that utilize our Thermal GasifierTM technology.
      Additionally, we will seek project funding in some cases with joint venture
      partners that will be based on the size, configuration and business structure
      of
      the project. We are also developing our business alliances with other companies
      to convert our producer gas into high grade alcohols for use as transportation
      fuels or other chemical products.





We
      anticipate that the timeframe from identification of a project to completion
      will be 18 to 24 months, provided we obtain the requisite project financing
      and
      appropriate environmental permits.




We
      are
      actively involved in ongoing business development activities. Currently the
      company is in the process of evaluating certain project opportunities and
      providing detailed proposals for selected qualified projects. We are currently
      in the process of completing a number of feasibility studies for several WTE
      projects in China. We expect to build, own and operate these projects. The
      total
      waste material handled daily is expected to range from 500 to more than 1,600
      tons per day during the first phase of deployment. These projects have multiple
      phases with total waste material handled expected as high as 5,000 tons per
      day
      from various sources of waste. During the second quarter of 2008, we have
      initiated discussions with state governments and municipalities in the United
      States for WTE facilities.





We
      own a
      tire derived fuel, TDF, processing operation in Hutchins, Texas which provides
      valuable services to industry, government and the local communities while
      simultaneously producing a marketable product. The facility is permitted by
      the
      Texas Commission of Environmental Quality, TCEQ, as a waste tire storage
      facility and as a used tire processor and recycler. We accept used passenger
      vehicle tires as a waste product from businesses, governments, communities,
      and
      individuals for a “tipping fee” as a disposal charge. The tires are processed
      upon receipt through a continuous loop shredding system designed to reduce
      the
      tires to 11⁄2 inch and smaller rubber chips, known as TDF. Following processing,
      the TDF is temporarily stored on site awaiting transportation to the end user.
      The tire fuel processing operation generated 100% of revenue from continuing
      operations, or $888 during the six months ended June 30, 2008.





Our
      TDF
      operation in Texas is subject to regulation by the TCEQ. We are registered
      with
      the Texas Commission on Environmental Quality which allows us to receive, store,
      transport and process waste tires. Our registration expired December 20, 2007.
      A
      permit renewal application was submitted after obtaining local fire marshal
      approval and as of August 1, 2008 was in process for approval allowing for
      continued operation. It is expected that the new permit will be issued in the
      near future. During the period December 20, 2007, the date our registration
      expired, and August 1, 2008, the date our application was resubmitted, our
      ability to operate the TDF facility was limited. Our goal is to continuously
      remove stockpiled material from the yard while taking in additional tires for
      tipping fees.





We
      expect
      to maintain our TDF facility to meet the requirements of the TCEQ’s regulations,
      however, should we be unable to continue to fund our compliance, we could lose
      our permit to operate the facility.





We
      have
      continued to improve operations and remove waste material from our TDF facility
      during 2008. The TDF facility is currently the only waste tire storage and
      processing facility licensed by the State of Texas to operate in the Dallas
      Metro area.




During
      August 2007, our tire processing equipment accidentally jammed, damaging one
      major piece of equipment and causing the processing line and the tire processing
      facility to shut down. The equipment failure and resulting business interruption
      were believed to be covered by insurance; however, the equipment insurance
      policy had been cancelled. Management was advised by the issuer that the policy
      had been cancelled in July 2007 for nonpayment of premiums. As a result of
      the
      insurance cancellation, we could not claim an estimated $110,000 of repair
      and
      business interruption costs. We subsequently obtained adequate equipment
      insurance from another carrier during the period. The facility has not been
      fully operational since August 2007.


2





At
      that
      time, management decided to purchase new tire processing equipment as the cost
      of new equipment was not significantly more than the cost of repairing the
      damaged equipment. We expect to place orders for new tire shredding equipment
      during the third quarter of 2008 with expected delivery in the fourth quarter
      of
      2008. The delay in placing an order for new tire shredding equipment was partly
      a result of management’s decision to defer this action until the permit with the
      TCEQ was obtained. As a result of the long lead time on this new equipment
      and
      additional time to install, we do not expect the tire processing facility to
      be
      fully operational until the fourth quarter of 2008 however; we have commenced
      receiving and partially processing waste tires in August 2008.





Due
      to
      the extremely poor financial state of the company at the time that new
      management was appointed and the undercapitalization that has plagued the
      company for years it has taken considerable time and resources to refocus the
      company and commence implementing its new business strategy. The company has
      been working diligently to overcome the financial and operating issues resulting
      from several management changes over the last several years and insure continued
      development and protection of the company’s intellectual property.





**Results
      of Operations for the Three Months Ended June 30, 2008 and
      2007**





The
      following tables set forth certain unaudited quarterly results of operations
      of
      the Company for the first two quarters of 2008. The quarterly operating results
      are not necessarily indicative of future results of operations.





Three
                Months Ended (unaudited)March
                31,
              2008
            
            
            June
                30,
              2008
            
            
            June
                30,
              2007
            
            
            June
                2008 vs. 2007
              Increase
                (decrease)$
            
            
            %Revenue
            
            $
            5,749
            
            $
            888
            
            $
            96,118
            
            $
            (95,230
            )
            
            (99
            )%Cost
                of revenue
            
            
            108,244
            
            
            77,225
            
            
            383,798
            
            
            (306,573
            )
            
            (80
            )%Gross
                loss
            
            
            (102,495
            )
            
            (76,337
            )
            
            (287,680
            )
            
            211,343
            
            
            73
            %Selling,
                general and administrative expense
            
            
            333,784
            
            
            229,511
            
            
            332,312
            
            
            (102,801
            )
            
            (31
            )%Total
                operating expenses
            
            
            333,784
            
            
            229,511
            
            
            332,312Loss
                from operations
            
            
            (436,279
            )
            
            (305,848
            )
            
            (619,992
            )Other
                income (expense):Other
                income
            
            
            66,667
            
            
            —
            
            
            —Interest
                income (expense), net
            
            
            (13,055
            )
            
            (12,320
            )
            
            (10,350
            )Gain
                on sale of equipment
            
            
            —
            
            
            —
            
            
            18,481Net
                loss
            
            $
            (382,667
            )
            $
            (318,168
            )
            $
            (611,861
            )Net
                loss per common share, basic and diluted
            
            $
            (0.004
            )
            $
            (0.003
            )
            $
            (0.01
            )Weighted-average
                common shares outstanding-diluted
            
            
            91,110,717
            
            
            96,482,963
            
            
            90,731,596Shares
                outstanding at end of period
            
            
            91,481,596
            
            
            97,031,893
            
            
            90,731,596





**Results
      of Operations for the Three Months Ended June 20, 2008 and
      2007**




*Revenue*





For
      the
      three months ended June 30, 2008, revenue was $888 compared to $96,118 during
      the three months ended June 30, 2007, a decrease of $95,230 or approximately
      99%. Revenue decreased during the three months ended June 30, 2008 as we ceased
      accepting waste tires at the tire processing facility in Hutchins, Texas. The
      reduction in operations at the Hutchins, TX tire processing facility during
      the
      second quarter of 2007 was exaggerated during August 2007 due to accidental
      damage to certain tire shredding equipment not covered by insurance. The cost
      of
      repairing the damaged equipment approximated the cost of new shredding
      equipment. Management decided to purchase new equipment; however, the company
      was not able to place the order in 2007 due to financial constraints. As a
      result, the facility operated on a limited basis since August 2007. Management
      also deferred purchasing new equipment until the TCEQ approved the permit to
      operate the facility. We originally submitted our application for approval
      during the fourth quarter of 2007 and subsequently requested an extension of
      time to complete work required for the permit renewal which was granted by
      the
      TCEQ. We requested an extension after a site visit by the TCEQ and the local
      fire marshal on June 23, 2008 where they identified site improvements necessary
      for final approval. The improvements had not been identified during a site
      visit
      on December 11, 2007 related to the original permit application. These site
      improvements were completed during July 2008. During this period, we continued
      to reduce tire shreds and other tire related material on site which we either
      sold as landscape material or we paid transporters to have removed and disposed.
      We re-submitted our permit application to the TCEQ on August 1, 2008 and have
      commenced operations on a limited basis in August 2008. We expect that new
      equipment will be ordered during the third quarter 2008 and upon receipt and
      installation we expect to operate as a full producer of tire derived fuel by
      the
      end of the fourth quarter of 2008.


3





*Cost
      of revenue*





Cost
      of
      goods sold was $77,225 for the three months ended June 30, 2008, compared to
      $383,798 during the three months ended June 30, 2007, a decrease of $306,573
      or
      80%. The decrease was due to a decrease in operations and related operating
      expenses and management cost reduction efforts at the facility during the three
      months ended June 30, 2008. The primary decreases include a decrease in payroll
      and employee benefit expenses of approximately $39,000 due to a reduction in
      our
      headcount, a decrease in equipment rental and operating supply expense of
      approximately $77,000, a decrease in equipment repair and maintenance of
      approximately $52,000, a decrease in expense for environmental compliance of
      approximately $57,000, a decrease in depreciation expense of approximately
      $29,000 due to the disposition of damaged tire shredding equipment in the first
      quarter of 2008, a decrease in business insurance expense of approximately
      $11,000 and a decrease in utility expense of approximately $11,000.





*Sales,
      general, and administrative expenses*





Sales,
      general, and administrative expenses were $229,511for the three months ended
      June 30, 2008, compared to $332,312 for the three months ended June 30, 2007,
      a
      decrease of $102,801 or approximately 31%. The decrease is due primarily to
      the
      reduction in amortization expense of approximately $25,000 related to
      engineering drawings and blueprints on the design of our Thermal GasifierTM,
      which were written off during the third quarter of 2007, a decrease of
      approximately $17,000 in legal and accounting fees as a result of eliminating
      the use of outside accounting services, a decrease in approximately $15,000
      in
      outside services related to engineering drafting support, a reduction in
      facility and administrative supplies expense due to relocation of corporate
      offices to a new location and expense reduction measures, and a decrease in
      payroll and payroll related expense of approximately $10,000 from the reduction
      of administrative headcount.





*Interest
      expense*





Interest
      expense, net of interest income, was $12,320 during the three months ended
      June
      30, 2008, compared to $10,350 during the three months ended June 30, 2007,
      an
      increase of $1,970 or 19%. The increase in interest expense is due to $500,000
      of debt due a shareholder outstanding for the full three month period ended
      June
      30, 2008 compared to a portion of the three month period ended June 30, 2007.





*Gain
      on sale of equipment*





Gain
      on
      sale of equipment for the three months ended June 30, 2008 decreased to $-0-
      from $18,481 for the three months ended June 30, 2007.





*Net
      loss*





For
      the
      reasons stated above, net loss for the three months ended June 30, 2008 was
      $318,168, a decrease of $293,693 or 48% compared with the net loss of $611,861
      for the three months ended June 30, 2007.





**Results
      of Operations for the Six Months Ended June 30, 2008 and
      2007**




*Revenue*





For
      the
      six months ended June 30, 2008, revenue from continuing operations decreased
      to
      $6,637 compared to $304,315 during the six months ended June 30, 2007, a
      decrease of $297,678 or approximately 98%. Revenue decreased during the six
      months ended June 30, 2008 as we ceased accepting waste tires at the tire
      processing facility in Hutchins, Texas. The reduction in operations at the
      Hutchins, TX tire processing facility during the second quarter of 2007 was
      exaggerated during August 2007 due to accidental damage to certain tire
      shredding equipment not covered by insurance. The cost of repairing the damaged
      equipment approximated the cost of new shredding equipment. Management decided
      to purchase new equipment; however, the company was not able to place the order
      in 2007 due to financial constraints. As a result, the facility operated on
      a
      limited basis since August 2007. Management also deferred purchasing new
      equipment until the TCEQ approved the permit to operate the facility. We
      originally submitted our application for approval during the fourth quarter
      of
      2007 and subsequently requested an extension of time to complete work required
      for the permit renewal which was granted by the TCEQ. We requested an extension
      after a site visit by the TCEQ and the local fire marshal on June 23, 2008
      where
      they identified site improvements necessary for final approval. The improvements
      had not been identified during a site visit on December 11, 2007 related to
      the
      original permit application. These site improvements were completed during
      July
      2008. During this period, we continued to reduce tire shreds and other tire
      related material on site which we either sold as landscape material or we paid
      transporters to have removed and disposed. We re-submitted our permit
      application to the TCEQ on August 1, 2008 and have commenced operations on
      a
      limited basis in August 2008. We expect that new equipment will be ordered
      during the third quarter 2008 and upon receipt and installation; we expect
      to
      operate as a full producer of tire derived fuel by the end of the fourth quarter
      of 2008.


4





*Cost
      of revenue*





Cost
      of
      goods sold was $185,469 for the six months ended June 30, 2008, compared to
      $723,025during the six months ended June 30, 2007, a decrease of $537,556or
      74%.
      The decrease was due to a decrease in operations and related operating expenses
      and management cost reduction efforts at the facility during the six months
      ended June 30, 2008. The primary decreases include a decrease in payroll and
      employee benefit expenses of approximately $73,000 due to a reduction in our
      headcount, a decrease in equipment rental and operating supply expense of
      approximately $155,000, a decrease in equipment repair and maintenance of
      approximately $92,000, a decrease in expense for environmental compliance of
      approximately $79,000, a decrease in depreciation expense of approximately
      $57,000 due to the disposition of damaged tire shredding equipment in the first
      quarter of 2008, a decrease in outside truck service expense of approximately
      $15,000, a decrease in business insurance expense of approximately $6,000 and
      a
      decrease in utility expense of approximately $25,000.





*Sales,
      general, and administrative expenses*





Sales,
      general, and administrative expenses were $563,295for the six months ended
      June
      30, 2008, compared to $693,426 for the six months ended June 30, 2007, a
      decrease of $130,131 or approximately 19%. The decrease is due primarily to
      the
      reduction in amortization expense of approximately $50,000 related to
      engineering drawings and blueprints on the design of our Thermal GasifierTM,
      which were written off during the third quarter of 2007, a decrease of
      approximately $24,000 in legal and accounting fees as a result of eliminating
      the use of outside accounting services, a decrease of approximately $19,000
      in
      outside services related to engineering drafting support and a reduction of
      approximately $12, 000 in facility and administrative supplies expense due
      to
      relocation of corporate offices to a new location and expense reduction
      measures.





*Research
      and development expense*





Research
      and development expense decreased from $68,776 during the six months ended
      June
      30, 2007 to $0 during the six months ended June 30, 2008.





*Interest
      expense*





Interest
      expense, net of interest income, was $25,375during the six months ended June
      30,
      2008, compared to interest expense of $13,732 during the six months ended June
      30, 2007, an increase of $11,643 or 85%. The increase in interest expense is
      due
      to $500,000 of debt due a shareholder outstanding for the full six month period
      ended June 30, 2008 compared to a portion of the six month period ended June
      30,
      2007.





*Other
      income*





Other
      income for the six months ended June 30, 2008 and 2007 was $66,667 and $0
      respectively. Other income represents a reduction in a reserve for payment
      for
      certain assets which management believes is no longer an
      obligation.





*Gain
      on sale of equipment*





Gain
      on
      sale of equipment for the six months ended June 30, 2008 decreased to $-0-
      from
      $26,662 for the three months ended June 30, 2007.





*Net
      loss*





For
      the
      reasons stated above, net loss for the six months ended June 30, 2008 was
      $700,835, a decrease of $467,147 or 40% compared with the net loss of $1,167,982
      for the six months ended June 30, 2007.





**Liquidity
      and Capital Resources**




As
      of
      June 30, 2008, we have a negative working capital of $2,949,713. The company’s
      negative working capital balance is due primarily to reduced revenues from
      the
      tire processing operations in Texas combined with increases in Thermal GasifierTM
engineering design and business development activity expenses.





For
      the
      period ended June 30, 2008, net cash used in operating activities of $398,269
      consists primarily of our net loss of ($700,835) and non cash reduction in
      reserves of $66,667, offset by an increase in accounts payable and accrued
      expenses of $305,812 and depreciation and amortization expense of $70,014.
      Net
      cash used in investing activities of $50,102 consists of the addition of capital
      equipment and site improvement designs. Net cash provided by financing
      activities of $446,273 consists primarily of $400,552 from the issuance of
      common stock, $65,502 from the issuance of notes and loans offset by $19,781
      principal payments on notes and loans.





For
      the
      period ended June 30, 2007, net cash used in operating activities of $631,637
      consists primarily of our net loss of ($1,167,982), offset by changes in the
      components of working capital in the amount of $343,976 and depreciation and
      amortization expense of $180,722. Net cash provided by investing activities
      of
      $4,462 consisted of proceeds from the sale of assets of $5,963 offset by capital
      expenditures of $1,501. Net cash provided by financing activities of $432,602
      consists primarily of $500,000 proceeds from the issuance of notes and loans
      offset by $67,398 principal payments on notes and loans.


5





We
      had a
      cash balance of $6,919 at June 30, 2008. The current cash on hand and revenues
      will be insufficient to sustain our current operations for three months. Vista
      International, Inc., our majority shareholder, has provided working capital
      for
      our ongoing operations. We expect to secure equity capital from Vista
      International, Inc. during the remainder of 2008 for engineering development
      and
      market development of our Thermal GasifierTM and to fund ongoing
      operations.





We
      received interim funding in cash of $325,552 for our operations as an equity
      investment from Vista International, Inc. during the first six months of 2008
      in
      exchange for common stock to be issued. In addition, Vista International, Inc.
      incurred expenses on behalf of the company during the first six months of 2008
      for sales and market development efforts in China, Mexico, South Eastern Europe
      and the US. Those expenses consist primarily of travel and marketing related
      expenses in pursuit of projects for the deployment of our thermal gasification
      technology. Vista International, Inc. has obtained a number of letters of intent
      to use our thermal gasification technology for waste to energy projects and
      expects to convert those into contracts in the future. The expenses incurred
      on
      our behalf have not been recorded as equity contributions to the company at
      this
      time. The company expects to negotiate a compensation agreement on a project
      by
      project basis to include an equity interest in the projects that result from
      Vista International, Inc.’s efforts. We expect that Vista International, Inc.
      will provide additional capital either as debt or as an equity contribution
      to
      us during the remainder of 2008 for the purpose of funding ongoing operations,
      investing in new equipment for our tire fuel processing operations and
      commercializing and deploying our Thermal GasifiersTM. We also expect to use this
      funding to identify and integrate other technologies that will improve the
      operation and forecasted profitability of our Thermal GasifierTM.





We
      expect
      that our current cash on hand and revenues will not be sufficient to sustain
      our
      current operations. The company believes it will need to secure several million
      dollars of investment capital within the next fiscal quarter in order to
      continue development of the next generation Thermal GasifierTM and fund ongoing
      operations.





The
      independent auditors report on our December 31, 2007 financial statements states
      that our recurring losses raise substantial doubts about our ability to continue
      as a going concern.





**Item
      4T. Controls and Procedures**




***Evaluation
      of Disclosure Controls and Procedures*** *.* Our
      management, with the participation of our Chief Executive Officer and Principal
      Accounting Officer, has evaluated the effectiveness of our “disclosure controls
      and procedures” (as defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) as of the end of the period covered by this report. Based on
      this evaluation, our management has concluded that our disclosure controls
      and
      procedures are not effective to ensure that information required to be disclosed
      by us in reports that we file or submit under the Securities Exchange Act of
      1934 is recorded, processed, summarized and reported within the time periods
      specified in Securities and Exchange Commission rules and forms. Additionally,
      based on management’s evaluation, our disclosure controls and procedures were
      effective in ensuring that information required to be disclosed in our Exchange
      Act reports is accumulated and communicated to our management, including our
      Chief Executive Officer and Principal Accounting Officer, to allow timely
      decisions regarding required disclosures.




***Management’s
      report on internal control over financial reporting.*** ** Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rule 13a-15(f) of the Securities
      Exchange Act of 1934. Our internal control over financial reporting is a process
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with generally accepted accounting principles. Our internal control
      over financial reporting includes those policies and procedures that (i) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of assets; (ii) provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of
      financial statements in accordance with U.S. generally accepted accounting
      principles, and that our receipts and expenditures are being made only in
      accordance with authorizations of our management and directors; and (iii)
      provide reason able assurance regarding prevention or timely detection of
      unauthorized acquisitions, use, or disposition of our assets that could have
      a
      material effect on the financial statements.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.




A
      material weakness is a control deficiency, or combination of control
      deficiencies, that results in more than a remote likelihood that a material
      misstatement of the annual or interim financial statement will not be prevented
      or detected. As of December 31, 2007, management assessed our internal control
      over financial reporting in relation to criteria described in *Internal
      Control- Integrated Framework* ,
      issued
      by the Committee of Sponsoring Organizations of the Treadway Commission. As
      a
      result of this assessment, we identified the following material weakness in
      internal control over financial reporting as of December 31, 2007.




The
      Company lacks sufficient accounting controls and procedures to ensure that
      expenditures are properly allocated between the Company and its majority
      shareholder, Vista International, Inc., which is a company, also engaged in
      the
      renewable energy business.




We
      determined that the aforementioned deficiency constitutes a material weakness
      in
      our internal control over financial reporting as of December 31, 2007. Due
      solely to this material weakness, we concluded that we did not maintain
      effective internal control over financial reporting as of December 31, 2007.




6




***Remediation
      of Internal Control Weakness:***





Management
      has commenced procedures to remediate the aforementioned deficiency in our
      internal control over financial reporting whereby allocated expenditures between
      the Company and its majority shareholder, Vista International, Inc. are
      determined on a timely basis for financial reporting and are reviewed and
      approved by the Company’s Board of Directors.





**PART
      2: OTHER INFORMATION**





**Item
      1. Legal Proceedings.**




Vista
      International Technologies, Inc. is involved in litigation in the normal course
      of its business, none of which is anticipated to have a material adverse effect
      on its financial condition, operations or prospects.





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




On
      January 28, 2008, the Company issued an aggregate of 750,000 restricted shares
      of its common stock to American Capital Venture, Inc. (and its affiliates)
      (collectively "ACV") for an investor relations' services contract. Under the
      contract, ACV was to plan, coordinate, establish, and manage an investor
      relations program, for the benefit of the Company, through one or more
      nationally recognized news and information mediums including, but not limited
      to, CNN, Bloomberg and CNBC. In connection with the sale of unregistered
      securities, the Company filed a Form D with the Commission.





On
      April
      10, 2008, the Company issued an aggregate of 5,550,297 restricted shares of
      its
      common stock to Vista International, Inc., for cash and payment of expenses
      pursuant to a Definitive Agreement for equity investment executed on January
      31,
      2008. In connection with the purchase of unrestricted securities, Vista
      International, Inc. filed a Form 4 with the Commission.





**Item
      3. Defaults Upon Senior Securities.**




Not
      Applicable





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




None.





**Item
      5. Other Information.**





None.





**Item
      6. Exhibits.**




(a)
      Exhibits.




2.1
            Stock
                Exchange Agreement, dated as of December 31, 2002, by and between
                Nathaniel Energy Corporation, and MNS Eagle Equity Group, Inc. and
                the
                shareholders of MNS Equity Group, Inc.*2.2
            Stock
                Purchase Agreement, dated August 26, 2002 but effective as of June
                30,
                2002, by and between MCNIC Pipeline & Processing Company and Nathaniel
                Energy Corporation*3(i).1
            Certificate
                of Incorporation**3(i).2
            Articles
                of Amendment to Articles of Incorporation, as amended on August 6,
                1999**3(i).3
            Certificate
                of Amendment of Certificate of Incorporation, as amended on April
                24,
                2002**3(i).4
            Certificate
                of Amendment to Certificate of Incorporation filed on October 12,
                2005**3(ii).1
            Amended
                and Restated By-Laws***10.2
            Stock
                Purchase Agreement dated September 29, 2005 between Nathaniel Energy
                Oklahoma Holdings, Corporation (“NEHOC”) and Richard Strain**10.3
            Purchase
                and Sale Agreement dated September 30, 2005 between Nathaniel Energy
                Corporation, NEOHC, MCNIC Rodeo Gathering, Inc. and Midstream Energy
                Services**10.4
            Nathaniel
                Energy Corporation 2005 Equity Participation Plan**10.6
            Agreement
                dated December 5, 2006 between Nathaniel Energy Corporation and
                Bailey-Jamar, LLC. ****14.1
            Code
                of Business Conduct and Ethics for Officers (Vice President and Senior)
                and Directors (effective March 8, 2004)***14.2
            Code
                of Business Conduct and Ethics for Employees and Officers(other than
                Vice
                President and Senior)(effective March 8, 2004)***31.
            Certification
                of Chief Executive Officer and Principal Accounting Officer pursuant
                to
                Rule 13a-14(a)or Rule 15d-14(a)as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 200232.
            Certification
                of Chief Executive Officer and Principal Accounting Officer pursuant
                to 18
                U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002




7





*
      Denotes
      document filed as an exhibit to our Annual Report on Form 10-KSB for the year
      ended December 31, 2003 and incorporated herein by reference.





**
      Denotes document filed as an exhibit to our Quarterly Report on Form 10-QSB
      for
      the period ended September 30, 2005 and incorporated herein by reference.





***Denotes
      document filed as an exhibit to our Current Report on Form 8-K for an event
      dated December 31, 2002 and incorporated herein by reference.





****Denotes
      document filed as an exhibit to our Annual Report on form 10-KSB for the year
      ended December 31, 2006 and incorporated herein by reference.


8





**SIGNATURES**




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




**VISTA
      INTERNATIONAL TECHNOLOGIES, INC.** **** (Registrant)




Date:
                August 14, 2008By:
            */s/
                Barry J. Kemble*Barry
                J. Kemble
              Chief
                Executive Officer
              (Principal
                financial officer)
              Vista
                International Technologies, Inc.




9