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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**___________________**FORM 10-QSB**_______________________

**ý                                QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

For the quarterly period endedJune 30, 2006

 

** ̈                                TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

  

For the transition period from               to    

  

Commission file number 0-50912

  **INTERNATIONAL AMERICANTECHNOLOGIES, INC.**(Exact Name Of RegistrantAs Specified In Its Charter)
| Nevada                                      | 88-0225318                              |
|---------------------------------------------|-----------------------------------------|
| (State of Incorporation)                    | (I.R.S. Employer    Identification No.) |
|                                   |                               |
| 601    Cien Street, Suite 235, Kemah, TX    | 77565-3077                              |
| (Address of Principal    Executive Offices) | (ZIP Code)                              |

Registrant'sTelephone Number, Including Area Code: (281) 334-9479

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x No  ̈Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes  ̈ No x

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.
| Large accelerated    filer  ̈ | Accelerated filer  ̈  | Non-accelerated    filer x |
|----------------------------------|-------------------------------|--------------------------------|

At June 30, 2006,the Registrant had 20,135,000 shares of common stock outstanding.

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**TABLE OF CONTENTS**
| Item                               |                          |                          |      | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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| **PART I - FINANCIAL INFORMATION** |
|                               |
| ITEM    1.                         |      |      |      |   FINANCIAL    STATEMENTS.
        3  
ITEM    2.
            
  MANAGEMENT'S    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION.
        3   
ITEM    3.
            
     CONTROLS AND PROCEDURES.
        4     
**PART II - OTHER INFORMATION**
  
ITEM 1.
            
  LEGAL    PROCEEDINGS.
        4  
ITEM 2.
            
  CHANGES IN    SECURITIES.
        4   
ITEM 3.
            
  DEFAULT UPON SENIOR SECURITIES.
        5   
ITEM 4.
            
  SUBMISSION OF    MATERS TO A VOTE OF SECURITY HOLDERS.
        5   
ITEM 5.
            
  OTHER    INFORMATION.
        5   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.5
 
****
**PART I - FINANCIAL INFORMATION**

ITEM 1. FINANCIALSTATEMENTS

The Registrant's financial statements for the three and six monthperiods ended June 30, 2006 and 2005 are attached to this quarterly report.

Financial Statements

ITEM2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION 

As used in this Quarterly Report, the terms *"we","us", "our" and the "Company"* means InternationalAmerican Technologies, Inc., a Nevada corporation, and its subsidiary, Hammonds TechnicalServices, Inc. To the extent that we make any forward-looking statements in the *"Management'sDiscussion and Analysis of Financial Condition and Results of Operations"* in thisQuarterly Report, we emphasize that forward-looking statements involve risks anduncertainties and our actual results may differ materially from those expressed or impliedby our forward-looking statements. Our forward-looking statements in this Quarterly Reportreflect our current views about future events and are based on assumptions and are subjectto risks and uncertainties. Generally, forward-looking statements include phrases withwords such as *"expect", "anticipate", "intend","plan", "believe", "seek", "estimate"* andsimilar expressions to identify forward-looking statements.

Organization, Principal Activities and Basis of Presentation

International American Technologies, Inc., a Nevada corporation, ispublicly traded on the OTCBB: Symbol "IMTG". The Company was incorporated onAugust 18, 1986 and is an 81.0% owned subsidiary of American International Industries,Inc., OTCBB: AMIN. 

Effective April 28, 2005 the Registrant entered into a Stock PurchaseAgreement to acquire a 51% interest in the capital stock of Hammonds Technical Services,Inc., a privately-owned Texas corporation ("Hammonds"), in consideration forIMTG, or IMTG’s corporate parent, American International Industries, Inc., providing(i) $998,300 in cash to Hammonds for working capital; (ii) a secured revolving long-termline of credit in the amount of $2,000,000; and (iii) American issuing 145,000 restrictedshares of common stock to IMTG in consideration for a $1,450,000 promissory note, whichshares were exchanged for two minority equity interests in Hammonds that were owned bythird parties. The total purchase price to acquire the 51% in Hammonds was $2,455,700representing cash payments of $825,000, 145,000 restricted shares of AmericanInternational Industries, valued at $1,450,000, and the assumption of a $173,000 notepayable to a former shareholder of Hammonds and the assumption of $7,400 in liabilities.

Revenue and expenses of Hammonds are included in the Company’sconsolidated statements of operations from May 1, 2005 through the period ended June 30,2006. The condensed consolidated balance sheets, statements of operations andcomprehensive income, and cash flow included herein are unaudited, except for thecondensed consolidated balance sheet as of December 31, 2005. The unaudited financialstatements include, in the opinion of management, all the adjustments, consisting only ofthe normal recurring adjustments, necessary for a fair presentation of the financialposition, results of operations and cash flows for the periods presented. The unauditedfinancial statements included herein have been prepared in accordance with the rules ofthe Securities and Exchange Commission for Form 10QSB and accordingly do not include allfoot note disclosures that would normally be included in financial statements prepared inaccordance with generally accepted accounting principles, although the Company believesthat the disclosures presented are adequate to make the information presented notmisleading. The unaudited financial statements should be read in conjunction with thefinancial statements and notes thereto included in the Company’s Annual Report onForm 10KSB for the year ended December 31, 2005.

The nature of the Company’s business is such that the results ofinterim periods are not necessarily indicative of results that may be expected for anyfuture interim period or for a full year.
**Results of Operations

Three and Six Months Ended June 30, 2006 Compared to Three andSix Months Ended June 30, 2005.

The following is derived from, and should be read in conjunction with,our unaudited condensed consolidated financial statements, and related notes, as of andfor the three and six months ended June 30, 2006 and 2005.
*Revenues. Revenues increased to $1,835,659 for the three monthsended June 30, 2006 from $576,035 for the three months ended June 30, 2005. For thesix-month periods ended June 30, 2006, revenues increased to $3,160,826 from $576,035 forthe same six-month period of 2005. In addition, during the six-month period ended June 30,2006, Hammonds projected backlog of orders has increased to approximately $5,000,000,representing a substantial increase from 2005.
*Cost of Sales. Cost of sales was $1,215,672 and $2,256,785 for thethree and six months ended June 30, 2006 as compared to $389,139 for the three and sixmonths ended June 30, 2005. The increase was primarily due to Hammonds increasedproduction volume and price costs since the acquisition of Hammonds effective April 28,2005.
*Selling and Administrative. Selling and administrative expensesincreased to $778,192 and $2,316,785 for the three and six months ended June 30, 2006 from$496,760 and $507,730 for the three and six months ended June 30, 2005. The increase wasprimarily due to sales and marketing expenses associated with the introduction by Hammondsof its new line of omni direction utility vehicles in late 2005 and the on-going sales andmarketing efforts associated with all of its product lines.
*Loss from Operations. As a result of the foregoing, our loss,excluding interest expense and income, for the three and six-month periods ended June 30,2006 were $158,205 and $559,352 compared to $309,864 and $320,864 for the same periodsended June 30, 2005. 
*Other Income (Expense). Interest expense increased slightly to$26,687 and $73,514 for the three and six-month periods ended June 30, 2006 from $11,633and $70,576 for the three and six-month periods ended June 30, 2005. The increase wasprimarily due to increase in the working capital line of credit.
*Net Income (loss). The Company reduced its net loss for thethree-month period ended June 30, 2006 to 184,892 from 298,231 during the three-monthperiod ended June 30, 2005. The Company incurred a net loss of $632,866 during thesix-month period ended June 30, 2006 compared to a net loss of $250,258.

Liquidity and Capital Resources

At June 30, 2006 and December 31, 2005, we had total assets of$6,344,125 and $5,749,767, respectively. We had current liabilities at June 30, 2006 andDecember 31, 2005 of $1,967,360 and $1,766,056, respectively. Our accumulated deficit atJune 30, 2006 and December 31, 2005 was $1,949,033 and $1,316,167, respectively. We hadpositive working capital of $728,938 at June 30, 2006 as compared to $171,094 at December31, 2005. Net cash used in operations was $1,098,857 during the six months ended June 30,2006 compared to $428,686 for the same period of June 30, 2005. The cash used in operatingactivities was mainly attributable to an increase in accounts receivable of $297,745 andan increase in inventories of $368,034. Net cash provided by investing activities was$364,993 during the six-month period ended June 30, 2006, compared to $10,208 for the sameof 2005.

ITEM 3. CONTROLS ANDPROCEDURES
*Evaluation of disclosure controls and procedures. As of June 30,2006, the Company's chief executive officer and chief financial officer conducted anevaluation regarding the effectiveness of the Company's disclosure controls and procedures(as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon theevaluation of these controls and procedures, our chief executive officer and chieffinancial officer concluded that our disclosure controls and procedures were effective asof the end of the period covered by this report.
*Changes in internal controls. During the quarterly period covered by this report,no changes occurred in our internal control over financial reporting that materiallyaffected, or is reasonably likely to materially affect, our internal control overfinancial reporting.

**PART II - OTHER INFORMATION**

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES 

None.

ITEM3. DEFAULTS UPON SENIOR SECURITIES 

None.

ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 

None.

ITEM 5. OTHER INFORMATION

None.

ITEM6. EXHIBITS AND REPORTS ON FORM 8-K 

(a) The following documents are filed as exhibits to this report on Form 10-QSB orincorporated by reference herein. Any document incorporated by reference is identified bya parenthetical reference to the SEC filing that included such document.
**Exhibit No.****Description**
31.1
Certification of    President and CFO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the    Sarbanes-Oxley Act of 2002
32.1
Certification of    President and CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K During the Period Covered by this Report: TheRegistrant filed a Form 8-K on May 1, 2006 with Item 8.01 "Other Events"disclosure and a Form 8-K on June 29, 2006 with Item 4.01 "Changes in Registrant'sCertifying Accountants" disclosure.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf of the registrant andin the capacities and on the date indicated.

/s/ GARY D. WOERZ

President and CFO
*Dated: August 8, 2006**
**FinancialStatements**Back to Table of Contents

Condensed Consolidated Financial Statements
      Unaudited Condensed Consolidated Balance Sheets - June 30, 2006 and December 31, 2005    (Audited)7
   Unaudited Condensed Consolidated Statement of Operations - Three and    Six months ended June 30, 2006 and 20058
      Unaudited Condensed Consolidated Statement of Cash Flows - Six months ended June 30, 2006    and 20059
   Notes to Unaudited Financial Statements10**INTERNATIONAL    AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed    Consolidated Balance Sheets
June 30, 2006 and    December 31, 2005  
   
**2006**
**2005**
(Unaudited)
(Audited)
Assets
Current assets:
   Cash
$
108,954
$
61,875   Accounts receivable, net
1,127,039
829,294
   Current    portion of notes receivable
28,807
27,435
   Inventories
1,372,691
1,004,657
   Prepaid    expenses and other assets
58,807
13,889
     Total current assets
2,696,298
1,937,150
   
   Long-term    notes receivable, less current portions
375,460
390,310
   Property    and equipment, net
777,798
829,049
   Patents and    trademarks, net
2,438,198
2,536,263
   Other    assets
56,371
56,995
          Total assets
$
6,344,125
$
5,749,767  
Liabilities and    Stockholders' Equity
  
Current liabilities:
   Accounts    payable and accrued expenses
$
1,498,684
$
1,442,849
   Short-term    note payable
311,274
173,300
   Current    installments of long-term debt
157,402
149,907
        Total current liabilities
1,967,360
1,766,056     Long-term debt, less current    installments2,617,1721,981,698
   Due to    American International Industries, Inc
2,234,034
1,843,588
   Deferred    tax liability
503,200
503,200
          Total liabilities
7,321,766
6,094,542
  
Stockholders' equity:
   Preferred    stock, $0.0001par value, authorized 5,000,000 shares: none issued
-
-
   Common    stock, $0.0001 par value, authorized 195,000,000 shares: 
        20,135,000 shares issued and outstanding at June 30, 2006 and December 31, 2005
2,014
2,014
   Additional    paid-in capital
969,378
969,378
   Accumulated    deficit
(1,949,033)
(1,316,167)
        Total stockholders' deficit
(977,641)
(344,775)
        Total liabilities and stockholders' equity
$
6,344,125
$
5,749,767
  
See accompanying notes to consolidated financial statements**INTERNATIONAL AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARIES**Condensed Consolidated Statements of OperationsBack to Table of ContentsThree    and six months ended June 30, 2006 and 2005(Unaudited)  **Three-Months Ended****Three-Months Ended****Six-Months Ended****Six-Months Ended****June 30, 2006****June 30, 2005****June 30, 2006**
**June 30, 2005**   
  
(Restated)
   
(Restated)   Revenues $1,835,659$576,035$3,160,828
$
576,035Costs and expenses:    Cost of sales 1,215,672389,1392,256,785
389,139   Selling, general    and administrative 778,192496,7601,463,395
507,730        Total costs and expenses 1,993,864885,8993,720,180
896,869   Operating    loss(158,205)(309,864)(559,352)
(320,834)   Other income (expenses):    Interest income 3,66011,6337,440
17,827   Interest expense(30,347)-(80,954)
-   Other---
52,749     Total    other income (expense)(26,687)11,633(73,514)
70,576       Net    loss before income taxes(184,892)(298,231)(639,866)
(250,258)Provision for income tax---
-Net loss(184,892)(298,231)(639,866)
(250,258)  Net loss applicable to common    shareholders:Basic and    diluted$(0.01)$(0.01)$(0.03)$
(0.01)   Weighted average common shares:Basic and    diluted20,135,00020,135,00020,135,000
20,088,750     See    accompanying notes to consolidated financial statements.
**INTERNATIONAL AMERICAN TECHNOLOGIES, INC.**
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2006 and 2005 
(Unaudited)  
**Three-Months    Ended**
**Three-Months    Ended****June    30, 2006**June    30, 2005
   
**  **
(Restated)  
Cash flows    from operating activities: 
   Net loss
$
(632,866)
$
(250,258)
      Adjustments to reconcile net loss 
      to net cash used in operating activities: 
        Depreciation and amortization of property and equipment
71,649
20,284        Amortization of intangibles123,25852,056
        Common stock issued for services
-
10,000
      Increase (decrease ) of operating assets, net of acquisition of subsidiaries:
        Accounts receivable
(297,745)
31,243
        Inventories
(368,034)
(133,677)
        Prepaid expenses and other current assets
(44,918)
3,208
        Other assets
625
1,167
   Increase    (decrease)of operating liabilities, net of acquisition of subsidiaries: 
        Accounts payable and accrued expenses
49,174
(162,709)
          Net cash used in operating    activities 
(1,098,857)
(428,686)
  
Cash flow    from investing activities:    Purchase of    property and equipment(13,738)-
      Redemption of certificate of deposit
-
300,000   Patents and    trademarks(25,193)-
      Notes receivable
13,478
14,708
      Amounts due to American International Industries, Inc.
390,446
(304,500)
          Net cash provided by    investing activities 
364,993
10,208
   
Cash flows    used in financing activities:   Proceeds from    short-term borrowings137,974-   Repayments of    short-term borrowings-(480,333)
       Proceeds from long-term debt
642,969
886,380
          Net cash provided by    financing activities
780,943
406,047
  
          Net increase (decrease) in    cash 
47,079
(12,431)
Cash at    beginning of year
61,875
56,605
Cash and cash equivalents at end of period
$
108,954
$
44,174
   Supplemental schedule of cash    flow information:
$
-
$
-  
See    accompanying notes to consolidated financial statements
INTERNATIONAL AMERICAN TECHNOLOGIES, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
**(1) General**
International American Technologies, Inc. (the "Company"),operates as through its majority-owned subsidiaries, Hammonds Technical Services, Inc.,Hammonds Fuel Services, Inc. and Hammonds Water Treatment System, Inc.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statementshave been prepared in accordance with U. S. generally accepted accounting principles("GAAP") for interim financial information and with the instructions to Form10-QSB. Accordingly, they do not include all of the information and footnotes required byGAAP for complete financial statements. In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for a fair presentationhave been included. Operating results for the six months period ended June 30, 2006 arenot indicative of the results that may be expected for the year ending December 31, 2006.

As contemplated by the Securities and Exchange Commission (SEC) underRules of Regulation S-B, the accompanying financial statements and related footnotes havebeen condensed and do not contain certain information that will be included in theCompany's annual financial statements and footnotes thereto. For further information,refer to the Company's audited consolidated financial statements and related footnotesthereto included in the Company's annual report on Form 10-KSB for the year ended December31, 2005.
**(2) Use of Estimates

The preparation of financial statements in conformity with U. S. GAAPrequires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could vary from those estimates.
**(4) Income Taxes

Income taxes for the interim periods were computed using the effectivetax rate estimated to be applicable for the full fiscal year, which is subject to ongoingreview and evaluation by management. The estimated federal income tax expense for thethree and six month periods ended June 30, 2006 and 2005 is eliminated by net operatingloss carry forwards.
**(5) Employee Stock Based Compensation

The Company grants options to non-employees for goods and services andin conjunction with certain agreements. These grants are accounted for under FASBStatement No. 123R, "Accounting for Stock-Based Compensation" based on the grantdate fair values.
**(6) Industry Segments

The Company has two reportable segments and corporate overhead:Hammonds was two separate reportable segments, Hammonds Technical Services, Inc. andHammonds Fuel Additives, Inc. (collectively *"Hammonds"*) manufacturersengineered products and chemicals that serve multiple segments of the fuels distribution,water treatment and utility vehicle industries. Hammonds products are marketed by aworldwide network of distributors, manufacturers representatives and original equipmentmanufacturers. The corporate overhead includes the Company's investment holdings includingfinancing current operations and expansion of its current holdings as well as evaluatingthe feasibility of entering into additional businesses.

The accounting policies of the segments are the same as those describedin the summary of significant accounting policies. The Company evaluates performancesbased on profit or loss from operations before income taxes, not including nonrecurringgains and losses and foreign exchange gains and losses.

The Company's reportable segments are strategic business units thatoffer different technology and marketing strategies.

The Company's areas of operations are principally in the United States.No single foreign country or geographic area is significant to the consolidated financialstatements.

Consolidated revenues, operating income/(losses), and identifiableassets were as follows:

**June    30,**
**2006**
**2005**
Revenues:
$
$   Hammonds    Technical Services
1,751,896
376,738
      Hammonds Fuel Additives
599,362
199,297
      Hammonds Water Treatment System
809,570
-
      Corporate
-
-
$
3,160,828
$
576,035  
Income    (loss) from operations:
$
$   Hammonds    Technical Services
(639,891)
(292,444)
      Hammonds Fuel Additives
13,824
(797)
      Hammonds Water Treatment System
84,260
-
      Corporate
(17,545)
(27,593)
$
(559,352)
$
(320,834)  
Identifiable    assets:
$
$   Hammonds    Technical Services
2,590,870
1,734,909
      Hammonds Fuel Additives
2,345,927
1,290,216
      Hammonds Water Treatment System
608,090
-
      Corporate
799,238
432,985
$
6,344,125
$
3,458,110
The Company's areas of operations are in the United States.
**(5) Restatement of Previously Issued Quarterly Data (Unaudited)**
**As previously reported**
**Restatement adjustments**
**As restated**
Period ended June    30, 2005   Selling, general and    administrative expenses
$
391,955
$
104,805
$
496,760
      Total cost and expenses
781,094
104,805
885,899
      Operating income (loss)
(205,059)
(104,805)
(309,864)
      Interest income
5,469
6,164
11,633
      Other income
466,350
(466,350)
-
      Total other income
471,819
(460,186)
11,633
   Net    earnings (loss) before minority interest
266,760
(564,991)
(298,231)
      Minority interest
(136,178)
136,178
-
   Net    earnings (loss)
130,582
(428,813)
(298,231)   
Net earnings    (loss) per share to shareholders
0.01
-
(0.01)   
June 30, 2005
      Patents and trademarks, net of amortization
138,415
2,509,652
2,648,067
      Goodwill
4,134,049
(4,134,049)
-
      Accounts payable and accrued expenses
2,961,807
(863,429)
2,098,378
      Deferred tax liability
-
503,200
503,200
      Minority interest
2,200,231
(2,200,231)
-
      Accumulated deficit
4,291
(376,064)
(371,773)
      Total stockholders' equity
967,933
(376,064)
591,869
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