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

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

 

For the quarterly period endedSeptember 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 September 30,2006, the Registrant had 36,135,000 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 nine monthperiods ended September 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 subsidiaries, HammondsTechnical Services, Inc., Hammonds Fuel Services, Inc. and Hammonds Water TreatmentSystems, Inc. (collectively, "Hammonds"). To the extent that we make anyforward-looking statements in the *"Management's Discussion and Analysis ofFinancial Condition and Results of Operations"* in this Quarterly Report, weemphasize that forward-looking statements involve risks and uncertainties and our actualresults may differ materially from those expressed or implied by our forward-lookingstatements. Our forward-looking statements in this Quarterly Report reflect our currentviews about future events and are based on assumptions and are subject to risks anduncertainties. Generally, forward-looking statements include phrases with words such as *"expect","anticipate", "intend", "plan", "believe","seek", "estimate"* and similar expressions to identifyforward-looking statements.

Organization, Principal Activities and Basis of Presentation

International American Technologies, Inc., a Nevadacorporation, is publicly traded on the OTCBB: Symbol "IMTG". The Company wasincorporated on August 18, 1986 and is a 44.9% owned subsidiary of and is fullyconsolidated by its parent, American International Industries, Inc., OTCBB: AMIN, becauseits parent controls the Company's board of directors by having designated two of theCompany's three board of directors. Effective April 28, 2005, the Company completed astock purchase agreement to acquire a 51% equity interest in the capital stock of HammondsTechnical Services, Inc., a privately-owned Texas corporation ("Hammonds"), inconsideration for IMTG, or IMTG’s corporate parent, American InternationalIndustries, Inc., providing (i) $998,300 in cash to Hammonds for working capital; (ii) asecured revolving long-term line of credit in the amount of $2,000,000; and (iii) AmericanInternational Industries issuing 145,000 restricted shares of common stock to IMTG inconsideration for a $1,450,000 promissory note, which shares were exchanged for twominority equity interests in Hammonds that were owned by third parties. The total purchaseprice to acquire the 51% in Hammonds was $2,455,700 representing cash payments of$825,000, 145,000 restricted shares of American International Industries, valued at$1,450,000, and the assumption of a $173,000 note payable to a former shareholder ofHammonds and the assumption of $7,400 in liabilities.

The Company was an 81% owned subsidiary of AmericanInternational Industries, Inc. until Mr. Carl Hammonds, the Company's president and adirector, converted his 49% minority ownership in Hammonds into 16,000,000 shares of theCompany's common stock at a conversion rate of $.25 per share. The additional cost hasbeen allocated to patents and is being amortized in a manner equivalent to theamortization use on the intangible assets acquired in  the stock purchase agreementwith Hammonds effective April 28, 2005. We are in the process of obtaining independentvaluations of the intangible assets, upon completion of which the amortization rates maybe adjusted, if appropriate. Mr. Hammonds converted his minority equity interest in theCompany in connection with the August 8, 2006 private financing transaction with VisionOpportunity Fund Limited ("VOMF"), as discussed below. As a result of Mr.Hammonds conversion of his 49% minority interest into IMTG shares, Hammonds has become awholly-owned subsidiary of IMTG. 

On August 8, 2006, IMTG entered into a stock purchase agreement withVOMF pursuant to which IMTG agreed to sell up to 833,333 shares of newly designated IMTGSeries A Convertible Preferred Stock, having an 8% dividend, for consideration of$1,500,000. On August 8, 2006, IMTG sold VOMF 555,555 shares of Series A Preferred Stockfor consideration of $1,000,000 and on August 23, 2006, IMTG sold an additional 277,778shares of Series A Preferred Stock for consideration of $500,000. In connection with theAugust 8 and August 23, 2006 private financing transactions, IMTG issued VOMF  aSeries A Warrant exercisable to purchase 8,333,333 shares of IMTG common stock at $.18 pershare, expiring in five years, and a Series B Warrant exercisable to purchase anadditional 8,333,333 shares of IMTG common stock at $.18 per share, expiring in August2007.

On September 30, 2006, IMTG entered into a second stock purchaseagreement with VOMF pursuant to which it sold VOMF 833,333 shares of Series B PreferredStock, having identical terms as the Series A stock purchase agreement except for thedividend rate of 4%, for consideration of $1,500,000. In connection with the Series Bstock purchase agreement, the Company issued VOMF Series C Warrants exercisable topurchase 8,333,333 additional shares of common stock at a price of $.50 per share,expiring in five years and extended the expiration dates of the Series B Warrants issuedin the August 2006 private financing transactions from one year to two years. 

Each share of Series A and B Convertible Preferred Stock isconvertible into ten shares of the Company's common stock. The Company received netproceeds of approximately $2,728,000 from the sale of Series A and Series B PreferredStock and will receive gross proceeds of $4,166,666 if all of the warrants are exercisedby VOMF. American International Industries’ ownership interest in IMTG will decreasewhen VOMF converts its Series A and Series B Preferred Stock and/or exerciseswarrants issued in the VOMF August and September 2006 private financing transactions intoshares of IMTG common stock. 

Revenue and expenses of Hammonds are included in the Company’sconsolidated statements of operations from May 1, 2005 through the period ended September30, 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 allfootnote 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 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 Nine Months Ended September 30, 2006 Compared to Three and Nine Months EndedSeptember 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 nine months ended September 30, 2006 and 2005.
*Revenues. Revenues increased to $1,527,863 for the three monthsended September 30, 2006 from $1,128,887 for the three months ended September 30, 2005.For the nine month periods ended September 30, 2006, revenues increased to $4,688,692 from$1,704,922 for the same nine month period of 2005. In addition, during the nine monthperiod ended September 30, 2006, Hammonds projected backlog of orders has increased toapproximately $5,000,000, representing a substantial increase from 2005.
*Cost of Sales. Cost of sales was $1,321,205 and $3,577,990 for thethree and nine months ended September 30, 2006 as compared to $915,904 and $1,305,043 forthe three and nine months ended September 30, 2005. The increase was primarily due toHammonds increased production volume.
*Selling and Administrative. Selling and administrative expensesincreased to $952,917 and $2,416,312 for the three and nine months ended September 30,2006 from $717,651 and $1,161,662 for the three and nine months ended September 30, 2005.The increase was primarily due to sales and marketing expenses associated with theproduction of its new line of omni direction utility vehicles, the on-going sales andmarketing efforts associated with all of its product lines, and the increase inamortization costs of the patents and trademarks.
*Loss from Operations. As a result of the foregoing, our loss,excluding interest expense and income, for the three and nine-month periods endedSeptember 30, 2006 was $746,259 and $1,305,610 compared to $504,668 and $761,783 for thesame periods ended September 30, 2005. 
*Other Income (Expense). Other income (expense) decreased to$(179,230) and $(252,744) for the three and nine month periods ended September 30, 2006from $2,629 and $14,325 for the three and nine-month periods ended September 30, 2005. Thedecrease was primarily due to an increase in the working capital line of credit.
*Net Income (Loss). Net Loss increased to $925,439 and $1,558,354for the three and nine month periods ended September 30, 2006 as compared to $501,976 and$747,458 for the three and nine month periods ended September 30, 2005. The increase innet loss was primarily attributable to costs associated with Hammonds introduction of itsnew line of omni directional vehicles.

Liquidity and Capital Resources

At September 30, 2006 and December 31, 2005, we had totalassets of $12,431,846 and $5,749,767, respectively. We had current liabilities atSeptember 30, 2006 and December 31, 2005 of $1,936,750 and $3,747,754, respectively. Ouraccumulated deficit at September 30, 2006 and December 31, 2005 was $2,894,523 and$1,316,167, respectively. We had positive working capital of $3,055,293 at September 30,2006 as compared to $(1,810,604) at December 31, 2005. Net cash used in operations was$2,189,591 during the nine months ended September 30, 2006 compared to $885,178 for thesame period of September 30, 2005. The cash used was derived from an increase in accountsreceivable of $403,298, an increase in inventories of $539,813, a decrease in accountspayable of $9,997, depreciation of $76,031, amortization of 307,469, a miscellaneouswrite-off of $22,684, an increase in other current assets and prepaid expenses of $56,740,and a decrease in other assets of $17,795. Net cash provided by investing activities was$527,110 during the nine-month period ended September 30, 2006, compared to $327,724 forthe same period of 2005. The cash provided was from an increase in amounts due to AmericanInternational Industries, Inc. of $552,111, offset by purchases of property and equipmentof $20,203, and patents and trademarks of $25,193. At September 30, 2006 we had net cashprovided from financing activities of $3,716,149 as compared to $1,215,720 at September30, 2005. The net cash provided by financing activities was mainly due to the sale to VOMFof Series A and Series B Preferred Stock of $2,727,746 and an increase in long termborrowings of $995,915. In the event that the Series A, B and C Warrants issued to VOMF inthe August and September 2006 private financing transactions are exercised, the Companymay expect additional proceeds of $4,166,666.

We believe that with the net proceeds from our August andSeptember 2006 private financing transactions, together with anticipated positive cashflow from our operations starting in 2007, funding provided under our bank line-of-creditand funding available from our parent, that we will have adequate funding to execute ourplanned expansion of our manufacturing capacity and our sales and marketing efforts tomeet our increasing orders in each of Hammonds' product lines. We believe that we havesufficient cash to implement our growth plan. In addition, if all of the warrants theCompany granted are exercised, our plan is to use additional net proceeds from suchexercise for our working capital, in order to accelerate our growth plan. 

ITEM 3. CONTROLS ANDPROCEDURES
*Evaluation of disclosure controls and procedures. As of September30, 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 quarterlyperiod covered by this report, no changes occurred in our internal control over financialreporting that materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

**PART II - OTHER INFORMATION**

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES 

On August 8, 2006, in connection with the August 2006 private financingtransactions between the Company and VOMF, Mr. Carl L. Hammonds, the Company's presidentand a director, converted his 49% ownership of Hammonds into 16,000,000 shares of theCompany's common stock.

In August 2006, we sold 833,333 shares of Series A ConvertiblePreferred Stock for $1,500,000 to VOMF. In September 2006, the Company sold additional833,333 shares of Series B Preferred Stock for $1,500,000 to VOMF. 

Each share of Series A and B Convertible Preferred Stock is convertibleinto ten shares of the Company's common stock.

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 CEO/    CFO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of    2002
32.1
Certification of CEO/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 August 14, 2006 with Item 3.02 "Unregistered Sale ofEquity Securities" disclosure and a Form 8-K on September 28, 2006 with Item 5.02"Departure of Director or Principal Officers; Election of Director; Appointment ofPrincipal Officers.

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

CEO and CFO
*Dated: November 22, 2006**
**FinancialStatements**Back to Table of Contents

Condensed Consolidated Financial Statements
 Unaudited    Condensed Consolidated Balance Sheets - September 30, 2006 and December 31, 2005 (Audited)8
 Unaudited Condensed Consolidated Statement of Operations - Three and Nine    months ended September 30, 2006 and 20059
 Unaudited    Condensed Consolidated Statement of Cash Flows - Nine months ended September 30, 2006 and    200510
 Notes to Unaudited Financial Statements11**INTERNATIONAL    AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARY**Consolidated Balance SheetsBack to Table of ContentsSeptember 30, 2006    and December 31, 2005(unaudited)  **  **
**September 30, 2006**
**December 31, 2005**** **
**(Audited)**   
AssetsCurrent assets:
      Cash$2,115,543
$
61,875   Accounts    receivable, net1,232,592829,294   Current portion of    notes receivable28,80727,435   Inventories, net1,544,4711,004,657   Prepaid expenses    and other assets70,62913,889        Total current assets4,992,0421,937,150   Long-term notes receivable,    less current portions368,543390,310Property and equipment, net778,075829,049Patents and trademarks, net6,253,9872,536,263Other assets39,19956,995          Total assets$12,431,846$5,749,767  
Liabilities    and Stockholders' Equity (Deficiency)  Current liabilities:   Accounts payable    and accrued expenses$1,464,198$1,442,849   Short-term notes    payable289,558173,300   Current    installments of long-term debt157,4022,131,605        Total current liabilities1,911,1583,747,754  Long-term debt, less current    installments2,817,172-Due to American International    Industries, Inc.2,395,6991,843,588Deferred tax liability503,200503,200      Total liabilities7,627,2296,094,542  Stockholders' equity    (deficiency):   Preferred stock,    $0.001par value, authorized 5,000,000 shares:        1,666,666 issued and outstanding167-   Common stock,    $0.0001 par value, authorized 195,000,000 shares:         36,135,000 shares issued and outstanding at September 30, 2006     and    20,135,000 shares and outstanding at December 31, 20053,6142,014   Additional paid-in    capital7,695,359969,378   Accumulated    deficit(2,894,523)(1,316,167)     Total    stockholders' equity (deficit)4,804,617(344,775)        Total liabilities and stockholders' equity$12,431,846
$5,749,767  See accompanying    notes to consolidated financial statements.**INTERNATIONAL AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARY**Consolidated Statements of OperationsBack to Table of ContentsFor    the three and nine months ended September 30, 2006 and 2005(Unaudited)  **Three Months****Three Months****Nine Months**
**Nine Months****Ended****Ended****Ended****Ended****September 30, 2006****September 30, 2005****September 30, 2006****September 30, 2005****  **
  
(restated)
** **
(restated)  Revenues$1,527,863$1,128,887$4,688,692
$1,704,922Costs and expenses:   Cost of sales 1,321,205915,9043,577,9901,305,043   Selling, general    and administrative 952,917717,6512,416,3121,161,662        Total costs and expenses 2,274,1221,633,5555,994,3022,466,705   Operating loss(746,259)(504,668)(1,305,610)(761,783)   Other income (expenses):    Interest income 3,7642,69211,20414,325   Interest expense(307,088)-(388,042)-   Other income 124,094-124,094-     Total    other income (expenses)(179,230)2,692(252,744)14,325  Net loss before income tax(925,489)(501,976)(1,558,354)(747,458)   Provision for    income tax----Net loss from operations before    minority interest(925,489)(501,976)(1,558,354)(747,458)              Net loss(925,489)(501,976)(1,558,354)(747,458)   Preferred dividends(20,000)-(20,000)-        Net loss applicable to common shareholders$(945,489)$(501,976)$(1,578,354)
$(747,458)  Net loss applicable to common    shareholders:Basic$(0.03)$(0.02)$(0.07)$(0.04)   Weighted average common shares:Basic30,743,69620,129,00023,710,09220,125,000     See    accompanying notes to consolidated financial statements.**INTERNATIONAL AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARY**Consolidated Statements of Cash FlowsBack to Table of ContentsNine    months ended September 30, 2006 and 2005(Unaudited)  **Nine Months Ended****Nine Months Ended****September 30, 2006****September 30, 2005****  **
** **
(restated)  Cash flows from operating    activities:    Net loss
$(1,558,354)
$
(747,458)   Adjustments to    reconcile net loss   to net cash used    in operating activities:         Depreciation and amortization of property and equipment76,031
52,736        Amortization of intangibles307,469
140,882     Common    stock issued for services-
13,500        Miscellaneous write off(22,684)-   (Increase)    decrease of operating assets, net of acquisition of subsidiary:         Accounts receivable(403,298)(7,216)        Inventories(539,813)(270,483)        Prepaid expenses and other current assets(56,740)(36,390)     Other    assets17,795
27,650        Accounts payable and accrued expenses(9,997)(58,399)                Net cash used in operating activities (2,189,591)
(885,178)  Cash flows from investing    activities:    Patents and    trademarks(25,193)
-   Purchase of    property and equipment(20,203)
(65,051)   Redemption of    certificate of deposit-
300,000   Purchase of stock    in majority-owned subsidiary-
(998,300)   Cash acquired in    acquisition of majority-owned subsidiary-
56,506   Notes receivable20,395
19,021   Amount due to    American International Industries, Inc.552,111
360,100               Net cash provided by (used in) investing activities 
527,110
(327,724)   Cash flows from financing    activities:    Proceeds from    issuance of short-term debt16,315-   Proceeds from    issuance of preferred stock2,727,746-   Proceeds from    long-term borrowings995,915
1,931,968   Principal payments    of short-term borrowings(22,198)(716,248)   Principal payments    of long-term borrowings(1,739)-   Net borrowings    under line of credit110
-               Net cash provided by financing activities 
3,716,149
1,215,720                 Net increase (decrease) in cash 2,053,668
2,818  Cash and cash equivalents at    beginning of year
61,875
99Cash and cash    equivalents at end of period
$
2,115,543
$
2,917   Supplemental schedule of cash    flow information:Interest paid
$388,042$-Issuance of    note payable for office equipment
$
4,855
$
-  See accompanying    notes to consolidated financial statements.**INTERNATIONAL AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARYNotes to  Consolidated FinancialStatements Back to Table ofContentsSeptember 30, 2006
**(1) General

International American Technologies, Inc. (the "Company"),operates as through its majority-owned subsidiaries Hammonds Technical Services, Inc.,Hammonds Fuel Additives, Inc., and Hammonds Water Treatment Systems, 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 nine months period ended September 30, 2006are not 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.
**(3) Revenue Recognition

Revenue is recognized when the earning process is completed, the risksand rewards of ownership have transferred to the customer, which is generally the same dayas delivery or shipment of the product, the price to the buyer is fixed or determinable,and collection is reasonably assured. The Company has no significant sales returns orallowances.
**(4) Recent Accounting Pronouncements

In May 2005, the Financial Accounting Standards Board (*"FASB"*)issued Statement of Financial Accounting Standard (*"SFAS"*) No. 154, *AccountingChanges and Error Corrections*. SFAS No. 154 replaces Accounting Principles BoardOpinion No. 20, *Accounting Changes*, and SFAS No. 3, *Reporting Accounting Changesin Internal Financial Statements*, and changes the requirements for the accounting forand reporting of a change in accounting principle. SFAS No. 154 requires retrospectiveapplication of changes in accounting principle to prior periods’ financialstatements, unless it is impracticable to determine either the period-specific effects orthe cumulative effect of the change. SFAS No. 154 is effective for accounting changes andcorrections of errors made in fiscal years beginning after December 15, 2005. We adoptedSFAS No. 154 on January 1, 2006. Any impact on the Company’s consolidated results ofoperations and earnings per share will be dependent on the amount of any accountingchanges or corrections of errors whenever recognized.
**(5) Acquisition

On February 28, 2005, the Company entered into a Stock PurchaseAgreement  to acquire a 51% interest in the capital stock of Hammonds TechnicalServices, Inc., a privately owned Texas corporation ("Hammonds") inconsideration for the Company or its parent, American International Industries, Inc.,providing: (i) $998,300 in cash to Hammonds for working capital; (ii) a secured revolvinglong-term line of credit in the amount of $2,000,000; and (iii) the parent issuing 145,000restricted shares of common stock to the Company in consideration for a $1,450,000promissory note. The restricted shares were exchanged for two minority equity interests inHammonds owned by third parties, which minority interest were cancelled. The totalpurchase price to acquire the 51% in Hammonds was $2,455,700, representing cash paymentsof $998,300, 145,000 shares of American International Industries’ restricted commonstock valued at $1,450,000 and the assumption of a note payable to one of the formershareholders in the amount of $173,300 and liabilities in excess of assets in the amountof $7,400. The acquisition of Hammonds closed on April 28, 2005.

Hammonds is a manufacturer of fuel injectors and pumps for the aviationindustry, and producer of fuel and water additives for the aviation and potable waterindustries. Sales are made to customers in both domestic and international markets.

As required by SFAS No. 141, the Company has recorded the acquisitionusing the purchase method of accounting with the purchase price allocated to the acquiredassets and liabilities based on their respective estimated fair values at the acquisitiondate. The purchase price of $2,455,700 had been allocated at follows:
Current assets$1,435,939Property and equipment, net 826,765Patents and trademarks, net of amortization2,724,487Other non-current assets70,085Current liabilities (2,098,376)Deferred tax credit(503,200)$2,455,700
On August 1, 2006 Mr. Carl L. Hammonds converted his 49%ownership of Hammonds Technical Services, Inc., Hammonds Fuel Additives, Inc., andHammonds Water Treatment Systems, Inc. into 16,000,000 shares or 44.4% of IMTG commonstock at a conversion rate of $.25 a share for total consideration of $4,000,000. Theadditional cost has been allocated to patents and is being amortized in a mannerequivalent to the amortization used on the intangible assets acquired in the initialpurchase of 51% of the company. The company is in the process of obtaining independentvaluations of the individual intangible assets and when that process is completed, theamortization rates may be adjusted if appropriate.
**(6) Inventory

Inventory at September 30, 2006 consisted of the following:
**2006Finished goods
$
141,564Work in process
263,972Parts and materials
1,420,377
1,825,913Less: Obsolescence reserve
(281,442)
$
1,544,471
**(7) 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 nine month periods ended September 30, 2006 and 2005 is eliminated by netoperating loss carry forwards.
**(8) Short-term Notes Payable To Banks
**September    30, 2006**December    31, 2005
Note    payable to former owner of equity interest in Hammonds payable on July 20, 2005 with    accrued interest at prime plus 4%
173,300
173,300   
Note    payable with interest at 10.75%, interest payments due quarterly, with a principal balance    due on December 10, 2006
$
90,000
$
-  
Other    notes with various terms
26,258
-
$
289,558
$
173,300**(9) Long-term Debt

Long-term debt consisted of the following:
**September    30, 2006**December    31, 2005Note payable to bank, interest due    monthly at prime plus 2%, principal payment due January 31, 2008, secured by assets of the    Company's subsidiary
1,992,189
1,993,878  Note payable to a bank, due in    quarterly installments of interest only at 6.5%, with a principal balance due on 1/1/2008
300,000
-  Note payable to a bank, due in    quarterly installments of interest only at 7.5%, with a principal balance due on 1/18/2008
200,000
-  Note payable to a bank, due in monthly    installments of interest only at 9.75%, with a principal balance due on 10/26/2007
400,000
-  Note payable to a bank, due in monthly    installments of principal and interest of $2,119.65 through 4/3/2011
82,385  Note payable with interest at 10.75%,    interest payments due quarterly, with a principal balance due on December 10, 2006
-
89,890  Other notes with various terms
-
47,837  
2,974,574
2,131,605Less current portion
(157,402)
(2,131,605)
$
2,817,172
$
-
Principal repayment provisions of long-term debt are as follows at September 30, 2006:
4th quarter of 2006
$
4,1172007
417,5032008
2,511,4772009
21,2552010
20,222Total
$
2,974,574**(10) 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.
**(11) Industry Segments

The Company has three reportable segments: Hammonds Technical Services,Hammonds Fuel Additives, and Hammonds Water Treatment Systems (collectively *"Hammonds"*).Hammonds manufactures engineered products and chemicals that serve multiple segments ofthe fuels distribution, water treatment and utility vehicle industries. Hammonds productsare marketed by a worldwide network of distributors, manufacturers representatives andoriginal equipment manufacturers. The corporate overhead includes the Company's investmentholdings including financing current operations and expansion of its current holdings aswell as evaluating the 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 from external customers, operating income/(losses), andidentifiable assets were as follows:

**September    30,**
**2006**
**2005**
Revenues:
Hammonds Technical Services
$
2,343,592
$
1,147,698
Hammonds Fuel Additives
916,141
557,224Hammonds Water Treatment
1,428,959
-
Corporate
-
-
$
4,688,692
$
1,704,922  Income (loss) from operations:Hammonds Technical Services$(1,250,844)$(745,149)Hammonds Fuel Additives(47,311)15,780Hammonds Water Treatment76,780-Corporate(84,235)(32,414)  $(1,305,610)$(761,783)
Identifiable assets:
Hammonds Technical Services$
5,044,077
$
5,140,000
Hammonds Fuel Additives
422,287
345,158Hammonds Water Treatment
733,352
-
Corporate
6,232,130
100,711
$
12,431,846
$
5,585,869
The Company's areas of operations are in the United States.
**(12) Related party transactions

The Company incurred management fees from AMIN of $30,000 and $90,000for the three-month and nine-month periods ending September 30, 2006, respectively.Additionally, the Company paid interest on notes payable to AMIN of $209,458 during thethree-month period ending September 30, 2006.********************************************* |