UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

        For the fiscal year ended June 30, 2006

[ ]  TRANSITION  REPORT  UNDER  SECTION  13  OR  15(d)  OF  THE  EXCHANGE  ACT

        For  the  transition  period  from:   ______________  to  ______________

                        Commission file number: 0-28353
                                                -------

                           INTEGRAL TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
           (Name of small business issuer as specified in its charter)

              Nevada                                      98-0163519
----------------------------------           -----------------------------------
  (State or other jurisdiction of              (IRS Employer Identification No.)
   incorporation or organization)


  805 W. Orchard Drive, Suite 7, Bellingham, Washington             98225
--------------------------------------------------------       --------------
     (Address of principal executive offices)                     (Zip Code)

Issuer's  telephone  number:   (360)  752-1982
                               ---------------

Securities  registered  under  Section  12(b)  of  the  Exchange  Act:   None
                                                                         ----

Securities  registered  under  Section 12(g) of the Exchange Act:   Common Stock
                                                                    ------------

     Check  whether  the  issuer  (1)  filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
has  been  subject to such filing requirements for the past 90 days.     Yes [X]
No  [ ]

     Check  if  there  is no disclosure of delinquent filers in response to Item
405  of  Regulation S-B is not contained in this form, and no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.    [ ]

     Check  whether  the  issuer is a shell company (as defined in Rule 12b-2 of
the  Exchange  Act).  Yes  [ ]     No  [X]

     State  issuer's  revenues  for  its  most  recent  fiscal  year.   $-0-.
                                                                        ----

     As  of  September  15, 2006, the aggregate market value of the voting stock
held  by  non-affiliates,  approximately  41,402,603 shares of Common Stock, was
approximately  $157  million  based  on  an average of the bid and ask prices of
approximately  $3.80  per  share  of  Common  Stock  on  such  date.

     The  number  of  shares outstanding of the issuer's Common Stock, $.001 par
value,  as  of  September  15,  2006  was  45,439,969  shares.

     DOCUMENTS  INCORPORATED  BY  REFERENCE:     None.

     Transitional  Small  Business  Disclosure  Format  (check  one):

     Yes  [ ];  No  [X]


<PAGE>
                                     PART I
                                     ------

               CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
                THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
            DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS

Readers  of this document and any document incorporated by reference herein, are
advised  that  this  document  and documents incorporated by reference into this
document  contain  both  statements  of  historical  facts  and  forward looking
statements.  Forward  looking  statements  are  subject  to  certain  risks  and
uncertainties,  which  could cause actual results to differ materially for those
indicated  by  the  forward  looking  statements.  Examples  of  forward looking
statements  include,  but are not limited to (i) projections of revenues, income
or  loss,  earning  or  loss per share, capital expenditures, dividends, capital
structure and other financial items, (ii) statements of the plans and objectives
of  Integral  Technologies,  Inc.  or  our  management  or  Board  of Directors,
including  the  introduction  of  new  products,  or estimates or predictions of
actions  by  customers,  suppliers, competitors or regulatory authorities, (iii)
statements  of  future  economic performance, and (iv) statements of assumptions
underlying  other  statements  and statements about our Company or our business.

This  document  and any documents incorporated by reference herein also identify
important  factors  which  could  cause actual results to differ materially from
those  indicated  by  forward looking statements.  These risks and uncertainties
include  price  competition,  the  decisions  of  customers,  the  actions  of
competitors,  the  effects  of  government  regulation,  possible  delays in the
introduction  of  new products and services, customer acceptance of products and
services,  our  ability  to  secure  debt  and/or equity financing on reasonable
terms,  and  other  factors  which  are  described  herein  and/or  in documents
incorporated  by  reference  herein.

The  cautionary  statements  made above and elsewhere should not be construed as
exhaustive or as any admission regarding the adequacy of disclosures made by us.
Forward  looking statements are beyond the ability of our Company to control and
in  many  cases  we  cannot  predict  what factors would cause results to differ
materially  from  those  indicated  by  the  forward  looking  statements.


                             DESCRIPTION OF BUSINESS

BUSINESS  DEVELOPMENT

Integral Technologies, Inc. ("Integral," the "Company" or the "Registrant") is a
development stage company, incorporated under the laws of the State of Nevada on
February  12,  1996.  To  date,  we  have expended resources on the research and
development  of  several  different  types  of  technologies.

Presently,  we  are  focusing  substantially  all  of  our  resources  on  the
researching,  developing  and commercializing of our ElectriPlast(R) technology,
which is comprised of over100 applications.  In addition, we apply a significant
portion  of our resources to the protection of our intellectual property through
patent filings.  To date, we have not realized any revenue from our efforts.  We
expect  to  derive  future  revenues  from the sale of ElectriPlast(R) materials
and/or  fees  from  licensing  ElectriPlast(R)  technologies  to  third-party
manufacturers.

TECHNOLOGIES

ElectriPlast(R)

We  have  developed  an innovative, electrically-conductive resin-based material
called  "ElectriPlast(R)."  The  ElectriPlast(R)  polymer  is  a  compounded
formulation  of  resin-based materials, which are conductively loaded, or doped,
with  a  proprietary-controlled,  balanced  concentration  of  micron conductive
materials,  then pelletized. The conductive loading or doping within this pellet
is  then  homogenized  using  conventional  molding  techniques and conventional
molding  equipment.  The  end result is a product that can be molded into any of
the  infinite  shapes  and  sizes  associated  with plastics and rubbers, and is
non-corrosive,  but  which  is  as  electrically conductive as if it were metal.


                                        1
<PAGE>
Various  examples  of  applications  for ElectriPlast(R) are shielding, lighting
circuitry,  switch actuators, resistors, medical devices, thermal management and
cable  connector  bodies,  to name just a few. We have been working to introduce
these  new  applications  and  the ElectriPlast(R) technology on a global scale.

PlasTenna(R)

We  have  developed  and prototyped a new antenna technology called PlasTenna(R)
that  utilizes  our  ElectriPlast(R)  technology.  The  pioneering aspect of the
PlasTenna(R)  technology  is  that  it  opens  the doors to vast new horizons in
antenna  design  and manufacturing processes. The combination of our proprietary
recipe  of  conductive  materials,  and a selection of resins from various resin
suppliers  results  in  a  covert  moldable antenna, that can become part of the
shell  or  case of any wireless device, be it phones, radios, or even body parts
of  vehicles,  or  new  designs for conventional antennas as we know them today.
Our  research  indicates that the PlasTenna(R) technology vastly improves design
flexibility,  increases  signal  performance,  reduces  manufacturing costs, and
shows  a  marked  reduction  in  power  consumption.

Patents  on  Technologies
-------------------------

Our  intellectual  property  portfolio consists of over ten years of accumulated
research  and  design  knowledge  and trade secrets.  We have sought U.S. patent
protection  for  many  of our ideas related to our ElectriPlast(R) technologies.
Currently,  we  have  filed  109 U.S. patent applications, 16 of which have been
issued,  3  of which have been allowed and are pending issuance, and 90 of which
have  been  filed  and are pending approval. No assurances can be given that all
patent  applications  will  be approved; however, to the extent that patents are
not  granted,  We  will  continue to attempt to commercialize these technologies
without  the  protection  of  patents.  As  patents are issued, we will have the
exclusive right to use in the U.S. the design(s) described in each issued patent
for  the  18-year  life  of  the  patent.

Product  Manufacturing  and  Distribution
-----------------------------------------

We  are  not  in  the  manufacturing  business.  We  will  rely  on  third-party
manufacturing  companies  to  manufacture  products.

Management  anticipates  that  our technologies will not be sold directly to the
general  public, but rather to businesses and manufacturers who will incorporate
our  technologies  as  components  in  the  design  of  their  products.

Barriers  to  Entry  into  Market  Segment
------------------------------------------

We  have  been  working  to  introduce  the  ElectriPlast(R)  technology  as  an
alternative  to  metal  for  use  as  an  electrically conductive material.  The
process  of  educating  potential customers about ElectriPlast(R) may prove time
consuming  and  difficult.

In  the  antenna  market,  we  will  be competing with other established antenna
providers that are much larger and better capitalized than Integral. In order to
compete,  management  believes that Integral must demonstrate to potential users
that its antenna products have an advantage over other antennas on the market in
terms  of  performance  and  cost.


RECENT  DEVELOPMENTS

We  are  focusing  our  marketing  efforts  on securing licensing agreements for
applications  of  our  ElectriPlast(R)  technology.  Our  technologies  will  be
marketed  to manufactures of products which would benefit from the incorporation
of  any  of  the  ElectriPlast(R)  applications  into  their  products.  We have
recently  completed  our  first  two  commercial  agreements.


                                        2
<PAGE>
Patent  License  Agreement  with  Heatron,  Inc.
------------------------------------------------

In  March  2006,  we  entered into a Patent License Agreement with Heatron, Inc.
("Heatron"),  pursuant  to  which  we  granted  to Heatron the rights to use our
ElectriPlast(R)  technology  for  specific  applications  in the heating and LED
lighting markets.  Heatron, founded in 1977 and based in Leavenworth, Kansas, is
an  industry  leader  in  heating  element  and  thermal  management designs and
solutions.

We  granted  to  Heatron  a  non-exclusive,  non-sublicensable,  non-assignable,
worldwide  license;  however, Heatron's rights are exclusive for the initial two
years.  The  agreement  will  terminate  upon  the expiration of the last patent
licensed  under  the  agreement,  or  earlier  under  certain  circumstances.

Heatron  paid  to us a nominal up-front license fee of $1.00.  Any revenue to be
generated  by  our  Company under the agreement will be from raw materials fees.
We  have  not  yet  derived  revenues  from  this  agreement.

Patent  License  Agreement  with  Jasper  Rubber  Products,  Inc.
-----------------------------------------------------------------

In  August  2006,  we entered into a Patent License Agreement with Jasper Rubber
Products,  Inc. ("Jasper"), pursuant to which we granted to Jasper the rights to
use our ElectriPlast(R) technology for specific applications within its customer
base.  Jasper,  founded  in  1949,  and based in Jasper, Indiana, is an industry
leader in innovative rubber and plastics development. Jasper manufactures a full
range of molded, extruded, lathe-cut rubber and thermoplastic products for major
appliance,  oil  filter,  and  automotive  industries.

We  granted  to  Jasper  a  non-exclusive,  non-sublicensable,  non-assignable,
worldwide license.  The agreement will terminate upon the expiration of the last
patent  licensed  under  the  agreement, or earlier under certain circumstances.

Jasper  paid  to  us a nominal up-front license fee of $1.00.  Any revenue to be
generated  by  our  Company under the agreement will be from raw materials fees.
We  have  not  yet  derived  revenues  from  this  agreement.


EMPLOYEES

We  currently employ a total of 5 people on a full-time basis.  However, we also
rely  on the expertise of several technical advisors who are consulted as needed
on  a  part-time,  contract  basis.


SEC  REPORTS  AVAILABLE  ON  WEBSITE

The  SEC  maintains an Internet site (http://www.sec.gov) that contains reports,
proxy  and  information statements, and other information regarding issuers that
file  electronically with the SEC.  Our Annual Reports on Form 10-KSB, Quarterly
Reports  on  Form  10-QSB, Current Reports on Form 8-K and other SEC filings are
available  on  the  SEC's  website  or  by  visiting  our  company  website  at
www.itkg.net.


                                        3
<PAGE>
                                  RISK FACTORS

An investment in our common stock involves major risks. Before you invest in our
common  stock, you should be aware that there are various risks, including those
described below.  You should carefully consider these risk factors together with
all  of  the  other  information  included  in this annual report on Form 10-KSB
before  you  decide  to  purchase  shares  of  our  common  stock.

PURCHASE  OF  OUR  STOCK  IS  A  HIGHLY  SPECULATIVE  YOU COULD LOSE YOUR ENTIRE
INVESTMENT.  We  have  been  operating at a loss since inception, and you cannot
assume that our plans will either materialize or prove successful.  In the event
our  plans  are  unsuccessful,  you  may  lose all or a substantial part of your
investment.  The  purchase  of our stock must be considered a highly speculative
investment.

WE  HAVE  INCURRED  SUBSTANTIAL LOSSES FROM INCEPTION AND WE HAVE NEVER GENERATE
SUBSTANTIAL REVENUES; FAILURE TO ACHIEVE PROFITABILITY IN THE FUTURE WOULD CAUSE
THE  MARKET  PRICE  FOR  OUR  COMMON  STOCK  TO  DECLINE SIGNIFICANTLY.  We have
generated  net  losses  from  inception  and  we  have an accumulated deficit of
approximately  $21.3  million as of June 30, 2006.  We have never generated more
than  nominal revenues.  If we don't achieve profitability, the market price for
our  common  stock  could  decline  significantly.

IF WE DO NOT GENERATE ADEQUATE REVENUES IN OUR FISCAL YEAR ENDING JUNE 30, 2007,
WE  MAY  NEED  TO RAISE CAPITAL TO CONTINUE OUR OPERATIONS.  We estimate that we
will  require $1.4 million to carry out our business plan during our fiscal year
ending June 30, 2007.  We had approximately $1.5 million in cash on hand at June
30,  2006.  Subsequent to year-end, we raised an additional $2.3 million through
a  private  placement  of  equity  securities:  as  a  result, we may expand our
business plan and utilize some or all of these additional funds over the next 12
months.  Unless  we generate adequate revenues from operations (we have had none
to  date)  in  the near future, we may require additional financing to carry out
our  business  plans  next year, and such financing may not be available at that
time.  If  we require additional financing, we may seek additional funds through
private  placements  that  will be exempt from registration and will not require
prior  shareholder  approval.  If  additional funds are raised by issuing common
stock,  or  securities that are convertible into common stock (such as preferred
stock,  warrants,  or  convertible debentures), further dilution to shareholders
could  occur.  Additionally,  investors  could be granted registration rights by
us,  which  could  result in market overhang and depress the market price of the
common stock.  If we fail to obtain sufficient additional financing, we will not
be  able  to  implement  our  business  plans  in  a  complete or timely manner.

IF  WE  ARE  UNABLE  TO COMPETE EFFECTIVELY WITH OUR COMPETITORS, WE WILL NOT BE
SUCCESSFUL  GENERATING  REVENUES  OR ATTAINING PROFITS.  Our ability to generate
revenues  and  profitability  is directly related to our ability to compete with
our  competitors.  Most  of  the  companies  with which we compete and expect to
compete  have  far  greater  capital resources and more significant research and
development staffs, marketing and distribution programs and facilities, and many
of them have substantially greater experience in the production and marketing of
products.  In  each  market, we face competition from companies with established
technologies.  Currently,  we believe that we will be able to compete because of
the  relative  performance, price and adaptability of our unique ElectriPlast(R)
technology.  Our beliefs are based only on our research and development testing.
If we are unable to compete effectively, we will not be successful in generating
revenues  or  attaining  profits.

LOSS  OF  KEY  PERSONNEL  COULD  CAUSE  A  MAJOR  DISRUPTION  IN  OUR DAY-TO-DAY
OPERATIONS  AND  WE COULD LOSE OUR RELATIONSHIPS WITH THIRD-PARTIES WITH WHOM WE
DO  BUSINESS.  Our  future  success  depends  in  a  significant  part  upon the
continued  service  of certain key personnel.  Competition for such personnel is
intense, and to be successful we must retain our key personnel.  The loss of key
personnel  or  the  inability  to hire or retain qualified replacement personnel
could  have  cause  a  major  disruption in our operations and we could lose our
relationships with third-parties with whom we do business, which could adversely
affect  our  financial  condition  and  results  of  operations.

IF  FUTURE  MARKET ACCEPTANCE OF OUR ELECTRIPLAST(R) TECHNOLOGY IS POOR, WE WILL
NOT  BE  ABLE  TO GENERATE ADEQUATE SALES TO ACHIEVE PROFITABLE OPERATIONS.  Our
future  is  dependent  upon the success of the current and future generations of
our ElectriPlast(R) technology.  Our ElectriPlast(R) technology will be marketed
to  manufacturers  of products which would benefit from the incorporation of any
of  the  ElectriPlast(R) applications into their products.  As of June 30, 2006,
we  have  not  generated  any  revenue  from our ElectriPlast(R) technology.  If
future  market  acceptance


                                        4
<PAGE>
of  our  ElectriPlast(R)  technology  is  poor,  we will not be able to generate
adequate  sales  to  achieve  profitable  operations.

DEPENDENCE  ON OUTSIDE SUPPLIERS AND MANUFACTURERS COULD DISRUPT OUR BUSINESS IF
THEY  FAIL  TO  MEET  OUR EXPECTATIONS.  Currently, we intend to rely on outside
suppliers  and  manufacturers  to  produce  ElectriPlast(R)  for  us in its raw,
unmolded form.  The ElectriPlast(R) would be sold to third-parties who would buy
the  "raw"  ElectriPlast(R)  from  us and then mold it into their products under
license  from us.  While we have entered into informal arrangements with outside
suppliers and manufacturers for the production of raw ElectriPlast(R), if any of
them  should  become  too  expensive  or suffer from quality control problems or
financial  difficulties,  we would have to find alternative sources, which could
disrupt  our  business.

OUR  PATENT  AND  OTHER  INTELLECTUAL  PROPERTY  RIGHTS  MAY  BE  ARE SUBJECT TO
UNCERTAINTY  AND MAY BE CHALLENGED OR CIRCUMVENTED BY COMPETITORS.  We rely on a
combination  of  patents,  patent  applications,  trademarks,  copyrights, trade
secrets  and  confidentiality  procedures  to  protect our intellectual property
rights,  which  we  believe  will  give  us  a  competitive  advantage  over our
competitors.  As  of  September  15,  2006,  we  have  filed  109  U.S.  patent
applications relating to our ElectriPlast(R) technology, with 16 patents issued,
3  patents  allowed  and  pending  issuance,  and 90 patents pending. Additional
patents  may  not  be  issued  from  our  pending applications, although we will
continue  to  attempt to commercialize these technologies without the protection
of  patents.  As  patents are issued, we will have the exclusive right to use in
the  U.S.  the design(s) described in each issued patent for the 18-year life of
the  patent.  However,  the  issuance  of  a  patent is not conclusive as to its
validity  or enforceability and, if a patent is issued, it is uncertain how much
protection,  if  any,  will  be given to our patent if we attempt to enforce it.
Litigation,  which  could  be  costly  and  time  consuming, may be necessary to
enforce  our  current patents or any patent issued in the future or to determine
the  scope and validity of the proprietary rights of third parties. A competitor
may  successfully  challenge  the  validity  or  enforceability  of  a patent or
challenge  the  extent of the patent's coverage. If the outcome of litigation is
adverse  to us, third parties may be able to use our patented technology without
payment  to us. Even if we are successful in defending such litigation, the cost
of  litigation  to  uphold  the  patent  can  be  substantial.

It  is  possible  that competitors may infringe upon our patents or successfully
avoid  them  through  design innovation. To stop these activities we may need to
file  a  lawsuit.  These lawsuits are expensive and would consume time and other
resources.  In  addition,  there  is  a  risk that a court would decide that our
patent  is not valid, that we do not have the right to stop the other party from
using  the  inventions,  or that the competitor's activities do not infringe our
patent.

Our  competitive position is also dependent upon unpatented technology and trade
secrets,  which  may  be  difficult to protect. Others may independently develop
substantially  equivalent  proprietary  information  and  techniques  that would
legally  circumvent  our  intellectual  property  rights.

THE  USE  OF  OUR  TECHNOLOGIES  COULD  POTENTIALLY  CONFLICT WITH THE RIGHTS OF
OTHERS.  Our  competitors, or others, may have or may acquire patent rights that
they  could  enforce  against us. If our products conflict with patent rights of
others,  third  parties could bring legal actions against us or our suppliers or
customers, claiming damages and seeking to enjoin manufacturing and marketing of
the affected products. If these legal actions are successful, in addition to any
potential  liability  for damages, we could be required to alter our products or
obtain  a  license  in  order  to continue to manufacture or market the affected
products.  We  may  not prevail in any legal action and a required license under
the patent may not be available on acceptable terms or at all. The cost to us of
any  litigation  or  other  proceeding relating to intellectual property rights,
even  if  resolved  in  our  favor,  could  be  substantial.

HOLDERS  OF PREFERRED STOCK HAVE RIGHTS THAT ARE SENIOR TO THE RIGHTS OF HOLDERS
OF  COMMON  STOCK.  Our  Articles  of  Incorporation  authorize  the issuance of
20,000,000  shares  of preferred stock.  The preferred stock may be divided into
one  or  more  series.  Our  board  of  directors is authorized to determine the
rights,  provisions, privileges and restrictions and number of authorized shares
of  any  series  of preferred stock.  Additionally, the preferred stock can have
other rights, including voting and economic rights that are senior to the common
stock.  The  issuance of preferred stock could adversely affect the market value
of  the  common  stock.

As of June 30, 2006, 1,000,000 shares of preferred stock have been designated as
Series  A  Convertible  Preferred  Stock  of  which  308,538  are  issued  and
outstanding,  and  held  by  two  of  our  insiders.  Each  share  of  Series  A
Convertible  Preferred  Stock:


                                        5
<PAGE>
     -    has  a  stated  value  and  liquidation  preference  of  $1.00;

     -    has  a  5% annual dividend, payable in cash or shares of common stock;

     -    may be  converted  into  shares  of  common  stock  (determined  by
          dividing  the  number  of  shares  of  Series A being converted by the
          average of the high and low bid prices of our common stock reported by
          the OTC Bulletin Board over the ten trading days preceding the date of
          conversion);

     -    may be  redeemed  by  us  within  one year after issue at $1.50, after
          one  year  but  less than two years at $2.00, after two years but less
          than  three years at $2.50, after three years but less than four years
          at  $3.00,  and  after  four  years but less than five years at $3.50;

     -    may  be  voted  on  all  matters  on  an  as-converted  basis;  and

     -    may be  voted  as  a  class  on  any  merger,  share  exchange,
          recapitalization, dissolution, liquidation or change in control of our
          company.

HOW  FUTURE  ISSUANCES  OF  COMMON STOCK PURSUANT TO OUR STOCK PLANS WILL AFFECT
YOU.  We  have  two  non-qualified  stock plans in effect.  As of June 30, 2006,
approximately 1,519,500 shares are available under the plans for future issuance
either  directly  or  pursuant to options, to our officers, directors, employees
and  consultants.  Also, as of June 30, 2006, approximately 1,295,000 shares are
under  option  under  the  plans,  at  a  weighted-average  exercise  price  of
approximately  $0.94  per  share,  plus  1,000,000 shares are under option by an
employee  at  an  exercise price of $.50 per share pursuant to a grant of option
that  was  not under either of the formal non-qualified stock plans.  Additional
stock or options to acquire our stock of can be granted at any time by our board
of directors, usually without shareholder approval.  When shares of common stock
are  issued  directly  or  upon  the exercise of options under these plans, your
ownership  may  be  diluted.

WE  DO NOT EXPECT TO BE ABLE TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE, SO
YOU  SHOULD  NOT MAKE AN INVESTMENT IN OUR STOCK IF YOU REQUIRE DIVIDEND INCOME.
The payment of cash dividends, if any, in the future rests within the discretion
of  our  board  of  directors  and  will  depend,  among  other things, upon our
earnings, our capital requirements and our financial condition, as well as other
relevant  factors.  We  have  not  paid  or declared any cash dividends upon our
common  stock  since our inception and by reason of our present financial status
and  our  contemplated  future  financial  requirements we do not contemplate or
anticipate  making  any  cash  distributions  upon  our  common  stock  in  the
foreseeable  future.

WE  HAVE  A LIMITED MARKET FOR OUR COMMON STOCK WHICH CAUSES THE MARKET PRICE TO
BE VOLATILE AND TO USUALLY DECLINE WHEN THERE IS MORE SELLING THAN BUYING ON ANY
GIVEN  DAY.  Our  common stock currently trades on the over the counter bulletin
board  under  the symbol "ITKG."  However, at most times in the past, our common
stock has been thinly traded and the market price usually declines when there is
more  selling  than  buying  on any given day. As a result, the market price has
been  volatile,  and  the  market price may decline immediately if you decide to
place  an  order  to  sell  your  shares.

THE MARKET PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE AND SEVERAL FACTORS THAT
ARE  BEYOND  OUR  CONTROL,  INCLUDING OUR COMMON STOCK BEING HISTORICALLY THINLY
TRADED,  COULD  ADVERSELY  AFFECT  ITS  MARKET PRICE.  Our common stock has been
historically  thinly  traded  and  the  market  price  has been highly volatile.
During  the  year ended June 30, 2006, the closing bid price of our common stock
has  been  quoted on the Over the Counter Bulletin Board from as low as $0.27 to
as  high  as  $3.00.  These quotations reflect interdealer prices without retail
markup,  markdown, or commission and may not represent actual transactions.  For
these  and  other  reasons, our stock price is subject to significant volatility
and  will  likely  be adversely affected if our revenues or earnings (or lack of
revenues  or  earnings)  in  any quarter fail to meet the investment community's
expectations.  Additionally,  the  market  price  of  our  common stock could be
subject  to  significant  fluctuations  in  response  to:


                                        6
<PAGE>
     -    announcements  of  new  products  or  sales  offered  by  us  or  our
          competitors;
     -    actual  or  anticipated  variations  in  quarterly  operating results;
     -    changes  in  financial  estimates  by  securities  analysts,  if  any;
     -    changes  in  the  market's  perception  of  us  or  the  nature of our
          business;  and
     -    sales  of  our  common  stock.

FUTURE  SALES  OF  COMMON  STOCK  INTO THE PUBLIC MARKET PLACE WILL INCREASE THE
PUBLIC  FLOAT  AND  MAY ADVERSELY AFFECT THE MARKET PRICE.  As of June 30, 2006,
approximately  6  million shares of common stock were available for sale by both
affiliates  (officers  and  directors)  and non-affiliates under Rule 144 and/or
Rule  144(k)  of the Securities Act of 1933, as amended.  In general, under Rule
144,  a person who has held stock for one year may, under certain circumstances,
sell  within any three-month period a number of shares which is not greater than
one percent of the then outstanding shares of common stock (as of June 30, 2006,
there were 44,234,432 shares of common stock outstanding, and one percent of the
total  number  of  shares  outstanding  equaled  442,344 shares).  Under certain
circumstances, the sale of shares which have been held for two years by a person
who  is  not  affiliated with us is also permitted without limitation under Rule
144(k). Future sales of common stock will increase the public float and may have
an  adverse  effect on the market price of the common stock, which in turn could
adversely  affect  our  ability  to  obtain  future  funding as well as create a
potential  market  overhang.

"PENNY STOCK" REGULATIONS MAY ADVERSELY AFFECT YOUR ABILITY TO RESELL YOUR STOCK
IN  MARKET TRANSACTIONS. The SEC has adopted penny stock regulations which apply
to securities traded over-the-counter.  These regulations generally define penny
stock  to  be any equity security that has a market price of less than $5.00 per
share  or  an equity security of an issuer with net tangible assets of less than
$5,000,000  as indicated in audited financial statements, if the corporation has
been  in  continuous  operations  for less than three years.  Subject to certain
limited  exceptions,  the  rules  for  any  transaction  involving a penny stock
require  the  delivery,  prior to the transaction, of a risk disclosure document
prepared  by the SEC that contains certain information describing the nature and
level  of  risk  associated  with  investments  in  the penny stock market.  The
broker-dealer  also  must  disclose  the  commissions  payable  to  both  the
broker-dealer  and  the registered representative and current quotations for the
securities.  Monthly  account  statements  must  be  sent  by  the broker-dealer
disclosing the estimated market value of each penny stock held in the account or
indicating  that  the estimated market value cannot be determined because of the
unavailability  of  firm  quotes. In addition, the rules impose additional sales
practice  requirements  on  broker-dealers  who  sell such securities to persons
other  than  established  customers  and  institutional  accredited  investors
(generally  institutions  with assets in excess of $5,000,000).  These practices
require  that,  prior  to  the  purchase,  the  broker-dealer  determined  that
transactions  in  penny  stocks were suitable for the purchaser and obtained the
purchaser's  written  consent  to  the  transaction.

Our  common  stock  is  currently  subject  to  the  penny  stock  regulations.
Compliance with the penny stock regulations by broker-dealers will likely result
in  price fluctuations and the lack of a liquid market for the common stock, and
may  make  it  difficult  for  you  to resell your stock in market transactions.


                                        7
<PAGE>
                             DESCRIPTION OF PROPERTY

We  do  not  own  any  real  property.  We  lease  office  space  in Bellingham,
Washington  and  Vancouver,  B.C.,  Canada.


                                LEGAL PROCEEDINGS

There  are  no  pending  legal  proceedings  involving  our  Company.


               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On  April  28,  2006,  we  held a Special Meeting of Stockholders.  Proxies were
solicited  pursuant  to  Regulation  14A  under  the Exchange Act.  A quorum was
present  and the matter voted upon was approved by a majority vote.  The results
were  as  follows:

     On  the  proposal  to  amend  our Articles of Incorporation to increase the
     number  of  shares  of  common  stock  we  have  authorized  to  issue from
     50,000,000  shares  to  150,000,000  shares.

<TABLE>
<CAPTION>
                         For       Against   Abstain
                      ----------  ---------  -------
<S>                   <C>         <C>        <C>
     Common votes     28,730,166  1,944,617   77,895

     Preferred votes     233,741        -0-      -0-

     Total votes      28,963,907  1,944,617   77,895
</TABLE>

No  other matters were submitted to a vote of security holders during the fourth
quarter  of  the  fiscal  year  ended  June  30,  2006.


                                        8
<PAGE>
                                     PART II

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market  Information

There  is  a  limited  public  market for our common stock.  Our common stock is
quoted  on  the OTC Bulletin Board under the symbol "ITKG."  The following table
sets  forth the range of high and low bid quotations for our common stock on the
OTC  Bulletin Board for each quarter of the fiscal years ended June 30, 2006 and
2005.

<TABLE>
<CAPTION>
          Quarter Ended       Low Bid   High Bid
          ------------------  --------  --------
<S>                           <C>       <C>
          September 30, 2004  $   0.59  $   1.20
          December 31, 2004   $   0.51  $   1.12
          March 31, 2005      $   0.60  $   0.92
          June 30, 2005       $   0.47  $   0.69

          September 30, 2005  $   0.28  $   0.52
          December 31, 2005   $   0.27  $   0.40
          March 31, 2006      $   0.36  $   2.27
          June 30, 2006       $   1.44  $   3.00
</TABLE>

The  source  of  this  information is the OTC Bulletin Board and other quotation
services.  The  quotations  reflect  inter-dealer prices, without retail markup,
markdown  or  commission  and  may  not  represent  actual  transactions.

Holders

As  of  September 15, 2006 there were approximately 230 holders of record of our
common  stock (this number does not include beneficial owners who hold shares at
broker/dealers  in  "street-name").

Dividends

To date, we have not paid any dividends on our common stock and do not expect to
declare  or  pay  any  dividends on such common stock in the foreseeable future.
Payment  of  any  dividends  will be dependent upon future earnings, if any, our
financial  condition,  and  other  factors  as  deemed  relevant by our Board of
Directors.

Recent  Sales  of  Unregistered  Securities

Information  regarding the issuance and sales of securities without registration
during  the  fiscal  year  ended  June 30, 2006, has previously been included in
Quarterly  Reports  on Forms 10-QSB and Current Reports on Form 8-K filed during
and  subsequent  to  the  period  covered  by  this  report.

Repurchases  of  equity  securities

We did not repurchase any of its outstanding equity securities during the fourth
quarter  of  the  year  ended  June  30,  2006.


                                        9
<PAGE>
                         MANAGEMENT'S PLAN OF OPERATION

Statements  contained  herein  that are not historical facts are forward-looking
statements.  Although  we  believe  that  the  expectations  reflected  in  such
forward-looking  statements  are  reasonable, the forward-looking statements are
subject  to  risks  and  uncertainties that could cause actual results to differ
from  those projected.  We caution investors that any forward-looking statements
made  by us are not guarantees of future performance and that actual results may
differ  materially from those in the forward-looking statements.  Such risks and
uncertainties include, without limitation: well-established competitors who have
substantially  greater  financial  resources  and  longer  operating  histories,
regulatory  delays  or  denials,  ability  to compete as a start-up company in a
highly  competitive  market,  and  access  to  sources  of  capital.

The  following  discussion  and  analysis should be read in conjunction with our
financial  statements  and notes thereto included elsewhere in this Form 10-KSB.
Except  for  the historical information contained herein, the discussion in this
Form  10-KSB  contains certain forward-looking statements that involve risks and
uncertainties,  such  as  statements  of our plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-KSB should be read as
being  applicable to all related forward-looking statements wherever they appear
in  this  Form  10-KSB.  Our  actual  results could differ materially from those
discussed  here.

To  date  we  have  recorded  nominal revenues from the sales of prototypes. Our
Company is still considered a development stage company for accounting purposes.
From  inception  on  February 12, 1996 through June 30, 2006, we have accrued an
accumulated  deficit  of  approximately  $21.4 million.

At  June  30,  2006,  all  of  our  assets  were  current  assets of $1,605,863,
consisting  of  cash of $1,496,818 and prepaid expenses of $109,045.  All of our
property  and  equipment  has  been  fully  depreciated.

At  June  30, 2006, all of our liabilities were current liabilities of $687,603,
consisting of accounts payable and accruals.  Of this amount, payables for legal
fees (including associated filing fees) related to patent filings accounting for
approximately  $520,000  of  the  total.

At  June  30,  2006,  total  stockholder's  equity  was  $918,260.

Our  net loss for the year ended June 30, 2006 was $2,104,285, compared to a net
loss  of  $1,812,265 for the prior fiscal year.  The primary expenses during the
year  ended  June  30,  2006,  were:  legal  and accounting ($456,911); salaries
($602,741);  consulting  fees ($718,025); general and administrative ($113,539);
and  travel  and  entertainment  ($98,385).

Each  of  these  major  expense  categories  decreased  significantly from prior
periods:

     -    Legal and  accounting  expenses  were  $456,911  in  fiscal 2006, down
          53%  from $967,581 in fiscal 2005 and down 50% from $909,398 in fiscal
          2004.

     -    Salaries  were  $602,741 in fiscal 2006, up 2% from $588,930 in fiscal
          2005  and  down  25%  from  $685,023  in  fiscal  2004.

     -    General  and  administrative  expenses  were  $113,539 in fiscal 2006,
          down  26%  from  $154,338  in fiscal 2005 and down 7% from $123,596 in
          fiscal  2004.

     -    Travel  and  entertainment  expenses  were  $98,385  in  fiscal  2006,
          down  8%  from  $107,069  in fiscal 2005 and down 26% from $133,132 in
          fiscal  2004.

The  only major expense category that increased significantly from prior periods
was  consulting  expenses.  Consulting expenses were $718,025 in fiscal 2006, up
107%  from  $346,339  in  fiscal  2005  and up 34% from $536,728 in fiscal 2004.
Consulting  expenses  during  the year ended June 30, 2006, included $466,439 in
non-cash  expenses  (65%  of  the total consulting expenses) for the issuance of
common  stock  and  the  granting  of  options  to  consultants,  with


                                       10
<PAGE>
$247,500 attributable to the issuance of common stock to The QuanStar Group LLC.
QuanStar  was  also  paid  $105,000  in  cash  during  the  year.

In  addition,  the  net  loss for the prior year ended June 30, 2005, reflects a
one-time  reversal  of  an accrual for research and development of $397,296 that
was  due  to  West  Virginia University, as a result of a global settlement of a
lawsuit  during  that  year.

Legal fees incurred during the year ended June 30, 2006, were down substantially
from  prior  periods,  due  to  a  decrease  in  patent  filings in 2006 and the
conclusion  and  favorable  settlement  of  a  lawsuit  in  2005.

During  the  last  fiscal  year,  as  a  result  of  management's  efforts  to
significantly  reduce  our  operating  expenses, we were able to reduce our cash
needs as well.  Net Cash Used by Operating Activities during the year ended June
30,  2006  was  $1,543,293,  down 25% from 2,064,331 in fiscal 2005 and down 27%
from  $2,119,707  in  fiscal  2004.

Presently,  we  are focusing all of its resources on the researching, developing
and  commercializing  of  our  ElectriPlast(R)  technologies.

We  are  not in the manufacturing business and do not expect to make any capital
purchases  of  a manufacturing plant or significant equipment in the next twelve
months.

Our business strategy focuses on leveraging our intellectual property rights and
our  strengths  in  product  design and material innovation. We are focusing our
marketing  efforts  on  securing  licensing  agreements  for applications of our
ElectriPlast(R)  technologies with manufacturers of products which would benefit
from  the  incorporation  of  any  of  the  ElectriPlast(R)  applications.

We  anticipate  spending  approximately  $250,000 over the next twelve months on
ongoing research and development (primarily salaries and consulting fees) of the
different  applications  and  uses  of  our  technologies.

During  the  next  twelve  months,  we  do  not anticipate increasing our staff.

As  of  June  30,  2006,  we had $1,496,818 in cash on hand.  Approximately $1.2
million  of  this  amount  represents  proceeds from the exercise of outstanding
warrants by warrant holders in June 2006. Subsequent to year end, we completed a
private  placement of common stock and common stock purchase warrants and raised
an  additional  $2,361,074.  Accordingly,  management  believes  that  there  is
adequate  cash  on  hand  to  fund  operations  over  the  next  twelve  months.


                                       11
<PAGE>
                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  audited financial statements and an index thereto commences on the index to
the  financial  statements,  which  page  follows  this  page.


                CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUNTING AND FINANCIAL DISCLOSURE

None.


                             CONTROLS AND PROCEDURES

DISCLOSURE  CONTROLS  AND  PROCEDURES

We  maintain disclosure controls and procedures that are designed to ensure that
information  required  to  be disclosed in our Exchange Act reports is recorded,
processed,  summarized  and  reported  within  the time periods specified in the
Securities  and Exchange Commission's rules and forms, and that such information
is  accumulated  and  communicated  to management, including the Chief Executive
Officer  and  Chief Financial Officer, as appropriate, to allow timely decisions
regarding  required  disclosure.  In  designing  and  evaluating  the disclosure
controls and procedures, management recognized that any controls and procedures,
no  matter how well designed and operated, can provide only reasonable assurance
of  achieving  the  desired  control  objectives, and management necessarily was
required  to  apply  its  judgment  in  assessing the costs and benefits of such
controls  and  procedures.

With  the  participation  of  management,  our Chief Executive Officer and Chief
Financial Officer evaluated the effectiveness of the design and operation of our
disclosure  controls  and  procedures at the conclusion of the period ended June
30,  2006.  Based  upon  this  evaluation, the Chief Executive Officer and Chief
Financial  Officer  concluded  that  our disclosure controls and procedures were
effective  in  ensuring  that  material  information required to be disclosed is
included  in  the  reports  that  we  file  with  the  Securities  and  Exchange
Commission.

There were no significant changes in our disclosure controls or in other factors
that  could  significantly  affect those controls subsequent to the date of this
evaluation,  including  any  corrective  actions  with  regard  to  significant
deficiencies  and  weaknesses.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management has not yet completed, and is not yet required to have completed, its
assessment of the effectiveness of internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002, as amended.


                                OTHER INFORMATION

None.


                                       12
<PAGE>
     INTEGRAL TECHNOLOGIES, INC.
     (A DEVELOPMENT STAGE COMPANY)

     CONSOLIDATED FINANCIAL STATEMENTS
     JUNE 30, 2006, 2005 AND 2004
     (US DOLLARS)


     INDEX                                                           PAGE
     -----                                                           ----

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         F-1

     CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheets                                     F-2

     Consolidated Statements of Operations                           F-3

     Consolidated Statements of Stockholders' Equity (Deficit)    F-4 - F-8

     Consolidated Statements of Cash Flows                           F-9

     Notes to Consolidated Financial Statements                  F-10 - F-22


<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TO THE DIRECTORS AND STOCKHOLDERS OF INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)

We  have  audited the consolidated balance sheets of Integral Technologies, Inc.
(A Development Stage Company) as of June 30, 2006 and 2005 and the statements of
operations,  stockholders' equity (deficit) and cash flows for each of the years
ended June 30, 2006, 2005 and 2004 and the cumulative totals for the development
stage  of  operations  from February 12, 1996 (inception) through June 30, 2006.
These  financial  statements are the responsibility of the Company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audits.  The  financial  statements of Integral Technologies, Inc. from
February  12,  1996  (inception)  through  June  30,  1996 were audited by other
auditors  whose report dated November 20, 1996, expressed an unqualified opinion
on those statements.  Our opinion insofar as it relates to the cumulative totals
for development stage operations from February 12, 1996 (inception) through June
30,  1996,  is  based  solely  on  the  report  of  the  other  auditors.

We  conducted  our  audits  in  accordance with auditing standards of the Public
Company  Accounting Oversight Board (United States of America).  Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the  financial  statements are free of material misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial statement presentation.  We believe that our
audits  and  the report of the other auditors provide a reasonable basis for our
opinion.

In  our opinion, based on our audits and the report of the other auditors, these
consolidated  financial statements present fairly, in all material respects, the
consolidated  financial position of the Company as at June 30, 2006 and 2005 and
the  consolidated  results  of its operations and its cash flows for each of the
years  ended  June  30,  2006,  2005  and 2004 and the cumulative totals for the
development  stage of operations from February 12, 1996 (inception) through June
30,  2006  in  conformity  with  accounting principles generally accepted in the
United  States  of  America.


"Pannell Kerr Forster" (signed)


(Registered with the PCAOB as "Smythe Ratcliffe")
Chartered Accountants

Vancouver, Canada
September 19, 2006


                                     F-1
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
JUNE 30
(US DOLLARS)

===================================================================================================
                                                                           2006           2005
---------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>
Assets
CURRENT
  Cash                                                                 $  1,496,818   $  1,791,442
  Prepaid expenses (note 4(a)(ii)(b))                                       109,045        272,142
---------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                      1,605,863      2,063,584
PROPERTY AND EQUIPMENT (note 3)                                                   0          8,219
---------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                           $  1,605,863   $  2,071,803
===================================================================================================


LIABILITIES
CURRENT
  Accounts payable and accruals (note 6)                               $    687,603   $    581,325
---------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                   687,603        581,325
---------------------------------------------------------------------------------------------------


STOCKHOLDERS' EQUITY (note 4)
PREFERRED STOCK AND PAID-IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
  20,000,000 Shares authorized
    308,538 (2005 - 308,538) Shares issued and
    outstanding (note 4(b))                                                 308,538        308,538
COMMON STOCK AND PAID-IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
  150,000,000 Shares authorized
    44,234,432 (2005 - 42,439,149) Shares issued and
    outstanding (note 4(a))                                              22,035,483     20,522,085
PROMISSORY NOTES RECEIVABLE (note 4(e))                                     (32,500)       (66,500)
OTHER COMPREHENSIVE INCOME                                                   46,267         46,267
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                        (21,439,528)   (19,319,912)
---------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                  918,260      1,490,478
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $  1,605,863   $  2,071,803
===================================================================================================
</TABLE>


See notes to consolidated financial statements.  F-2
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(US DOLLARS)

========================================================================================================
                                                                                           PERIOD FROM
                                                                                          FEBRUARY 12,
                                                                                              1996
                                                                                           (INCEPTION)
                                                          YEARS ENDED JUNE 30,               THROUGH
                                                   2006          2005          2004       JUNE 30, 2006
--------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>
REVENUES                                       $         0   $    11,158   $     1,483   $      249,308
COST OF SALES                                            0             0             0          216,016
--------------------------------------------------------------------------------------------------------
                                                         0        11,158         1,483           33,292
OTHER INCOME                                         2,096        55,462             0          660,401
--------------------------------------------------------------------------------------------------------
                                                     2,096        66,620         1,483          693,693
--------------------------------------------------------------------------------------------------------


EXPENSES
  Consulting                                       718,025       346,339       536,728        3,756,609
  Salaries                                         602,741       588,930       685,023        5,133,142
  Legal and accounting                             456,911       967,581       909,398        3,510,059
  General and administrative                       113,539       154,338       123,596          897,891
  Travel and entertainment                          98,385       107,069       133,132        1,082,254
  Telephone                                         41,268        29,312        38,375          366,255
  Rent                                              37,290        32,816        33,631          357,355
  Advertising                                       25,511        17,500         6,000          320,266
  Bank charges and interest, net                     4,895         9,264        55,374          177,388
  Write-off of investments                               0             1             0        1,250,000
  Non-competition agreement                              0             0             0          711,000
  Write-down of license and operating assets             0             0             0        1,855,619
  Interest on beneficial conversion feature              0             0             0          566,455
  Bad debts (recovery)                                   0             0       (23,958)          52,613
  Settlement of lawsuit                                  0             0             0           45,250
  Research and development                               0      (397,296)            0          847,459
  Financing fees                                      (499)            0        25,000          129,043
  Depreciation and amortization                      8,219        23,031        23,032          324,386
--------------------------------------------------------------------------------------------------------

                                                 2,106,285     1,878,885     2,545,331       21,383,044
--------------------------------------------------------------------------------------------------------

NET LOSS                                       $(2,104,189)  $(1,812,265)  $(2,543,848)  $  (20,689,351)
========================================================================================================

NET LOSS PER COMMON SHARE                      $     (0.05)  $     (0.04)  $     (0.07)
========================================================================================================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                     42,814,988    40,490,001    36,391,491
========================================================================================================
</TABLE>


See notes to consolidated financial statements.  F-3
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(US DOLLARS)

======================================================================================================================
                                                COMMON                      PREFERRED
                                 SHARES        STOCK AND      SHARES OF     STOCK AND
                               OF COMMON    PAID-IN CAPITAL   PREFERRED  PAID-IN CAPITAL   PROMISSORY
                                 STOCK         IN EXCESS        STOCK       IN EXCESS         NOTES         SHARE
                                 ISSUED         OF PAR         ISSUED         OF PAR       RECEIVABLE   SUBSCRIPTIONS
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>                <C>        <C>               <C>          <C>
SHARES ISSUED FOR
  Cash                          1,000,000  $         10,000           0  $              0  $         0  $            0
  Property and equipment
    (to officers
    and directors)              1,500,000            15,000           0                 0            0               0
  Services (provided by
    officers and directors)     2,000,000            20,000           0                 0            0               0
  Services (others)             1,500,000            15,000           0                 0            0               0
Foreign currency translation            0                 0           0                 0            0               0
Net loss for year                       0                 0           0                 0            0               0
----------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 1996          6,000,000            60,000           0                 0            0               0
SHARES ISSUED FOR
  Cash                          5,086,000           865,514           0                 0            0               0
  Share issue costs                     0           (48,920)          0                 0            0               0
  Services                        564,000            63,036           0                 0            0               0
  Acquisition of subsidiary       100,000           275,000           0                 0            0               0
Foreign currency translation            0                 0           0                 0            0               0
Net loss for year                       0                 0           0                 0            0               0
----------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 1997         11,750,000         1,214,630           0                 0            0               0
SHARES ISSUED FOR
  Cash                            825,396           650,000           0                 0            0               0
  Share issue costs                     0           (78,000)          0                 0            0               0
Foreign currency translation            0                 0           0                 0            0               0
Net loss for year                       0                 0           0                 0            0               0
----------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 1998         12,575,396  $      1,786,630           0  $              0  $         0  $            0
----------------------------------------------------------------------------------------------------------------------

================================================================================
                                                   DEFICIT
                                                 ACCUMULATED
                                    OTHER        DURING THE          TOTAL
                                COMPREHENSIVE    DEVELOPMENT     STOCKHOLDERS'
                                   INCOME           STAGE      EQUITY (DEFICIT)
--------------------------------------------------------------------------------
<S>                            <C>              <C>            <C>
SHARES ISSUED FOR
  Cash                         $            0   $          0   $         10,000
  Property and equipment
    (to officers
    and directors)                          0              0             15,000
  Services (provided by
    officers and directors)                 0              0             20,000
  Services (others)                         0              0             15,000
Foreign currency translation           (1,226)             0             (1,226)
Net loss for year                           0       (344,843)          (344,843)
--------------------------------------------------------------------------------

BALANCE, JUNE 30, 1996                 (1,226)      (344,843)          (286,069)
SHARES ISSUED FOR
  Cash                                      0              0            865,514
  Share issue costs                         0              0            (48,920)
  Services                                  0              0             63,036
  Acquisition of subsidiary                 0              0            275,000
Foreign currency translation           12,601              0             12,601
Net loss for year                           0       (822,217)          (822,217)
--------------------------------------------------------------------------------

BALANCE, JUNE 30, 1997                 11,375     (1,167,060)            58,945
SHARES ISSUED FOR
  Cash                                      0              0            650,000
  Share issue costs                         0              0            (78,000)
Foreign currency translation           24,860              0             24,860
Net loss for year                           0       (937,373)          (937,373)
--------------------------------------------------------------------------------

BALANCE, JUNE 30, 1998         $       36,235   $ (2,104,433)  $       (281,568)
--------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.  F-4
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(U.S. DOLLARS)

=================================================================================================================================
                                                          COMMON                      PREFERRED
                                         SHARES OF       STOCK AND      SHARES OF     STOCK AND
                                           COMMON     PAID-IN CAPITAL   PREFERRED  PAID-IN CAPITAL    PROMISSORY
                                           STOCK         IN EXCESS        STOCK       IN EXCESS         NOTES          SHARE
                                           ISSUED         OF PAR         ISSUED         OF PAR        RECEIVABLE   SUBSCRIPTIONS
---------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>                <C>        <C>               <C>           <C>
BALANCE, JUNE 30, 1998                   12,575,396  $      1,786,630           0  $              0  $         0   $            0
SHARES ISSUED FOR
  Cash                                      200,000            50,000           0                 0            0                0
  Exercise of stock options                 445,000            80,500           0                 0            0                0
  Promissory note                         1,683,789           252,568           0                 0     (284,068)               0
  Settlement of lawsuit                     150,000            15,000           0                 0            0                0
  Services (provided by
    officers and directors)                 666,666           100,000           0                 0            0                0
  Share issue costs                               0          (100,500)          0                 0            0                0
  Services                                  250,000            50,000           0                 0            0                0
  Conversion of convertible debentures    3,869,120           525,813           0                 0            0                0
  Acquisition of subsidiary               1,800,000           619,200           0                 0            0                0
  Held in escrow                            447,091                 0           0                 0            0                0
  Stock option benefit                            0            70,600           0                 0            0                0
  Beneficial conversion feature                   0           566,456           0                 0            0                0
Foreign currency translation                      0                 0           0                 0            0                0
Net loss for year                                 0                 0           0                 0            0                0
---------------------------------------------------------------------------------------------------------------------------------

BALANCE JUNE 30, 1999                    22,087,062         4,016,267           0                 0     (284,068)               0
SHARES ISSUED FOR
  Cash on private placement               2,650,000         3,975,000           0                 0            0                0
  Exercise of options                     1,245,000           256,700           0                 0            0                0
  Services                                   50,000            13,000           0                 0            0                0
  Settlement of debt                              0                 0     664,410           664,410            0                0
Shares released from escrow                       0            75,558           0                 0            0                0
Stock option benefit                              0            48,256           0                 0            0                0
Promissory note repayment                         0                 0           0                 0      225,568                0
Foreign currency translation                      0                 0           0                 0            0                0
Net loss for year                                 0                 0           0                 0            0                0
---------------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2000                   26,032,062  $      8,384,781     664,410  $        664,410  $   (58,500)  $            0
---------------------------------------------------------------------------------------------------------------------------------

=========================================================================================
                                                            DEFICIT
                                                          ACCUMULATED
                                             OTHER        DURING THE          TOTAL
                                         COMPREHENSIVE    DEVELOPMENT     STOCKHOLDERS'
                                             INCOME          STAGE      EQUITY (DEFICIT)
-----------------------------------------------------------------------------------------
<S>                                      <C>             <C>            <C>
BALANCE, JUNE 30, 1998                   $       36,235  $ (2,104,433)  $       (281,568)
SHARES ISSUED FOR
  Cash                                                0             0             50,000
  Exercise of stock options                           0             0             80,500
  Promissory note                                     0             0            (31,500)
  Settlement of lawsuit                               0             0             15,000
  Services (provided by
    officers and directors)                           0             0            100,000
  Share issue costs                                   0             0           (100,500)
  Services                                            0             0             50,000
  Conversion of convertible debentures                0             0            525,813
  Acquisition of subsidiary                           0             0            619,200
  Held in escrow                                      0             0                  0
  Stock option benefit                                0             0             70,600
  Beneficial conversion feature                       0             0            566,456
Foreign currency translation                      8,444             0              8,444
Net loss for year                                     0    (1,404,021)        (1,404,021)
-----------------------------------------------------------------------------------------

BALANCE JUNE 30, 1999                            44,679    (3,508,454)           268,424
SHARES ISSUED FOR
  Cash on private placement                           0             0          3,975,000
  Exercise of options                                 0             0            256,700
  Services                                            0             0             13,000
  Settlement of debt                                  0             0            664,410
Shares released from escrow                           0             0             75,558
Stock option benefit                                  0             0             48,256
Promissory note repayment                             0             0            225,568
Foreign currency translation                      1,614             0              1,614
Net loss for year                                     0    (1,537,402)        (1,537,402)
-----------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2000                   $       46,293  $ (5,045,856)  $      3,991,128
-----------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.  F-5
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(US DOLLARS)

===========================================================================================================================
                                                COMMON                        PREFERRED
                                 SHARES        STOCK AND      SHARES OF       STOCK AND
                               OF COMMON    PAID IN CAPITAL   PREFERRED    PAID- IN CAPITAL    PROMISSORY
                                 STOCK         IN EXCESS        STOCK         IN EXCESS          NOTES           SHARE
                                 ISSUED         OF PAR          ISSUED          OF PAR         RECEIVABLE    SUBSCRIPTIONS
---------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>                <C>         <C>                 <C>           <C>
BALANCE, JUNE 30, 2000         26,032,062  $      8,384,781     664,410   $         664,410   $   (58,500)  $            0
SHARES ISSUED FOR
  Cash on private placement        81,885           112,480           0                   0             0                0
  Exercise of options             517,000            91,515           0                   0             0                0
  Services                        100,000            40,000           0                   0             0                0
  Held in escrow                  218,115                 0           0                   0             0                0
Stock option benefit                    0           272,207           0                   0             0                0
Dividends on preferred shares           0                 0           0                   0             0                0
Share subscriptions                     0                 0           0                   0             0           50,000
Redeemed shares                         0                 0    (100,000)           (100,000)            0                0
Foreign currency translation            0                 0           0                   0             0                0
Net loss for year                       0                 0           0                   0             0                0
---------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2001         26,949,062         8,900,983     564,410             564,410       (58,500)          50,000
SHARES ISSUED FOR
  Proprietary non-competition
    agreement                     450,000           711,000           0                   0             0                0
  Held in escrow                  700,000                 0           0                   0             0                0
  Exercise of options           2,263,500           971,200           0                   0       (15,000)         (10,000)
  Exercise of warrants            325,000           130,000           0                   0             0                0
  Subscriptions                   100,000            40,000           0                   0             0          (40,000)
Stock option compensation               0           415,685           0                   0             0                0
Shares released from escrow             0           954,582           0                   0             0                0
Dividends on preferred shares           0                 0           0                   0             0                0
Redeemed shares                         0                 0    (124,800)           (124,800)            0                0
Write-off of promissory
  note receivable                       0            (7,000)          0                   0         7,000                0
Net loss for year                       0                 0           0                   0             0                0
---------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2002         30,787,562  $     12,116,450     439,610   $         439,610   $   (66,500)  $            0
---------------------------------------------------------------------------------------------------------------------------

================================================================================
                                                   DEFICIT
                                                 ACCUMULATED
                                    OTHER        DURING THE          TOTAL
                                COMPREHENSIVE    DEVELOPMENT     STOCKHOLDERS'
                                   INCOME           STAGE      EQUITY (DEFICIT)
--------------------------------------------------------------------------------
<S>                            <C>              <C>            <C>
BALANCE, JUNE 30, 2000         $       46,293   $ (5,045,856)  $      3,991,128
SHARES ISSUED FOR
  Cash on private placement                 0              0            112,480
  Exercise of options                       0              0             91,515
  Services                                  0              0             40,000
  Held in escrow                            0              0                  0
Stock option benefit                        0              0            272,207
Dividends on preferred shares               0        (30,720)           (30,720)
Share subscriptions                         0              0             50,000
Redeemed shares                             0       (100,000)          (200,000)
Foreign currency translation              (26)             0                (26)
Net loss for year                           0     (4,000,169)        (4,000,169)
--------------------------------------------------------------------------------

BALANCE, JUNE 30, 2001                 46,267     (9,176,745)           326,415
SHARES ISSUED FOR
  Proprietary non-competition
    agreement                               0              0            711,000
  Held in escrow                            0              0                  0
  Exercise of options                       0              0            946,200
  Exercise of warrants                      0              0            130,000
  Subscriptions                             0              0                  0
Stock option compensation                   0              0            415,685
Shares released from escrow                 0              0            954,582
Dividends on preferred shares               0        (26,087)           (26,087)
Redeemed shares                             0       (187,200)          (312,000)
Write-off of promissory
  note receivable                           0              0                  0
Net loss for year                           0     (3,836,191)        (3,836,191)
--------------------------------------------------------------------------------

BALANCE, JUNE 30, 2002         $       46,267   $(13,226,223)  $       (690,396)
--------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.  F-6
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(US DOLLARS)

================================================================================================================================
                                                       COMMON                       PREFERRED
                                       SHARES        STOCK AND      SHARES OF       STOCK AND
                                      OF COMMON   PAID-IN CAPITAL   PREFERRED    PAID IN-CAPITAL    PROMISSORY
                                        STOCK        IN EXCESS        STOCK         IN EXCESS         NOTES           SHARE
                                       ISSUED          OF PAR         ISSUED         OF PAR         RECEIVABLE    SUBSCRIPTIONS
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>               <C>         <C>                <C>           <C>
BALANCE, JUNE 30, 2002               30,787,562   $     12,116,450    439,610   $        439,610   $   (66,500)  $            0
SHARES ISSUED FOR                                                           0
  Cash on private placement           1,684,000            842,050          0                  0             0                0
  Settlement of debt                    144,793            104,542          0                  0             0                0
  Services                              200,000            196,000          0                  0             0                0
  Exercise of options                    52,500             43,750          0                  0             0                0
  Exercise of warrants                   55,000             27,500          0                  0             0                0
Subscription received                         0                  0          0                  0             0          176,665
Stock option compensation                     0              5,460          0                  0             0                0
Settlement of lawsuit (note 9(b))             0                  0          0                  0             0           35,250
Dividends on preferred shares                 0                  0          0                  0             0                0
Net loss for year                             0                  0          0                  0             0                0
--------------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2003               32,923,855         13,335,752    439,610            439,610       (66,500)         211,915
SHARES ISSUED FOR
  Cash on private placement           6,609,336          6,042,935          0                  0             0         (211,915)
  Cash on exercise of options            25,000             25,000          0                  0             0                0
  Settlement of lawsuit (note 8(b))      37,500             35,250          0                  0             0                0
  Services                               25,000             21,873          0                  0             0                0
  Redemption of preferred shares        415,000            415,000   (118,572)          (118,572)            0                0
  Exercise of warrants                  288,298                  0          0                  0             0                0
Shares returned to treasury for
    cancellation                       (142,140)                 0          0                  0             0                0
Stock option compensation                     0            321,275          0                  0             0                0
Dividends on preferred shares                 0                  0          0                  0             0                0
Net loss for year                             0                  0          0                  0             0                0
--------------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2004               40,181,849   $     20,197,085    321,038   $        321,038   $   (66,500)  $            0
--------------------------------------------------------------------------------------------------------------------------------

=====================================================================================
                                                        DEFICIT
                                                       ACCUMULATED
                                         OTHER        DURING THE          TOTAL
                                     COMPREHENSIVE    DEVELOPMENT     STOCKHOLDERS'
                                         INCOME          STAGE      EQUITY (DEFICIT)
<S>                                  <C>             <C>            <C>
-------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2002               $       46,267  $(13,226,223)  $       (690,396)
SHARES ISSUED FOR
  Cash on private placement                       0             0            842,050
  Settlement of debt                              0             0            104,542
  Services                                        0             0            196,000
  Exercise of options                             0             0             43,750
  Exercise of warrants                            0             0             27,500
Subscription received                             0             0            176,665
Stock option compensation                         0             0              5,460
Settlement of lawsuit (note 9(b))                 0             0             35,250
Dividends on preferred shares                     0       (22,060)           (22,060)
Net loss for year                                 0    (1,346,833)        (1,346,833)
-------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2003                       46,267   (14,595,116)          (628,072)
SHARES ISSUED FOR
  Cash on private placement                       0             0          5,831,020
  Cash on exercise of options                     0             0             25,000
  Settlement of lawsuit (note 8(b))               0             0             35,250
  Services                                        0             0             21,873
  Redemption of preferred shares                  0      (296,428)                 0
  Exercise of warrants                            0             0                  0
Shares returned to treasury for
    cancellation                                  0             0                  0
Stock option compensation                         0             0            321,275
Dividends on preferred shares                     0       (19,016)           (19,016)
Net loss for year                                 0    (2,543,848)        (2,543,848)
-------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2004               $       46,267  $(17,454,408)  $      3,043,482
-------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.  F-7
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(US DOLLARS)

===========================================================================================================================
                                                   COMMON                       PREFERRED
                                    SHARES       STOCK AND      SHARES OF       STOCK AND
                                  OF COMMON   PAID-IN CAPITAL   PREFERRED    PAID IN-CAPITAL    PROMISSORY
                                    STOCK        IN EXCESS        STOCK         IN EXCESS         NOTES          SHARE
                                    ISSUED         OF PAR         ISSUED         OF PAR         RECEIVABLE   SUBSCRIPTIONS
---------------------------------------------------------------------------------------------------------------------------
<S>                               <C>         <C>               <C>         <C>                <C>           <C>
BALANCE, JUNE 30, 2004            40,181,849  $     20,197,085    321,038   $        321,038   $   (66,500)  $            0
SHARES ISSUED FOR
  Settlement of debt                  44,000            55,000          0                  0             0                0
  Cashless exercise of warrants    1,713,300                 0          0                  0             0                0
  For services                       500,000           270,000          0                  0             0                0
  Redemption of preferred shares           0                 0    (12,500)           (12,500)            0                0
  Dividends on preferred shares            0                 0          0                  0             0                0
Net loss for year                          0                 0          0                  0             0                0
---------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2005            42,439,149        20,522,085    308,538            308,538       (66,500)               0
SHARES ISSUED FOR
  Exercise of options                200,000           134,000          0                  0             0                0
  Cashless exercise of warrants       35,115                 0          0                  0             0                0
  For services                       269,000           191,510          0                  0             0                0
  Exercise of warrants             1,291,168         1,080,669          0                  0             0                0
  Repayment of promissory note             0                 0          0                  0        34,000                0
  Dividends on preferred shares            0                 0          0                  0             0                0
  Stock option compensation                0           107,219          0                  0             0                0
Net loss for year                          0                 0          0                  0             0                0
---------------------------------------------------------------------------------------------------------------------------

BALANCE, JUNE 30, 2006            44,234,432  $     22,035,483    308,538            308,538   $   (32,500)  $            0
---------------------------------------------------------------------------------------------------------------------------

==================================================================================
                                                     DEFICIT
                                                   ACCUMULATED
                                      OTHER        DURING THE          TOTAL
                                  COMPREHENSIVE    DEVELOPMENT     STOCKHOLDERS'
                                      INCOME          STAGE      EQUITY (DEFICIT)
----------------------------------------------------------------------------------
<S>                               <C>             <C>            <C>
BALANCE, JUNE 30, 2004            $       46,267  $(17,454,408)  $      3,043,482
SHARES ISSUED FOR
  Settlement of debt                           0             0             55,000
  Cashless exercise of warrants                0             0                  0
  For services                                 0             0            270,000
  Redemption of preferred shares               0       (37,500)           (50,000)
  Dividends on preferred shares                0       (15,739)           (15,739)
Net loss for year                              0    (1,812,265)        (1,812,265)
----------------------------------------------------------------------------------

BALANCE, JUNE 30, 2005                    46,267   (19,319,912)         1,490,478
SHARES ISSUED FOR
  Exercise of options                          0             0            134,000
  Cashless exercise of warrants                0             0                  0
  For services                                 0             0            191,510
  Exercise of warrants                         0             0          1,080,669
  Repayment of promissory note                 0             0             34,000
  Dividends on preferred shares                0       (15,427)           (15,427)
  Stock option compensation                    0             0            107,219
Net loss for year                              0    (2,104,189)        (2,104,189)
----------------------------------------------------------------------------------

BALANCE, JUNE 30, 2006            $       46,267  $(21,439,528)  $        918,260
----------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.  F-8
<PAGE>
<TABLE>
<CAPTION>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US DOLLARS)

==================================================================================================================
                                                                                                   PERIOD FROM
                                                                                                FEBRUARY 12, 1996
                                                                                                   (INCEPTION)
                                                                YEARS ENDED, JUNE 30                 THROUGH
                                                         2006          2005          2004         JUNE 30, 2006
------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>           <C>           <C>
OPERATING ACTIVITIES
  Net loss                                           $(2,104,189)  $(1,812,265)  $(2,543,848)  $      (20,689,351)
  Adjustments to reconcile net loss to
  net cash used by operating activities
    Write-down of investment                                   0             1             0            1,250,000
    Other income                                               0       (55,462)            0             (658,305)
    Proprietary, non-competition
      agreement                                                0             0             0              711,000
    Consulting services                                  359,220         7,500        61,873            1,323,993
    Depreciation and amortization                          8,219        23,031        23,032              349,941
    Stock option compensation                            107,219             0       321,275            1,240,702
    Interest on beneficial conversion feature                  0             0             0              566,456
    Settlement of lawsuit                                      0             0             0               60,250
    Write-down of license and operating assets                 0             0             0            1,853,542
    Bad debt                                                   0             0         1,141               77,712
    Due to West Virginia University
      Research Corporation                                     0      (397,296)            0                    0
  Changes in non-cash working capital
    Due from affiliated company                                0             0             0             (116,000)
    Notes and accounts receivable                              0             0             0             (109,213)
    Inventory                                                  0             0             0              (46,842)
    Prepaid expenses                                      (4,613)       16,449       (14,247)             (14,255)
    Deferred revenue and other                                 0             0             0               (2,609)
    Accounts payable and accruals                         90,851       153,711        31,067              991,457
------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                 (1,543,293)   (2,064,331)   (2,119,707)         (13,211,522)
------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
  Purchase of property, equipment and
    Intangibles assets                                         0             0             0             (200,935)
  Assets acquired and liabilities assumed
    on purchase of subsidiary                                  0             0             0             (129,474)
  Investment in and advances to affiliate companies            0             0             0           (2,000,000)
  License agreements                                           0             0             0             (124,835)
------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                          0             0             0           (2,455,244)
------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
  Redemption of preferred shares                               0       (50,000)            0              (50,000)
  Repayment of loan                                       34,000             0             0              (11,000)
  Advances from stockholders                                   0             0             0            1,078,284
  Repayments to stockholders                                   0             0             0              (94,046)
  Subscriptions received                                       0             0             0              226,665
  Proceeds from issuance of common stock               1,214,669             0     5,851,270           15,594,834
  Proceeds from convertible debentures                         0             0             0              600,000
  Share issue costs                                            0             0             0             (227,420)
------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING
  ACTIVITIES                                           1,248,669       (50,000)    5,851,270           17,117,317
------------------------------------------------------------------------------------------------------------------
EFFECT OF FOREIGN CURRENCY TRANSLATION
  ON CASH                                                      0             0             0               46,267
------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH                             (294,624)   (2,114,331)    3,731,563            1,496,818
CASH, BEGINNING OF YEAR                                1,791,442     3,905,773       174,210                    0
------------------------------------------------------------------------------------------------------------------
CASH, END OF YEAR                                    $ 1,496,818   $ 1,791,442   $ 3,905,773   $        1,496,818
==================================================================================================================
</TABLE>
Supplemental disclosure of cash flow information (note 5)


See notes to consolidated financial statements.  F-9
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

1.   INCORPORATION  AND  NATURE  OF  OPERATIONS

     The Company was incorporated under the laws of the State of Nevada on
     February 12, 1996 and has its head office in Bellingham, Washington, USA.
     The Company is in the development stage as more fully defined in Statement
     No. 7 of the Financial Accounting Standards Board. The Company is in the
     business of researching, developing and commercializing new antenna
     technologies.

     The Company will be devoting all of its resources to the research,
     development and commercialization of its antenna technologies. As a
     consequence, the value for the license of all other technologies was
     written off in 2001.

2.   SIGNIFICANT  ACCOUNTING  POLICIES

     (a)  Principles of consolidation

          These financial statements include the accounts of Integral
          Technologies, Inc. (a development stage company), its wholly-owned
          subsidiaries, Integral Vision Systems, Inc. ("IVSI"), Antek Wireless
          Inc. ("Antek") and Plastenna, Inc. ("Plastenna"), a Delaware
          corporation, and its 76.625%-owned subsidiary, Emergent Technologies
          Corp. ("ETC"). All intercompany balances and transactions have been
          eliminated.

     (b)  Depreciation

          Depreciation is provided using the straight-line method based on the
          following estimated useful lives:

                    Machinery, furniture and equipment     -   5 years
                    Computer hardware and software         -   5 years
                    Moulds                                 -   5 years

          The Company reviews long-term assets to determine if the carrying
          amount is recoverable based on the estimate of future cash flow
          expected to result from the use of the asset and its eventual
          disposition. If in this determination there is an apparent shortfall,
          the loss will be recognized as a current charge to operations.

     (c)  Loss per share

          Basic loss per share computations are based on the weighted average
          number of common shares outstanding during the year. Common share
          equivalents consisting of stock options and warrants are not
          considered in the computation of diluted loss per share because their
          effect would be anti-dilutive.


                                      F-10
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)

     (d)  Stock issued in exchange for services

          The valuation of the common stock issued in exchange for services is
          valued at an estimated fair market value as determined by officers and
          directors of the Company based upon other sales and issuances of the
          Company's common stock within the same general time period.

     (e)  Revenue recognition

          As the Company is continuing development of its technologies, no
          significant revenues have been earned to date. The Company recognizes
          revenues at the time of delivery of the product to the customers.

     (f)  Foreign currency translation

          Transactions and financial statements for the Company's operations
          whose functional currency is not the US dollar are translated into US
          dollars at the exchange rates in effect at the balance sheet dates for
          monetary assets and liabilities, and at historical exchange rates for
          non-monetary assets and liabilities. Revenue and expenses are
          translated at average rates for the period, except for amortization
          and depreciation, which are translated on the same basis as the
          related assets. Resulting translation gains or losses are reflected in
          net earnings (loss).

     (g)  Research and development

          Research and development expenditures are charged to operations as
          incurred.

     (h)  Use of estimates

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities and disclosures of contingent assets
          and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates and would impact
          future results of operations and cash flows.


                                      F-11
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)

     (i)  Financial instruments

          (i)   Fair value

                The carrying values of cash, and accounts payable and accruals
                approximate their fair values because of the short-term maturity
                of these financial instruments.

          (ii)  Interest rate risk

                The Company is not exposed to significant interest rate risk due
                to the short-term maturity of its monetary current assets and
                current liabilities.

          (iii) Credit risk

                The Company's financial assets that are exposed to credit risk
                consist primarily of cash, which is placed with major financial
                institutions.

          (iv)  Translation risk

                The Company translates the results of non-US operations into US
                currency using rates approximating the average exchange rate for
                the year. The exchange rate may vary from time to time. This
                risk is considered nominal as the Company does not incur any
                significant transactions in currencies other than US dollars.

     (j)  Income taxes

          The Company uses the asset and liability approach in its method of
          accounting for income taxes that requires the recognition of deferred
          tax liabilities and assets for expected future tax consequences of
          temporary differences between the carrying amounts and the tax basis
          of assets and liabilities. A valuation allowance against deferred tax
          assets is recorded if, based upon weighted available evidence, it is
          more likely than not that some or all of the deferred tax assets will
          not be realized.

     (k)  Stock-based compensation

          Prior to July 1, 2005, the Company accounted for stock-based awards
          under the recognition and measurement provisions of Accounting
          Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
          to Employees", using the intrinsic value method of accounting, under
          which compensation expense was only recognized if the exercise price
          of the Company's employee stock options was less than the market price
          of the underlying common stock on the date of grant.


                                      F-12
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)

     (k)  Stock-based  compensation  (Continued)

          Had compensation expense been determined as provided in SFAS 123 using
          the Black-Scholes option pricing model, the pro forma effect on the
          Company's net loss and per share amounts would have been as follows:

<TABLE>
<CAPTION>
          ========================================================================
                                                  2006      2005          2004
          ------------------------------------------------------------------------
<S>                                               <C>   <C>           <C>
          Net loss, as reported                   N/A   $(1,812,265)  $(2,543,848)
          Deduct:  Stock-based employee           N/A             0       136,750
            compensation expense under
            intrinsic value method included in
            reported net loss, net of related
            tax effects
          Add:  Total stock-based                 N/A      (326,000)      (14,159)
            compensation expense
            determined under fair value
            based method for all awards, net
            of related tax effects
          ------------------------------------------------------------------------

          Net loss, pro-forma                     N/A   $(2,138,265)  $(2,421,257)
          ========================================================================

          Net loss per share, as reported         N/A   $     (0.04)  $     (0.07)
          Deduct:  Stock-based employee           N/A          0.00          0.00
            compensation expense under
            intrinsic value method included in
            reported net loss, net of related
            tax effects
          Add:  Total stock-based                 N/A         (0.01)         0.00
            compensation expense
            determined under fair value
            based method for all awards, net
            of related tax effects
          ------------------------------------------------------------------------

          Net loss per share, pro-forma           N/A   $     (0.05)  $     (0.07)
          ========================================================================
</TABLE>

          Effective July 1, 2005, the Company adopted the fair value recognition
          provisions of SFAS No. 123R, "Share-Based Payments", using the
          modified retrospective transition method for the current fiscal year.

          The fair value for options granted was estimated at the date of grant
          using the Black-Scholes option pricing model. During the year ended
          June 30, 2006, the Company recorded stock-based compensation of
          $107,219 (2005 - $Nil; 2004 - $321,275) as consulting expense.

          During the 2006 fiscal year, the Company extended the expiry date of
          1,295,000 options. These options have been re-measured resulting in
          $91,424 additional compensation expense recognized in the year.


                                      F-13
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

2.   SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (k)  Stock-based  compensation  (Continued)

          The fair value of each option grant is calculated using the following
          weighted average assumptions:

<TABLE>
<CAPTION>
          =============================================
                                  2006    2005    2004
          ---------------------------------------------
<S>                              <C>     <C>     <C>
          Expected life (years)      2       1       1
          Interest rate           3.00%   3.45%   3.50%
          Volatility             59.09%  75.00%  72.50%
          Dividend yield          0.00%   0.00%   0.00%
          =============================================
</TABLE>

          Option pricing models require the input of highly subjective
          assumptions including the expected price volatility. The subjective
          input assumptions can materially affect the fair value estimate, and
          therefore, the existing models do not necessarily provide a reliable
          single measure of the fair value of the Company's stock option.

     (l)  Comprehensive  income

          Other comprehensive income includes revenues and expenses and
          unrealized gains and losses that under accounting principles generally
          accepted in the United States of America are excluded from net income
          (loss) and are recorded directly as an adjustment to stockholders'
          equity, net of tax. When the unrealized gains and losses are realized
          they are reclassified from other comprehensive income and included in
          net income. The Company's other comprehensive income (loss) is
          comprised of gains and losses from foreign currency translation
          adjustments. As at June 30, 2006, the Company has comprehensive income
          of $46,267 that relates to foreign operations the Company had in the
          past. The Company's operations in the foreign jurisdiction were
          integrated into the main operations of the Company therefore no
          further comprehensive gains or losses have been incurred.

     (m)  Recent  accounting  pronouncements

          (i)  FAS 151, Inventory Costs. This statement is effective for
               inventory costs incurred during fiscal years beginning after June
               15, 2005. Earlier application is permitted for inventory costs
               incurred during fiscal years beginning after November 24, 2004.
               The provisions of this statement should be applied prospectively.
               There is no impact on the Company's financial statements.

          (ii) FAS 153, Exchanges of Non-Monetary Assets. The provisions of
               this statement are effective for non-monetary asset exchanges
               occurring in fiscal periods beginning after June 15, 2005.
               Earlier application is permitted for non-monetary asset exchanges
               occurring in fiscal periods beginning after December 16, 2004.
               The provisions of this statement should be applied prospectively.
               There is no impact on the Company's financial statements.


                                      F-14
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)

     (m)  Recent accounting pronouncements (Continued)

          (iii) In December 2004, the FASB issued Statement No. 123
                (revised 2004), "Share-Based Payment" ("SFAS 123(R)"), which
                requires the measurement and recognition of compensation expense
                for all stock-based compensation payments and supersedes the
                Company's current accounting under APB 25. SFAS 123(R) is
                effective for all annual periods beginning after June 15, 2005.
                In March 2005, the Securities and Exchange Commission issued
                Staff Accounting Bulletin No. 107 ("SAB 107") relating to the
                adoption of SFAS 123(R). The Company adopted SFAS 123(R) in the
                first quarter of fiscal 2006.

3.   PROPERTY  AND  EQUIPMENT

<TABLE>
<CAPTION>
     ======================================================
                                           2006      2005
     ------------------------------------------------------
<S>                                      <C>       <C>
     Machinery, furniture and equipment  $148,940  $148,940
     Computer hardware and software        39,419    39,419
     Moulds                                 4,800     4,800
     ------------------------------------------------------

                                          193,159   193,159
     Less:  Accumulated depreciation      193,159   184,940
     ------------------------------------------------------

                                         $      0  $  8,219
     ======================================================
</TABLE>

4.   STOCKHOLDERS'  EQUITY  (DEFICIT)

     (a)  Common stock

          (i)  During the year ended June 30, 2005, the Company:

               (a)  Issued 44,000 shares to settle debt for $55,000.
               (b)  Issued 500,000 shares as partial consideration for
                    consulting services to be provided over 12 months. These
                    shares have been recorded at a value of $270,000
                    representing the market value of the shares at the date of
                    issuance. The amount was recorded as a prepaid expense to be
                    amortized over the term of the contract.
               (c)  Issued 1,713,300 shares on exercise of cashless
                    warrants.

          (ii) During the year ended June 30, 2006, the Company

               (a)  Issued 19,000 shares for services in the amount of
                    $29,010.
               (b)  Issued 250,000 shares as partial consideration for
                    consulting services to be provided over 12 months. These
                    shares have been recorded at a value of $162,500
                    representing the market value of the shares at the date of
                    issuance. The amount was recorded as a prepaid expense to be
                    amortized over the term of the contract.
               (c)  Issued 1,291,168 shares in the amount of $1,080,669 on
                    exercise of warrants.
               (d)  Issued 35,115 shares on exercise of cashless warrants.


                                      F-15
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

4.   STOCKHOLDERS'  EQUITY  (DEFICIT)  (Continued)

     (b)  Preferred stock

          The preferred stock may be issued in one or more series. The
          distinguishing features of each series including preference, rights
          and restriction are to be determined by the Company's Board of
          Directors upon the establishment of each such series.

          During the year ended June 30, 2000, the Company designated 1,000,000
          of its authorized 20,000,000 preferred shares as Series A Convertible
          Preferred Stock with a par value of $0.001 each and a stated value and
          liquidation preference of $1.00 per share. Cumulative dividends are
          accrued at the rate of 5% annually, payable at the option of the
          Company. The shares may be converted to restricted shares of common
          stock at the average trading price ten days prior to conversion, and
          are entitled to votes equal to the number of shares of common stock
          into which each series of preferred stock may be converted. Each
          Series A Convertible Preferred Stock may be redeemed by the Company
          for $1.50 each within one year after the date of issue, and for $2.00,
          $2.50, $3.00 and $3.50 per share in each of the subsequent four years
          after the date of issue. The Company may, at its discretion, redeem
          the shares at a price higher than stipulated herein.

          During the year ended June 30, 2000, the Company agreed to settle
          $383,228 of accounts payable and $281,182 of long-term debt, both
          amounts owed to officers and directors of the Company, by issuing
          664,410 shares of Series A convertible preferred stock at a par value
          of $0.001 and a stated value of $1.00 per share.

     (c)  Stock options

          In January 2001 the Company adopted the "Integral Technologies, Inc.
          2001 Stock Plan" (the "2001 Plan"), a non-qualified stock option plan
          under which the Company may issue up to 2,500,000 stock options and
          stock bonuses of common stock of the Company to provide incentives to
          officers, directors, key employees and other persons who contribute to
          the success of the Company. This plan was amended December 2001 to
          increase the number of common share options that may be granted from
          2,500,000 to 3,500,000 stock options. As at June 30, 2006, there are
          19,500 options available under this plan.


                                      F-16
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

4.   STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

     (c)  Stock options (Continued)

          The following table summarizes the Company's stock option activity for
          the years ended June 30, 2006, 2005 and 2004:

<TABLE>
<CAPTION>
          ==============================================================
                                                               Weighted
                                                  Exercise      Average
                                     Number        Price       Exercise
                                   of Shares     Per Share       Price
          --------------------------------------------------------------
<S>                                <C>         <C>             <C>

          Balance, June 30, 2003   1,907,500   $0.40 to $1.50  $    0.94
          Granted during the year    255,000   $         1.00  $    1.00
          Cancelled                 (175,000)  $0.65 to $1.50  $    0.77
          Exercised                 (440,000)  $         1.00  $    1.00
          --------------------------------------------------------------

          Balance, June 30, 2004   1,547,500   $0.64 to $1.50  $    0.94
          Granted during the year  1,000,000   $         0.50  $    0.50
          Cancelled                 (102,500)  $0.65 to $1.50  $    0.77
          Exercised                        0   $         0.00  $    0.00
          --------------------------------------------------------------

          Balance, June 30, 2005   2,445,000   $0.50 to $1.16  $    0.76
          Granted during the year     50,000   $         0.40  $    0.40
          Cancelled                        0   $         0.00  $    0.00
          Exercised                 (200,000)  $0.40 to $1.00  $    0.67
          ==============================================================

          Balance, June 30, 2006   2,295,000   $0.40 to $1.16  $    0.76
          ==============================================================
</TABLE>


                                      F-17
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

4.   STOCKHOLDERS'  EQUITY  (DEFICIT)  (Continued)

     (c)  Stock options (Continued)

          The following summarizes the options outstanding and exercisable at
          June 30, 2006 and 2005 all of which were fully vested at these dates:

<TABLE>
<CAPTION>
          =======================================================
                                Exercise     Number of   Shares
          Expiry Date            Price         2006       2005
          -------------------------------------------------------
<S>                          <C>             <C>        <C>
          August 31, 2006    $0.65 to $1.16    880,000  1,030,000
          December 31, 2007  $         1.00    415,000    415,000
          June 30, 2010      $         0.50  1,000,000  1,000,000
          -------------------------------------------------------
          Total              $0.40 to $1.16  2,295,000  2,445,000
          =======================================================
</TABLE>

          Pursuant to the 2001 Plan:

          (i)  The expiry date of 415,000 options was extended to December
               31, 2007 and 880,000 options were extended to August 31, 2006,
               and subsequent to year end, to August 31, 2007.

          (ii) During the year ended June 30, 2003, the Company granted a
               total of 1,230,000 stock options to officers, directors and key
               employees at an exercise price of $1.00 per common share. Of
               these options, 400,000 fully vested at the date of grant, and
               830,000 vested January 1, 2003 and expire December 31, 2005.
               During the year ended June 30, 2006, the expiry date of 415,000
               of these options was extended to December 31, 2007.

          In April 2003, the Company adopted the "Integral Technologies, Inc.
          2003 Stock Plan" (the "2003 Plan"), a non-qualified stock option plan
          under which the Company may issue up to 1,500,000 stock options. As of
          June 30, 2005, no options have been granted with respect to this plan.

          During the year ended June 30, 2005, the Company granted a total of
          1,000,000 stock options to an employee at an exercise price of $0.50
          per common share. All options are fully vested at the date of grant
          and expire June 30, 2010.

          During the year ended June 30, 2006, the Company granted a total of
          50,000 stock options to a consultant at an exercise price of $0.40 per
          common share. All options are fully vested at the date of grant and
          expire December 31, 2007.


                                      F-18
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

4.   STOCKHOLDERS'  EQUITY  (DEFICIT)  (Continued)

     (d)  Stock purchase warrants

          At June 30, 2006 and 2005, the following stock purchase warrants were
          outstanding:

<TABLE>
<CAPTION>
          ============================================================
                                Exercise        Number of Shares
          Expiry Date            Price         2006          2005
          ------------------------------------------------------------
<S>                          <C>             <C>        <C>
          November 10, 2005  $1.19 to $1.69          0     45,496
          November 29, 2005  $         0.50          0    842,000  *
          June 30, 2006      $         1.00          0    449,170  **
          ------------------------------------------------------------
          Total              $ Nil to $1.19          0  1,336,666
          ============================================================
</TABLE>

          *    During the 2006 fiscal year, the expiry date of these
               warrants was extended to November 29, 2005 from the previous
               November 1, 2004 expiry date.

          **   Subsequent to the year-end, the expiry date of these
               warrants was extended from September 25, 2005 to June 30, 2006.

     (e)  Promissory notes receivable at June 30, 2006 includes:

          (i)  $17,500 (2005 - $31,500) due on exercise of 210,000 stock
               options, interest at 10% per annum, due November 1, 2002,
               subsequently extended to June 30, 2003.

          (ii) $Nil (2005 - $20,000) due on exercise of 100,000 stock
               options, interest at 8% per annum due June 6, 2002.

          (iii) $15,000 (2005 - $15,000) due on exercise of 23,000 stock
               options, interest at 10% per annum due June 30, 2003.

          As at June 30, 2006, $34,000 of these notes had been collected. Shares
          issued on exercise of options are restricted for trading. The
          restrictions will not be removed until the respective notes are paid
          to the Company.


                                      F-19
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

5.   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
     =================================================================================================
                                                                                         PERIOD FROM
                                                                                        FEBRUARY 12,
                                                                                            1996
                                                                                         (INCEPTION)
                                                        YEARS E     NDED    JUNE 30,       Through
                                                          2006      2005      2004      JUNE 30, 2006
     ------------------------------------------------------------------------------------------------
<S>                                                     <C>       <C>       <C>        <C>
     SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
     SHARES ISSUED
       For redemption of preferred shares               $      0  $      0  $ 415,000  $       415,000
       For property and equipment                       $      0  $      0  $       0  $        23,000
       For proprietary agreement                        $      0  $      0  $       0  $       711,000
       For settlement of accounts payable               $      0    55,000  $       0  $       228,742
       For services (provided by officers
         and directors)                                 $      0  $      0  $       0  $       120,000
       For settlement of lawsuit                        $      0  $      0  $       0  $        15,000
       For services                                     $191,510  $270,000  $  61,873  $       696,784
       For acquisition of subsidiary                    $      0  $      0  $       0  $       894,200
     SUPPLEMENTAL CASH FLOW INFORMATION
       Interest paid                                    $      0  $      0  $       0  $        81,111
       Income tax paid                                  $      0  $      0  $       0  $             0
     =================================================================================================
</TABLE>

6.   RELATED PARTY TRANSACTIONS

     (a)  Accounts payable at June 30, 2006 includes $7,870 (2005 -
          $10,727; 2004 - $29,290) due to two directors and officers of the
          Company.

     (b)  The Company incurred $360,000 (2005 - $430,000; 2004 - $340,000)
          for wages paid to two directors and officers of the Company.

     (c)  The Company incurred $Nil (2005 - $Nil; 2004 - $37,000) for
          interest paid to two directors and officers of the Company.

     (d)  Promissory notes receivable at June 30, 2006 includes $32,500
          (2005 - $46,500) for advances made by the Company to an officer of the
          Company.


                                      F-20
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

7.   INCOME TAXES

     Deferred income taxes reflect the tax effect of the temporary differences
     between the carrying amount of assets and liabilities for financial
     reporting purposes and the amounts used for tax purposes. The components of
     the net deferred income tax assets are as follows:

<TABLE>
<CAPTION>
     ===========================================================================
                                            2006          2005          2004
     ---------------------------------------------------------------------------
<S>                                     <C>           <C>           <C>
     Deferred income tax assets
       Net operating loss and credit
         Carry-forwards                 $ 5,738,000   $ 5,300,000   $ 4,700,000
     Excess of tax value of long-term
       investments and licenses over
       net book value                       254,000       692,000       692,000
     Accrued liabilities                      5,000         5,000       144,000
     Temporary differences on property
       and equipment depreciation            (3,000)       (3,000)       (3,000)
     ---------------------------------------------------------------------------

     Gross deferred tax assets            5,994,000     5,994,000     5,533,000
     Valuation allowance                 (5,994,000)   (5,994,000)   (5,533,000)
     ---------------------------------------------------------------------------

                                        $         0   $         0   $         0
     ===========================================================================
</TABLE>

     As at June 30, 2006, the Company's net operating loss carry-forwards for
     income tax purposes were approximately $17,512,000 (2005 - $15,500,000;
     2004 - $13,300,000). If not utilized, they will start to expire in 2012.


                                      F-21
<PAGE>
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2006, 2005 AND 2004
(US DOLLARS)

================================================================================

8.   SETTLEMENT  OF  LAWSUIT

     (a)  During the year ended June 30, 2005, the Company settled all past
          and present claims that the Company and Mr. James Smith and his
          personal company, Integral Concepts, Inc., have against each other.
          All parties will release all claims against each other. In addition,
          Mr. Smith will return to the Company 40,000 shares of its common
          stock.

     (b)  As part of a global settlement, the Company, West Virginia
          University (WVU) and West Virginia University Research Corp. ("WVURC")
          have mutually agreed to release all past and present claims that each
          has against each other under the following terms:

          (i)   WVU and WVURC release all past and present claims it has
                against the Company, including $397,296 in claimed amounts,
                vigorously contested by the Company for past research and
                development work performed by WVURC on the Plasma Ignition
                Technology, the Colorvision Technology and the CTHA Technology;

          (ii)  Cancellation of the licensing agreement between WVU and
                Integral Concepts, Inc., for the Plasma Ignition Technology, the
                Colorvision Technology and the CTHA Technology, which had been
                previously sub-licensed by Integral Concepts, Inc. to the
                Company or its subsidiaries; and

          (iii) WVU will issue new licensing agreements for the
                aforementioned technologies directly to the Company.

          In return, the Company issued 40,000 restricted shares of its common
          stock to WVU.

          As a result of this settlement, the Company reversed a prior accrual
          of $397,296 and $21,492 previously included in accounts payable and
          accruals.

9.   SUBSEQUENT  EVENTS

     On September 15, 2006, the Company closed a private placement of 1,180,537
     units consisting of common stock at $2.00 per share and warrants to
     purchase 590,269 shares of common stock within two years at an exercise
     price of $2.50 per share, provide that in the event that the average
     closing bid price of a share of the Company's common stock exceeds $4.50
     for ten consecutive trading days, the Company has the right to redeem the
     warrants for $.01 per share of common stock purchasable hereunder, upon
     thirty days written notice (the Holder shall have the right to exercise the
     warrant in accordance with its terms prior to the expiration of the thirty
     day period). The purchase price attributable to the warrants was $.001 per
     share of common stock underlying the warrants. Aggregate proceeds from the
     sale of the common stock and the warrants was $2,361,664 ($2,361,074 for
     the common stock and $590 for the warrants). At any time commencing sixty
     days after the close of the offering, the Investors can require that the
     Company prepare and file a registration statement to register the shares of
     common stock (including the shares underlying the warrants) for resale by
     the investors. The Company also reserves the right to file such a
     registration statement at any time after the Closing Date on its own
     initiative.


                                      F-22
<PAGE>
                                    PART III

                        DIRECTORS AND EXECUTIVE OFFICERS

Our  Company  has  a  Board  of  Directors  which  is currently comprised of two
members.  Each  director  holds  office  until  the  next  annual  meeting  of
shareholders  or  until a successor is elected or appointed.  The members of the
Board  and  the  executive  officers of our Company and their respective age and
position  are  as  follows:

<TABLE>
<CAPTION>
                                                                     Director of
Name                 Age  Position with Company                     Company Since
----------------------------------------------------------------------------------
<S>                  <C>  <C>                                       <C>
William S. Robinson   49  Director, Chairman, CEO and Treasurer     February 1996

William A. Ince       55  Director, President, Secretary and Chief  February 1996
                          Financial Officer
</TABLE>


WILLIAM ROBINSON
(Chairman, CEO and Treasurer)

As  a  co-founder of our Company (since 1996), Mr. Robinson has been responsible
since  the  inception  of  Integral  for securing funding in order to ensure the
ongoing operations of Integral and its subsidiaries.  Together with Mr. Ince, he
has  been  responsible  for  the  development  and  implementation  of corporate
strategies.

Mr.  Robinson brings many years of management experience in finance, banking and
corporate  development.  Previously,  he  acted  as  a  director  of a number of
companies  involved  in  natural  resources,  sales  and marketing, and computer
technologies.

WILLIAM  A.  INCE
(Director,  President,  Secretary  and  Chief  Financial  Officer)

Mr.  Ince,  a co-founder of our Company (since 1996), is responsible, along with
Mr.  Robinson,  for  the development and implementation of corporate strategies.
He  is  also  responsible  for  the  accounting  and  financial  systems  and
record-keeping  of  Integral  and  its  subsidiaries.

Mr.  Ince  brings  with  him  a  background  as  a  professional  accountant and
experience  from  management  positions  in  finance  and  operations in several
private companies.  He has consulted to both private and public companies in the
areas of marketing and finance, as well as turn-around situations.  Mr. Ince has
been  responsible  for  "team  building"  efforts to ensure that each project is
brought  to  fruition  on  a  timely  basis.

NON-EXECUTIVE  OFFICERS  /  SIGNIFICANT  EMPLOYEES

TOM  AISENBREY
(General  Manager,  Vice  President  of Product Development and Chief Technology
Officer)

Mr.  Aisenbrey  has been with our Company since February 2001.  Mr. Aisenbrey is
an  accomplished  executive  program  manager  with  27 years of experience in a
variety  of  electronic  industries,  including design & development of multiple
computer  oriented  products,  specializing  in  wireless  products.


                                       13
<PAGE>
AUDIT  COMMITTEE  AND  AUDIT  COMMITTEE  FINANCIAL  EXPERT  DISCLOSURE

Our  Company  does  not have a separately-designated standing audit committee at
this  time  because it is not required to do so.  Accordingly, we do not have an
audit  committee  financial  expert.

CODE  OF  ETHICS

On  September  20,  2004,  the  Board of Directors established a written code of
ethics  that  applies to our senior executive and financial officers.  A copy of
the  code  of  ethics  is incorporated by reference as an exhibit to this annual
report.  In  addition,  a  copy of the code of ethics is posted on our Company's
website  at  www.itkg.net.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

Section  16(a)  of  the  Securities  Exchange Act of 1934 requires our Company's
officers  and directors, and persons who own more than 10% of a registered class
of  our Company's equity securities, to file reports of ownership and changes in
ownership  with  the  Securities  and  Exchange  Commission  ("SEC").  Officers,
directors,  and  greater than 10% shareholders are required by SEC regulation to
furnish  us  with  copies of all Section 16(a) forms they file.  Based solely on
our  review  of  copies of such reports received or written representations from
certain reporting persons, we believe that, during the year ended June 30, 2006,
all  Section 16(a) filing requirements applicable to our officers, directors and
ten  percent  shareholders  were  complied  with  by  such  persons.


                             EXECUTIVE COMPENSATION

The  following  information discloses all plan and non-plan compensation awarded
to,  earned  by,  or  paid  to  the executive officers of our Company, and other
individuals  for  whom  disclosure is required, for all services rendered in all
capacities  to  our  Company  and  our  subsidiaries.

SUMMARY COMPENSATION TABLE

The following table sets forth all compensation, including bonuses, stock option
awards  and other payments, paid or accrued by Integral and/or its subsidiaries,
to  or  for  Integral's  Chief Executive Officer and each of the other executive
officers  (one  person)  and  one non-executive officer, during the fiscal years
ended  June  30,  2006,  2005  and  2004.

<TABLE>
<CAPTION>
                                           Annual Compensation
                                     ----------------------------------
        (a)                  (b)        (c)       (d)          (e)
        Name                                                  Other
        And                  Year                            Annual
     Principal              Ended     Salary     Bonus    Compensation
     Position              June 30      ($)       ($)       ($) (n5)
-----------------------------------------------------------------------
<S>                        <C>       <C>        <C>       <C>
William S. Robinson,           2006  $ 180,000       -0-           -0-
Director, Chairman, CEO,       2005  $ 180,000  $ 45,000           -0-
Treasurer                      2004  $ 170,000  $ 57,110           -0-

William A. Ince,               2006  $ 180,000       -0-           -0-
Director, President,           2005  $ 180,000  $ 25,000           -0-
Secretary, CFO                 2004  $ 170,000       -0-           -0-

Thomas Aisenbrey,              2006  $ 144,000       -0-           -0-
Chief Technology Officer       2005  $ 144,000       -0-           -0-
(non-executive officer)        2004  $  98,265       -0-           -0-
</TABLE>


                                       14
<PAGE>
<TABLE>
<CAPTION>
                                                Long Term Compensation
                                     --------------------------------------------
                                                Awards                Payouts
                                     --------------------------------------------
        (a)                  (b)         (f)              (g)            (h)            (i)
        Name                         Restricted
        And                  Year       Stock           Shares           LTIP        All Other
     Principal              Ended     Award(s)    Underlying Options   Payouts     Compensation
     Position              June 30       ($)                             ($)            ($)
--------------------------------------------------------------------------------------------------
<S>                        <C>       <C>          <C>                  <C>       <C>
William S. Robinson,           2006          -0-                 -0-        -0-  $      12,890(n2)
Chairman, CEO,                 2005          -0-                 -0-        -0-  $49,926(n2,n3,n4)
Treasurer                      2004          -0-                 -0-        -0-  $  368,943(n1,n2)

William A. Ince,               2006          -0-                 -0-        -0-  $       6,650(n2)
Director, President,           2005          -0-                 -0-        -0-  $47,614(n2,n3,n4)
Secretary, CFO                 2004          -0-                 -0-        -0-  $     32,268 (n2)

Thomas Aisenbrey,              2006          -0-                 -0-        -0-               -0-
Chief Technology Officer       2005          -0-       1,000,000 (n6)       -0-               -0-
(non-executive officer)        2004          -0-                 -0-        -0-               -0-
</TABLE>

(n1) In December  2003,  the  Board  of  Directors  authorized the redemption of
     118,572  shares  of  Series  A  Preferred  Stock  from  Mr.  Robinson  at a
     predetermined  redemption price of $3.50 per share. The stated value of the
     Series A Preferred Stock is $1.00 per share, which resulted in a redemption
     premium  of  $2.50  per  share  over  the  stated  value  (an  aggregate of
     $296,430).  Mr. Robinson tendered the shares of Series A Preferred Stock in
     payment  of  the  aggregate  exercise price of $415,000 for the exercise of
     415,000  options  to  purchase  common  stock,  and no cash was paid to Mr.
     Robinson.

(n2) A 5% dividend on the Series A Preferred Stock, payable in cash or shares of
     common  stock  at  the  election  of  the Company, had been accrued for the
     period from September 30, 1999 (date of issuance) to June 30, 2003, and was
     paid in cash during the fiscal year end June 30, 2004, with $72,513 paid to
     William S. Robinson and $32,268 paid to William A. Ince. For the year ended
     June  30,  2004, $13,536 was accrued to Mr. Robinson and $5,491 was accrued
     to  Mr. Ince, all of which was paid in cash during the fiscal year end June
     30,  2005. For the year ended June 30, 2005, $2,640 was paid in cash to Mr.
     Robinson during the fiscal year and an additional $7,765 was accrued to Mr.
     Robinson  at  year  end, and $1,373 was paid in cash to Mr. Ince during the
     fiscal  year  and an additional $3,961 was accrued to Mr. Ince at year end.
     For the year ended June 30, 2006, $12,890 (includes the $7,765 accrued from
     the prior year) was paid in cash to Mr. Robinson during the fiscal year and
     an  additional  $5,125  was accrued to Mr. Robinson at year end, and $6,550
     (includes  the  $3,961 accrued from the prior year) was paid in cash to Mr.
     Ince  during  the  fiscal  year and an additional $2,588 was accrued to Mr.
     Ince at year end. For purposes of the chart, only amounts actually paid are
     included  and  are  shown  in  the  year  in  which  payments  were  made.

(n3) In January  2005,  the  Board  of Directors authorized the redemption of an
     aggregate  of  12,500 shares of Series A Preferred Stock (6,250 shares from
     William  S. Robinson and 6,250 shares from William A. Ince) at a redemption
     price  of $4.00 per share. The stated value of the Series A Preferred Stock
     is  $1.00  per  share,  which resulted in a redemption premium of $3.00 per
     share  over  the  stated  value.

(n4) During  the  fiscal  year  ended  June  30,  2004,  the  Board of Directors
     authorized  the  payment  of accrued interest on amounts since July 1, 2001
     for  loans  made  to  the  Company by officers and directors, at an average
     annual  interest  rate  of 8%. A total of $15,000 was accrued to William S.
     Robinson  and  a  total  of


                                       15
<PAGE>
     $22,000  was  accrued  to  William  A.  Ince at June 30, 2004, all of which
     was  paid  during  the  fiscal  year end June 30, 2005. For purposes of the
     chart,  the  amounts  are  shown  in  the year in which payments were made.

(n5) As permitted  by  the  instruction  to Item 402(b)(2)(iii)(C) of Regulation
     S-B,  omitted  from column (e) are perquisites and other personal benefits,
     securities  or  property,  that  in  the aggregate do not exceed 10% of the
     total  of  annual  salary  and  bonus  reported  in  columns  (c)  and (d).

(n6) On June  17,  2005,  the  Company  provided  a  Grant  of  Option to Thomas
     Aisenbrey,  the  Company's  General  Manager,  Vice  President  of  Product
     Development  and Chief Technology Officer. Pursuant to the Grant of Option,
     which  was  not  under  either of the Company's formal Employee Benefit and
     Consulting  Services Compensation Plans, Mr. Aisebrey was granted an option
     to  acquire  1,000,000  share of common stock of the Company at an exercise
     price  of $.50 per share, exercisable in whole or in part at any time until
     June 30, 2010. The exercise price per share shall automatically be adjusted
     down  to  $.001  per  share  in the event of a "triggering event," which is
     defined  as  the  termination of employment of Mr. Aisenbrey or a change in
     control  of the Company. A change in control of the Company shall be deemed
     to  have  occurred  if  there  is  any sale, exchange or transfer of all or
     substantially  all  of the assets of the Company, or if there is any merger
     or  share exchange involving the Company, which has the result of effecting
     a  change  in control of the business through a change in management and/or
     officers  and  directors  of  the  Company.


OPTION/SAR  GRANTS  IN  LAST  FISCAL  YEAR

The information provided in the table below provides information with respect to
individual  grants  of stock options for the year ended June 30, 2006 to each of
the  persons  named  in  the Summary Compensation Table above.  Integral did not
grant  any  stock  appreciation  rights  for  the  year  ended  June  30,  2006.

<TABLE>
<CAPTION>
                                        Individual Grants

           (a)                        (b)                 (c)           (d)           (e)
                                                      % of Total
                                   Number of         Options/SARS
                             Securities Underlying    Granted to
                                  Options/SARs         Employees    Exercise or
                                  Granted (#)          in Fiscal     Base Price   Expiration
          Name                                         Year (n1)       ($/Sh)        Date
--------------------------------------------------------------------------------------------
<S>                          <C>                     <C>            <C>           <C>
William S. Robinson,                            -0-            -0-           N/A         N/A
Chairman, CEO, Treasurer

William A. Ince, Director,                      -0-            -0-           N/A         N/A
President, Secretary, CFO

Thomas Aisenbrey,                               -0-            -0-           N/A         N/A
Chief Technology Officer
(non-executive officer)
</TABLE>

     (n1) The percentage  of  total  options  granted  in  the  fiscal  year  is
          based  upon  all  options  granted  to  eligible  participants,  which
          includes  officers,  directors,  employees,  consultants and advisors,
          under the Integral Technologies, Inc. 2001 Stock Plan and the Integral
          Technologies,  Inc.  2003  Stock  Plan  during the year ended June 30,
          2006.


                                       16
<PAGE>
AGGREGATED  OPTION/SAR  EXERCISES  IN  LAST  FISCAL  YEAR  AND  FISCAL  YEAR-END
OPTION/SAR  VALUES

The information provided in the table below provides information with respect to
each  exercise  of  stock  options during most recent fiscal year ended June 30,
2006  by the persons named in the Summary Compensation Table and the fiscal year
end  value  of  unexercised  options.

<TABLE>
<CAPTION>
           (a)             (b)          (c)              (d)                   (e)
                                                      Number of              Value of
                                                Securities Underlying      Unexercised
                                                     Unexercised           In-the-Money
                                                   Options/SARs at       Options/SARs at
                          Shares       Value          FY-End (#)            FY-End($)
                       Acquired on   Realized        Exercisable/          Exercisable/
          Name         Exercise (#)   ($)(n1)       Unexercisable       Unexercisable(n1)
------------------------------------------------------------------------------------------
<S>                    <C>           <C>        <C>                     <C>

William S. Robinson             -0-        N/A                 -0-/-0-             -0-/-0-
Director, Chairman,
CEO, Treasurer

William A. Ince                 -0-        N/A        415,000 (n2)/-0-  $      576,850/-0-
Director, President,
Secretary, CFO

Thomas Aisenbrey,               -0-        N/A      1,445,000 (n3)/-0-  $    2,578,550/-0-
Chief Technology
Officer (non
executive officer)
</TABLE>

     (n1) The aggregate  dollar  values  in  columns  (c) and (e) are calculated
          by  determining  the  difference  between the fair market value of the
          common  stock  underlying  the  options  and the exercise price of the
          options  at exercise or fiscal year end, respectively. The fair market
          value  of the common stock on June 30, 2006 was $2.39 per share (based
          on  the  closing  bid  price).

     (n2) Mr. Ince  holds  415,000  options  with  an  exercise  price  of $1.00
          per  share. In December 2005, the expiration date of these options was
          extended  until  December  31,  2007.

     (n3) Mr. Aisenbrey  holds  1,000,000  options  with  an  exercise  price of
          $.50  per  share,  200,000  options with an exercise price of $.65 per
          share, and 245,000 options with an exercise price of $.1.00 per share.
          The  expiration  date  of the $.50 options is June 30, 2010. In August
          2006,  the  expiration dates of the $.65 options and the $1.00 options
          were  extended  until  August  31,  2007.

LONG-TERM  INCENTIVE  PLANS  ("LTIP")  -  AWARDS  IN  LAST  FISCAL  YEAR

This  table  has  been  omitted,  as  no executive officers named in the Summary
Compensation  Table  above  received  any awards pursuant to any LTIP during the
fiscal  year  ended  June  30,  2006.

COMPENSATION OF DIRECTORS

No  compensation  was paid by Integral to its Directors for any service provided
as  a  Director  during the fiscal year ended June 30, 2006.  There are no other
formal  or  informal  understandings  or  arrangements relating to compensation;
however,  Directors  may  be  reimbursed for all reasonable expenses incurred by
them  in  conducting  Integral's  business.  These  expenses  would  include
out-of-pocket  expenses  for  such  items  as  travel,  telephone,  and postage.


                                       17
<PAGE>
EMPLOYMENT  CONTRACTS  AND  TERMINATION  OF  EMPLOYMENT  AND  CHANGE-IN-CONTROL
ARRANGEMENTS

As  of  the date of filing of this report, the current executive officers do not
have  written  employment  contracts.

Integral's  Board of Directors has complete discretion as to the appropriateness
of  (a)  key-man  life  insurance,  (b) obtaining officer and director liability
insurance,  (c) employment contracts with and compensation of executive officers
and  directors,  (d)  indemnification contracts, and (e) incentive plan to award
executive  officers  and  key  employees.

Integral's  Board  of Directors is responsible for reviewing and determining the
annual salary and other compensation of the executive officers and key employees
of  Integral.  The  goals  of  Integral  are to align compensation with business
objectives  and performance and to enable Integral to attract, retain and reward
executive  officers  and  other  key  employees  who contribute to the long-term
success of Integral.  Integral intends to provide base salaries to its executive
officers  and  key employees sufficient to provide motivation to achieve certain
operating  goals.  Although salaries are not specifically tied into performance,
incentive  bonuses  may  be  available  to  certain  executive  officers and key
employees.  In the future, executive compensation may include without limitation
cash  bonuses,  stock  option  grants  and  stock  reward  grants.

EMPLOYEE  BENEFIT  AND  CONSULTING  SERVICES  COMPENSATION  PLANS

As  of  June 30, 2006, Integral had two Employee Benefit and Consulting Services
Compensation  Plans  in  effect.

On January 2, 2001, Integral adopted an employee benefit and consulting services
compensation  plan entitled the Integral Technologies, Inc. 2001 Stock Plan (the
"2001 Plan"), which was amended on December 17, 2001.  As amended, the 2001 Plan
covers up to 3,500,000 shares of common stock.  The 2001 Plan has not previously
been  approved  by  security  holders.

On  April  4, 2003, Integral adopted an employee benefit and consulting services
compensation  plan entitled the Integral Technologies, Inc. 2003 Stock Plan (the
"2003  Plan").  The 2003 Plan covers up to 1,500,000 shares of common stock. The
2003  Plan  has  not  previously  been  approved  by  security  holders.

Under  both  Plans,  Integral  may issue common stock and/or options to purchase
common  stock  to  certain  officers, directors and employees and consultants of
Integral  and its subsidiaries.  The purpose of the Plans is to promote the best
interests  of  Integral  and  its  shareholders by providing a means of non-cash
remuneration  to  eligible participants who contribute to operating progress and
earning  power  of  Integral.  The Plans are administered by Integral's Board of
Directors or a committee thereof which has the discretion to determine from time
to  time  the eligible participants to receive an award; the number of shares of
stock  issuable directly or to be granted pursuant to option; the price at which
the  option  may  be exercised or the price per share in cash or cancellation of
fees  or  other payment which Integral or its subsidiaries is liable if a direct
issue  of  stock  and  all  other  terms  on which each option shall be granted.


                                       18
<PAGE>
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                               STOCKHOLDER MATTERS

COMMON  STOCK

The  following table sets forth, as of September 15, 2006 the stock ownership of
each person known by Integral to be the beneficial owner of five percent or more
of Integral's common stock, each director and executive officer individually and
all  directors  and  executive  officers of Integral as a group.  Each person is
believed  to  have  sole  voting  and investment power over the shares except as
noted.

<TABLE>
<CAPTION>
==========================================================================================================
Name and Address of                               Amount and Nature of Beneficial
Beneficial Owner (n1)                                    Ownership(n1)(n2)          Percent of Class (n3)
------------------------------------------------  --------------------------------  ----------------------
Executive Officers and Directors:
------------------------------------------------  --------------------------------  ----------------------
<S>                                               <C>                               <C>
William S. Robinson (n4)                                                 2,323,533                   5.1%
#3 1070 West Pender St.
Vancouver, B.C.  V6E 2N7
------------------------------------------------  --------------------------------  ----------------------
William A. Ince (n5)                                                     2,128,833                   4.7%
805 W. Orchard Dr., Suite #7
Bellingham, WA  98225
------------------------------------------------  --------------------------------  ----------------------

------------------------------------------------  --------------------------------  ----------------------
All executive officers and directors as a group                          4,452,366                   9.7%
(2 persons)
------------------------------------------------  --------------------------------  ----------------------

------------------------------------------------  --------------------------------  ----------------------
5% Beneficial Owners:
------------------------------------------------  --------------------------------  ----------------------
Wellington Management Company, LLP (n6)                                  4,334,100                   9.5%
75 State Street, Boston, MA  02109
==========================================================================================================
</TABLE>

(n1) Unless  otherwise indicated, all shares are directly beneficially owned and
     investing  power  is  held  by  the  persons  named.

(n2) Includes  vested  options  beneficially  owned  but  not  yet exercised and
     outstanding,  if  any. The table does not include the effects of conversion
     by  Mr.  Robinson  and  Mr.  Ince  of  their shares of Series A Convertible
     Preferred  Stock  ("Series A"), which are convertible into shares of common
     stock  at a conversion rate that varies with the market price of the common
     stock  at  the  time  of  conversion.  The conversion rate is determined by
     dividing the number of shares of Series A being converted by the average of
     the  high and low bid prices of Integral's common stock reported by the OTC
     Bulletin  Board over the ten trading days preceding the date of conversion.
     Mr.  Robinson  owns  204,975  shares  of Series A and Mr. Ince owns 103,563
     shares of Series A. As of September 15, 2006, the conversion rate was $3.79
     per  share,  so  Mr. Robinson's 204,975 shares of Series A were convertible
     into 54.083 shares of common stock, and Mr. Ince's 103,563 shares of Series
     A were convertible into 27,325 shares of common stock. The actual number of
     shares  of  common  stock  receivable  by  Messrs.  Robinson  and Ince upon
     conversion  of  the  Series A would depend on the actual conversion rate in
     effect  at  the  time  of  conversion.

(n3) Based upon  45,439,969  shares  issued  and outstanding, plus the amount of
     shares  each  person  or  group  has  the  right  to acquire within 60 days
     pursuant  to  options,  warrants,  conversion  privileges  or other rights.


                                       19
<PAGE>
(n4) Mr. Robinson  is  an executive officer and director of Integral and each of
     its  subsidiaries.  Beneficial  ownership  figure  includes an aggregate of
     150,000  shares held in the names of his spouse and his two minor children.

(n5) Mr. Ince  is  an executive officer and director of Integral and each of its
     subsidiaries.  Beneficial  ownership  figure  includes  415,000  shares
     underlying  options.

(n6) Wellington  Management Company, LLP, has included the following information
     in its Schedule 13G filing with the Securities and Exchange Commission: (a)
     Wellington,  in  its  capacity  as  investment  adviser,  may  be deemed to
     beneficially  own  4,334,100 shares of the Company which are held of record
     by  clients  of Wellington; (b) those clients have the right to receive, or
     the  power  to  direct the receipt of, dividends from, or the proceeds from
     the  sale of, such securities; and (c) no such client is known to have such
     right  or  power  with  respect  to more than five percent of this class of
     securities.

SERIES  A  CONVERTIBLE  PREFERRED  STOCK

The following table sets forth, as of September 15, 2006, the stock ownership of
each person known by Integral to be the beneficial owner of five percent or more
of  Integral's  Series  A Convertible Preferred Stock, each Officer and Director
individually  and all Directors and Officers of Integral as a group. Each person
is  believed  to have sole voting and investment power over the shares except as
noted.

<TABLE>
<CAPTION>
============================================================================================
Name and Address of                            Amount and Nature of
Beneficial Owner (n1)                        Beneficial Ownership(n1)  Percent of Class (n2)
-------------------------------------------  ------------------------  ---------------------
<S>                                          <C>                       <C>
William S. Robinson (n3)
#3 1070 West Pender St
Vancouver, B.C.  V6E 2N7                                      204,975                  66.4%
-------------------------------------------  ------------------------  ---------------------
William A. Ince (n4)
805 W. Orchard Dr., Suite #3
Bellingham, WA  98225                                         103,563                  33.6%
===========================================  ========================  =====================
All officers and directors of Integral as a
group (2 persons)                                             308,538                   100%
============================================================================================
</TABLE>

(n1) Unless  otherwise indicated, all shares are directly beneficially owned and
     investing  power  is  held  by  the  persons  named.

(n2) Based upon  308,538  Series  A  Convertible  Preferred  shares  issued  and
     outstanding.

(n3) Mr. Robinson  is  an executive officer and director of Integral and each of
     its  subsidiaries.

(n4) Mr. Ince  is  an executive officer and director of Integral and each of its
     subsidiaries.


                                       20
<PAGE>
EQUITY COMPENSATION PLAN INFORMATION

The following information concerning the Company's equity compensation plans is

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                            Number of securities to be         Weighted-average             Number of securities
                              issued upon exercise of     exercise price of options,   available for future issuance
                               outstanding options,          warrants and rights         under equity compensation
                                warrants and rights                                     plans (excluding securities
                                                                                          reflected in column (a))

   Plan category                        (a)                          (b)                            (c)
--------------------------  ---------------------------  ----------------------------  ------------------------------
<S>                         <C>                          <C>                           <C>
Equity compensation
plans approved by security
holders                     N/A                          N/A                           N/A
--------------------------  ---------------------------  ----------------------------  ------------------------------
Equity compensation
plans not approved by
security holders            2,295,000                    $0.75                         1,519,500
--------------------------  ---------------------------  ----------------------------  ------------------------------

Total                       2,295,000                    $0.75                         1,519,500
---------------------------------------------------------------------------------------------------------------------
</TABLE>

As  of  June 30, 2006, Integral had two Employee Benefit and Consulting Services
Compensation  Plans  in  effect.

On January 2, 2001, Integral adopted an employee benefit and consulting services
compensation  plan entitled the Integral Technologies, Inc. 2001 Stock Plan (the
"2001 Plan"), which was amended on December 17, 2001.  As amended, the 2001 Plan
covers up to 3,500,000 shares of common stock.  The 2001 Plan has not previously
been  approved  by  security  holders.

On  April  4, 2003, Integral adopted an employee benefit and consulting services
compensation  plan entitled the Integral Technologies, Inc. 2003 Stock Plan (the
"2003 Plan").  The 2003 Plan covers up to 1,500,000 shares of common stock.  The
2003  Plan  has  not  previously  been  approved  by  security  holders.

Under  both  Plans,  Integral  may issue common stock and/or options to purchase
common  stock  to  certain  officers, directors and employees and consultants of
Integral  and its subsidiaries.  The purpose of the Plans is to promote the best
interests  of  Integral  and  its  shareholders by providing a means of non-cash
remuneration  to  eligible participants who contribute to operating progress and
earning  power  of  Integral.  The Plans are administered by Integral's Board of
Directors or a committee thereof which has the discretion to determine from time
to  time  the eligible participants to receive an award; the number of shares of
stock  issuable directly or to be granted pursuant to option; the price at which
the  option  may  be exercised or the price per share in cash or cancellation of
fees  or  other payment which Integral or its subsidiaries is liable if a direct
issue  of  stock  and  all  other  terms  on which each option shall be granted.

In  addition,  included  in  the  chart is a non-plan grant of options to Thomas
Aisenbrey,  the Company's General Manager, Vice President of Product Development
and Chief Technology Officer.  On June 17, 2005, the Company provided a Grant of
Option  to  Thomas  Aisenbrey. Pursuant to the Grant of Option, Mr. Aisebrey was
granted  an  option to acquire 1,000,000 share of common stock of the Company at
an exercise price of $.50 per share, exercisable in whole or in part at any time
until  June  30,  2010.  The  exercise  price  per  share shall automatically be
adjusted  down to $.001 per share in the event of a "triggering event," which is
defined as the termination of employment of Mr. Aisenbrey or a change in control
of  the  Company.  A  change  in  control of the Company shall be deemed to have
occurred  if there is any sale, exchange or transfer of all or substantially all
of  the  assets  of  the  Company,  or  if there is any merger or share exchange
involving  the Company, which has the result of effecting a change in control of
the business through a change in management and/or officers and directors of the
Company.


                                       21
<PAGE>
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During  the  last  two  fiscal  years,  our  Company  entered into the following
transactions  in  which  our  officers  and  directors have a material interest:

(a)     A  5%  dividend  on  the  Series A Preferred Stock is payable in cash or
shares  of common stock at the election of the Company.  William S. Robinson and
William A. Ince each own shares of Series A Preferred Stock.  For the year ended
June  30,  2005,  $2,640 was paid in cash to Mr. Robinson during the fiscal year
and an additional $7,765 was accrued to Mr. Robinson at year end, and $1,373 was
paid  in  cash  to  Mr. Ince during the fiscal year and an additional $3,961 was
accrued  to  Mr.  Ince  at  year end.  For the year ended June 30, 2006, $12,890
(includes  the  $7,765  accrued  from  the  prior  year) was paid in cash to Mr.
Robinson  during  the  fiscal  year  and an additional $5,125 was accrued to Mr.
Robinson  at  year  end,  and $6,550 (includes the $3,961 accrued from the prior
year)  was  paid  in  cash  to Mr. Ince during the fiscal year and an additional
$2,588  was  accrued  to  Mr.  Ince  at  year  end.

(b)     During  the  fiscal  year  ended  June  30, 2004, the Board of Directors
authorized  the  payment  of  accrued interest on amounts since July 1, 2001 for
loans  made  to  the  Company  by  officers  and directors, at an average annual
interest  rate of 8%.  A total of $15,000 was accrued to William S. Robinson and
a total of $22,000 was accrued to William A. Ince at June 30, 2004, all of which
was  paid  during  the  fiscal  year  end  June  30,  2005.

(c)     In  January 2005, the Board of Directors authorized the redemption of an
aggregate  of  12,500  shares  of  Series  A  Preferred Stock (6,250 shares from
William S. Robinson and 6,250 shares from William A. Ince) at a redemption price
of  $4.00  per share.  The stated value of the Series A Preferred Stock is $1.00
per  share,  which  resulted in a redemption premium of $3.00 per share over the
stated  value.

(d)     On  June  17,  2005,  the  Company  provided a Grant of Option to Thomas
Aisenbrey,  the Company's General Manager, Vice President of Product Development
and  Chief  Technology  Officer.  Pursuant to the Grant of Option, which was not
under  either  of  the Company's formal Employee Benefit and Consulting Services
Compensation  Plans,  Mr.  Aisebrey  was  granted an option to acquire 1,000,000
share  of  common  stock  of the Company at an exercise price of $.50 per share,
exercisable  in  whole or in part at any time until June 30, 2010.  The exercise
price  per  share shall automatically be adjusted down to $.001 per share in the
event of a "triggering event," which is defined as the termination of employment
of  Mr.  Aisenbrey or a change in control of the Company. A change in control of
the  Company  shall be deemed to have occurred if there is any sale, exchange or
transfer  of  all or substantially all of the assets of the Company, or if there
is  any  merger or share exchange involving the Company, which has the result of
effecting  a  change  in  control of the business through a change in management
and/or  officers  and  directors  of  the  Company.

The  options  and  the  underlying  shares  of  common  stock  are  subject  to
restrictions on transfer, as required by applicable federal and state securities
laws.  The option was not made under either of the Company's two existing equity
compensation  plans  described  under  the  heading  "Equity  Compensation  Plan
Information."


                                       22
<PAGE>
<TABLE>
<CAPTION>
                                                   EXHIBITS

<S>          <C>
Exhibit No.  Description
-----------  -----------

3.03         Articles of Incorporation, as amended and currently in effect.  (Incorporated by reference to Exhibit 3.03
             of Integral's quarterly report on Form 10-QSB for the period ended March 31, 2006.)

3.04         Bylaws, as amended and restated on December 31, 1997.  (Incorporated by reference to Exhibit 3.04 of
             Integral's quarterly report on Form 10-QSB for the period ended March 31, 2006.)

10.12        Integral Technologies, Inc. 2001 Stock Plan dated January 2, 2001, as amended December 17, 2001.
             (Incorporated by reference to Exhibit 10.12 of Integral's registration statement on Form S-8 (file no.
             333-76058).)

10.15        Integral Technologies, Inc. 2003 Stock Plan dated April 4, 2003 (Incorporated by reference to Exhibit
             10.15 of Integral's registration statement on Form S-8 (file no. 333-104522).)

10.18        Grant of Option dated June 17, 2005 between Integral and Thomas Aisenbrey. (Incorporated by
             reference to Exhibit 10.18 of Integral's Current Report Form 8-K dated June 17, 2005 (filed June 23,
             2005).)

10.19        Agreement between the Company and The QuanStar Group, LLC dated June 20, 2005. (Incorporated by
             reference to Exhibit 10.18 of Integral's Current Report Form 8-K dated June 17,2005 (filed June 23,
             2005).)

10.20        Patent License Agreement between the Company and Heatron, Inc. dated March 17, 2006. (Incorporated
             by reference to Exhibit 10.20 of Integral's Current Report Form 8-K dated March 17, 2006 (filed April
             11, 2006).)

10.21        Patent License Agreement between the Company and Jasper Rubber Products, Inc. dated August 25,
             2006. (Incorporated by reference to Exhibit 10.21 of Integral's Current Report Form 8-K dated August
             25, 2006 (filed September 19, 2006).)

14.1         Code of Ethics adopted September 20, 2004. (Incorporated by reference to Exhibit 14.1 of Integral's
             annual report on Form 10-KSB for the period ended June 30, 2004.)

21.4         List of Subsidiaries. (Incorporated by reference to Exhibit 21.4 of Integral's annual report on Form 10
             KSB for the period ended June 30, 2004.)

31.1         Section 302 Certification by the Corporation's Chief Executive Officer.  (Filed herewith).

31.2         Section 302 Certification by the Corporation's Chief Financial Officer.  (Filed herewith).

32.1         Section 906 Certification by the Corporation's Chief Executive Officer.  (Filed herewith).

32.2         Section 906 Certification by the Corporation's Chief Financial Officer.  (Filed herewith).
</TABLE>


                                       23
<PAGE>
                     PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our  Company's  board  of  directors  reviews and approves audit and permissible
non-audit services performed by Pannell Kerr Forster, Vancouver, Canada ("PKF"),
as  well  as  the  fees  charged  by  PKF  for  such services.  In its review of
non-audit  service  fees and its appointment of PKF as our Company's independent
accountants,  the  board  of  directors considered whether the provision of such
services is compatible with maintaining PKF's independence.  All of the services
provided  and  fees  charged  by PKF in the fiscal year ended June 30, 2006 were
pre-approved  by  the  board  of  directors.

AUDIT FEES

The  aggregate  fees  billed  for  professional services rendered by PKF for the
audit  of  our  annual  financial  statements  and  the reviews of the financial
statements  included  in  our  quarterly reports on Form 10-QSB for fiscal years
ended  June  30,  2006  and  2005  were  $37,500  and  $35,000,  respectively.

AUDIT-RELATED  FEES

There  were  no  other  fees  billed by PKF during the last two fiscal years for
assurance  and  related services that were reasonably related to the performance
of  the  audit  or review of our Company's financial statements and not reported
under  "Audit  Fees"  above.

TAX  FEES

The  were  no  fees  billed  for  professional  services rendered by PKF for tax
compliance  services  in  fiscal  years  ended  June  30,  2006  and  2005.

ALL  OTHER  FEES

There  were  no  other  fees  billed by PKF during the last two fiscal years for
products  and  services  provided  by  PKF.


                                       24
<PAGE>
                                   SIGNATURES
                                   ----------

In  accordance  with Section 13 or 15(d) of the Securities Exchange Act of 1934,
as  amended, the Registrant caused this Report to be signed on its behalf by the
undersigned,  thereunto  duly  authorized.

                                   INTEGRAL TECHNOLOGIES, INC


Dated:  September 29, 2006         /s/ William S. Robinson
                                   ---------------------------------------------
                                   William S. Robinson, Chief Executive Officer

                                   /s/ William A. Ince
                                   ---------------------------------------------
                                   William A. Ince, Chief Financial Officer and
                                   Principal Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

     Name                           Title        Date
     ----                           -----        ----

/s/ William S. Robinson        Director          September 29, 2006
-------------------------
William S. Robinson

/s/ William A. Ince            Director          September 29, 2006
-------------------------
William A. Ince


                                       25
<PAGE>
<TABLE>
<CAPTION>
                                                   EXHIBIT INDEX

<S>          <C>
Exhibit No.  Description
-----------  -----------

3.03         Articles of Incorporation, as amended and currently in effect.  (Incorporated by reference to Exhibit
             3.03 of Integral's quarterly report on Form 10-QSB for the period ended March 31, 2006.)

3.04         Bylaws, as amended and restated on December 31, 1997.  (Incorporated by reference to Exhibit 3.04 of
             Integral's quarterly report on Form 10-QSB for the period ended March 31, 2006.)

10.12        Integral Technologies, Inc. 2001 Stock Plan dated January 2, 2001, as amended December 17, 2001.
             (Incorporated by reference to Exhibit 10.12 of Integral's registration statement on Form S-8 (file no.
             333-76058).)

10.15        Integral Technologies, Inc. 2003 Stock Plan dated April 4, 2003 (Incorporated by reference to Exhibit
             10.15 of Integral's registration statement on Form S-8 (file no. 333-104522).)

10.18        Grant of Option dated June 17, 2005 between Integral and Thomas Aisenbrey. (Incorporated by
             reference to Exhibit 10.18 of Integral's Current Report Form 8-K dated June 17, 2005 (filed June 23,
             2005).)

10.19        Agreement between the Company and The QuanStar Group, LLC dated June 20, 2005. (Incorporated
             by reference to Exhibit 10.18 of Integral's Current Report Form 8-K dated June 17,2005 (filed June 23,
             2005).)

10.20        Patent License Agreement between the Company and Heatron, Inc. dated March 17, 2006.
             (Incorporated by reference to Exhibit 10.20 of Integral's Current Report Form 8-K dated March 17,
             2006 (filed April 11, 2006).)

10.21        Patent License Agreement between the Company and Jasper Rubber Products, Inc. dated August 25,
             2006. (Incorporated by reference to Exhibit 10.21 of Integral's Current Report Form 8-K dated August
             25, 2006 (filed September 19, 2006).)

14.1         Code of Ethics adopted September 20, 2004. (Incorporated by reference to Exhibit 14.1 of Integral's
             annual report on Form 10-KSB for the period ended June 30, 2004.)

21.4         List of Subsidiaries. (Incorporated by reference to Exhibit 21.4 of Integral's annual report on Form 10
             KSB for the period ended June 30, 2004.)

31.1         Section 302 Certification by the Corporation's Chief Executive Officer.  (Filed herewith).

31.2         Section 302 Certification by the Corporation's Chief Financial Officer.  (Filed herewith).

32.1         Section 906 Certification by the Corporation's Chief Executive Officer.  (Filed herewith).

32.2         Section 906 Certification by the Corporation's Chief Financial Officer.  (Filed herewith).
</TABLE>