----

----

| UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
|--------------------------------------------------|

| Washington, D.C. |
|------------------|

|                                                          |                              |
|---------------------------------------------------------------|-----------------------------------|
| NEVADA                                                        | 20-5936198                        |
| (State or other jurisdiction of incorporation ororganization) | (IRS Employer Identification No.) |

|                                                                 |                        |
|----------------------------------------------------------------------|-----------------------------|
| Large accelerated filer o                                            | Accelerated Filer o         |
| Non-accelerated filer o(Do not check if a smaller reporting company) | Smaller reporting company x |

----

----

----

|                                                        |   |   |
|-------------------------------------------------------------|--------|--------|
| Financial Statement                                         |   |   |
|                                                        |   |   |
| Consolidated Balance Sheet                                  |   | F-1    |
| Statement of Operations                                     |   | F-2    |
| Statement of Stockholders’ Equity                     |   | F-3    |
| Statement of Cash Flows                                     |   | F-4    |
|                                                        |   |   |
| Notes to Financial Statement                                |   |   |
|                                                        |   |   |
| Organization and Summary of Significant Accounting Policies |   | F-5    |
| Acquisitions                                                |   | F-8    |
| Property, Plant and Equipment                               |   | F-9    |
| Operating Leases                                            |   | F-10   |
| Related Party Transactions                                  |   | F-10   |
| Intangible Assets                                           |   | F-11   |
| Earnings (Loss) Per Share                                   |   | F-11   |
| Income Taxes                                                |   | F-11   |
| Contractual Obligations                                     |   | F-13   |
| Employee Stock Plan                                         |   | F-14   |
| New Accounting Pronouncements                               |   | F-15   |

----

| UTEC Inc.                                                                  |                                                          |   |            |      |   |   |
|----------------------------------------------------------------------------|---------------------------------------------------------------|--------|-----------------|-----------|--------|--------|
| Consolidated Balance sheet                                                 |                                                          |   |            |      |   |   |
| As of June 30, 2008 (unaudited) and December 31, 2007                      |                                                          |   |            |      |   |   |
|                                                                       |                                                          |   | 2008(unaudited) |      |   | 2007   |
| ASSETS                                                                     |                                                          |   |            |      |   |   |
| Current Assets                                                             |                                                          |   |            |      |   |   |
|                                                                       | Cash and cash equivalents                                     |   | $               | 100       |   |   | $ | 89,377 |   |
|                                                                       | Accounts receivables                                          |   |            | 243,809   |   |   |   | 52,415 |   |
|                                                                       | Inventory                                                     |   |            | 153,808   |   |   |   | 59,440 |   |
|                                                                       | Prepaid expenses                                              |   |            | 17,749    |   |   |   | 6,115 |   |
|                                                                       | Deferred Tax Asset (Note 8)                                   |   |            | 9,900     |   |   |   | 14,300 |   |
|                                                                       | Total Current Assets                                          |   |            | 425,366   |   |   |   | 221,647 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
|                                                                       | Prepaid Ground Lease (Note 5)                                 |   |            | 58,950    |   |   |   | 64,300 |   |
|                                                                       | Intangible Assets, net (Note 6)                               |   |            | 1,092,171 |   |   |   | 1,127,250 |   |
|                                                                       | Property, plant & equipment, net (Note 3)                 |   |            | 685,791   |   |   |   | 694,455 |   |
|                                                                       | Deferred Tax Asset (Note 8)                                   |   |            | 137,400   |   |   |   | 105,600 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
| Total assets                                                               |                                                          | $      | 2,399,678       |      |   | $      | 2,213,252 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
| LIABILITIES                                                                |                                                          |   |            |      |   |   |   |   |
| Current liabilities                                                        |                                                          |   |            |      |   |   |   |   |
|                                                                       | Accounts payable and accrued liabilities                      |   | $               | 336,181   |   |   | $ | 247,308 |   |
|                                                                       | Amounts payable to related parties                            |   |            | 150,664   |   |   |   | 115,062 |   |
|                                                                       | Short term note to related parties                            |   |            | 191,000   |   |   |   | - |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
|                                                                       |       Total Current Liabilities |   |            | 677,845   |   |   |   | 362,370 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                 |                                                          |   |            |      |   |   |   |   |
|                                                                       | Authorized:                                                   |   |            |      |   |   |   |   |   |
|                                                                       | 74,000,000 common shares, par value of $0.001 per share       |   |            |      |   |   |   |   |   |
|                                                                       | Issued and outstanding:                                       |   |            |      |   |   |   |   |   |
|                                                                       | 51,968,159 at June 30, 2008                                   |   |            | 51,968    |   |   |   |   |   |
|                                                                       | 53,756,159 at December 31, 2007                               |   |            |      |   |   |   | 53,756 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
|                                                                       | 1,000,000 preferred shares, par value of $0.001 per share     |   |            |      |   |   |   |   |   |
|                                                                       | Issued and outstanding:                                       |   |            |      |   |   |   |   |   |
|                                                                       | 42,013 at June 30, 2008                                       |   |            | 42        |   |   |   |   |   |
|                                                                       | 42,013 at December 31, 2007                                   |   |            |      |   |   |   | 42 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
|                                                                       | Additional paid in capital                                    |   |            | 2,085,013 |   |   |   | 2,116,376 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
|                                                                       | Retained earnings (deficit)                                   |   |            | (415,190  | )      |   |   | (319,292 | ) |
| Total Stockholders’ Equity                                           |                                                          |   | 1,721,833       |      |   |   | 1,850,882 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
| Total liabilities and stockholders’ equity                           |                                                          | $      | 2,399,678       |      |   | $      | 2,213,252 |   |
|                                                                       |                                                          |   |            |      |   |   |   |   |   |
| The accompanying notes are an integral part of these financial statements. |                                                          |   |            |      |   |

  

----

Comparative Consolidated Statement of Operations

|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |
|--------------------------------------------------------------------|-----------------------------------------------|--------|--------------------------------|-----------|--------|----------------------------------|------------|----------|-----------------------|--------|------------|-----------------------|--------|
|                                                               |                                          |   | Six-month period ended June 30 |      |   | Three-month period ended June 30 |       |
|                                                               |                                          |   | 2008 (unaudited)          |      |   | 2007 (unaudited)            |       |     | 2008 (unaudited) |   |       | 2007 (unaudited) |   |
| Revenue                                                            |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |
|                                                               | Service revenue                               |   | $                              | 528,564   |   |                             | $          | 477,025  |                  |   | $          | 298,898               |   |   | $ | 273,834 |   |
|                                                               | Product sales                                 |   |                           | 538,502   |   |                             |       | 376,918  |                  |   |       | -                     |   |   |   | 357,120 |   |
|                                                               | Total Sales                                   |   |                           | 1,067,066 |   |                             |       | 853,943  |                  |   |       | 298,898               |   |   |   | 630,954 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               | Cost of Sales                                 |   |                           | (273,782  | )      |                             |       | (153,175 | )                     |   |       | -                     |   |   |   | (153,175 | ) |
|                                                               | Gross profit                                  |   |                           | 793,284   |   |                             |       | 700,768  |                  |   |       | 298,898               |   |   |   | 477,779 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
| Operating Expenses                                                 |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |
|                                                               | General and administrative expense            |   |                           | 355,949   |   |                             |       | 260,536  |                  |   |       | 246,107               |   |   |   | 157,731 |   |
|                                                               | Selling expense                               |   |                           | 142,701   |   |                             |       | 47,151   |                  |   |       | 87,309                |   |   |   | 19,586 |   |
|                                                               | Research and development expense              |   |                           | 417,931   |   |                             |       | 422,722  |                  |   |       | 207,057               |   |   |   | 181,570 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               | Total operating expenses                      |   |                           | 916,582   |   |                             |       | 730,409  |                  |   |       | 540,474               |   |   |   | 358,887 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               | Income (loss) before income taxes             |   |                           | (123,298  | )      |                             |       | (29,641  | )                     |   |       | (241,576              | )      |   |   | 118,892 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
| Provision for income taxes (benefit)                               |                                          |   | (27,400                        | )         |   |                             | 3,896      |     |                  |   | (82,400    | )                     |   |   | 55,396 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               | Net loss                                      |   | $                              | (95,898   | )      |                             | $          | (33,537  | )                     |   | $          | 159,176               | )      |   | $ | 63,496 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
|                                                               | Earnings (loss) per share - basic and diluted |   | $                              | (0.002    | )      |                             | $          | (0.001   | )                     |   | $          | (0.003                | )      |   | $ | 0.001 |   |
|                                                               |                                          |   |                           |      |   |                             |       |     |                  |   |       |                  |   |   |   |   |   |
| Weighted average number of common shares outstanding as of June 30 |                                          |   | 52,826,939                     |      |   |                             | 52,072,254 |     |                  |   | 51,968,159 |                  |   |   | 53,706,194 |   |

----

omparative Consolidated Statements of Stockholders’ Equity

|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
|--------------------------------------------------------------------|--------|--------|--------------------|--------|--------|------------------|--------|--------|-----------|--------|--------|---------------------------------|--------|--------|----------------------------------|--------|
|                                                               |   | 2007   |
|                                                               |   |   | Common shares |   |   | Preferred Shares |   |   | Par value |   |   | Additional Paid-in Capital      |   |   | Retained Earnings (Deficit) |   |
| Balance January 1                                                  |   |   | 25,917,159         |   |   | 22,013           |   | $      | 25,939    |   | $      | -                               |   | $      | (33,951                          | )      |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Common shares issued for purchase of ESI at $0.001                 |   |   | 22,500,000         |   |   |             |   |   | 22,500    |   |   | 1,879,439                       |   |   |                             |   |
| Common shares issued for finders fee at $0.001                     |   |   | 2,525,000          |   |   |             |   |   | 2,525     |   |   |                            |   |   |                             |   |
| Preferred shares issued for purchase of ESI at $0.001              |   |   |               |   |   | 20,000           |   |   | 20        |   |   |                            |   |   |                             |   |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Common shares issued pursuant to employee stock grants             |   |   | 1,914,000          |   |   |             |   |   | 1,914     |   |   | 105,487                         |   |   |                             |   |
| Common shares issued for patent rights and contractual services    |   |   | 850,000            |   |   |             |   |   | 850       |   |   | 70,750                          |   |   |                             |   |
| Common shares issue for consulting services                        |   |   | 50,000             |   |   |             |   |   | 50        |   |   | 22,450                          |   |   |                             |   |
| Capital contribution by shareholder for consulting services        |   |   |               |   |   |             |   |   |      |   |   | 38,250                          |   |   |                             |   |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Net Loss for the twelve months ended December 31, 2007             |   |   |               |   |   |             |   |   | -         |   |   | -                               |   |   | (285,341                         | )      |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Balance, December 31, 2007                                         |   |   | 53,756,159         |   |   | 42,013           |   | $      | 53,798    |   | $      | 2,116,376                       |   | $      | (319,292                         | )      |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
|                                                               |   | 2008   |
|                                                               |   |   | Common shares |   |   | Preferred Shares |   |   | Par value |   |   | Additional Paid-in Capital |   |   | Retained Earnings (Deficit)      |   |
| Balance January 1, 2008                                            |   |   | 53,756,159         |   |   | 42,013           |   | $      | 53,798    |   | $      | 2,116,376                       |   | $      | (319,292                         | )      |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Cancel shares issued pursuant to employee stock grants (unaudited) |   |   | (1,898,000         | )      |   |             |   |   | (1,914    | )      |   | (105,487                        | )      |   |                             |   |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Sale of outstanding non-restricted stock (unaudited)               |   |   | 110,000            |   |   |             |   |   | 126       |   |   | 41,874                          |   |   |                             |   |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Options issue pursuant to employee option plan (unaudited)         |   |   |               |   |   |             |   |   |      |   |   | 32,250                          |   |   |                             |   |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Net Loss for the six months ended June 30 (unaudited)              |   |   |               |   |   |             |   |   |      |   |   |                            |   |   | (95,898                          | )      |
|                                                               |   |   |               |   |   |             |   |   |      |   |   |                            |   |   |                             |   |
| Balance, June 30, 2008                                             |   |   | 51,968,159         |   |   | 42,013           |   | $      | 52,010    |   | $      | 2,085,013                       |   | $      | (415,190                         | )      |

----

omparative Consolidated Statements of Cash Flows for the six-month period ended June 30

|                                                                 |                                                        |   | 2008(unaudited) |     |   | 2007(unaudited) |   |
|----------------------------------------------------------------------|-------------------------------------------------------------|--------|-----------------|----------|--------|-----------------|--------|
| Cash flows from operating activities:                                |                                                        |   |            |     |   |            |
|                                                                 | Net Income (loss)                                           |   | $               | (95,898  | )      |            | $      | (33,537 | ) |
|                                                                 | Adjustments to reconcile net income (loss) to net cash      |   |            |     |   |            |   |   |   |
|                                                                 | provided by operating activities:                           |   |            |     |   |            |   |   |   |
|                                                                 | Depreciation                                                |   |            | 21,364   |   |            |   | 21,365 |   |
|                                                                 | Amortization of intangibles                                 |   |            | 40,429   |   |            |   | 39,849 |   |
|                                                                 | Employee option grants issued                               |   |            | 32,250   |   |            |   |   |   |
|                                                                 | Employee stock grants issued                                |   |            | -        |   |            |   | 54,659 |   |
|                                                                 | Employee stock grants issued (cancellation)                 |   |            | (107,401 | )      |            |   |   |   |
|                                                                 | Deferred tax benefit                                        |   |            | (27,400  | )      |            |   | 3,896 |   |
|                                                                 | Accounts receivables                                        |   |            | (191,394 | )      |            |   | (416,547 | ) |
|                                                                 | Inventories                                                 |   |            | (94,368  | )      |            |   | - |   |
|                                                                 | Prepaid Expenses                                            |   |            | (11,634  | )      |            |   | - |   |
|                                                                 | Accounts payable and accrued liabilities                    |   |            | 124,475  |   |            |   | 169,273 |   |
|                                                                 | Total cash flows from operating activities                  |   |            | (309,577 | )      |            |   | (161,042 | ) |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
| Cash flows from investing activities                                 |                                                        |   |            |     |   |            |   |   |
|                                                                 | Asset construction in progress                              |   |            | (12,700  | )      |            |   | - |   |
|                                                                 | Cash in UTEC Corporation when contributed to UTEC Inc.      |   |            | -        |   |            |   | 15,000 |   |
|                                                                 | Total cash flow from investing activities                   |   |            | (12,700  | )      |            |   | 15,000 |   |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
| Cash flows from financing activities                                 |                                                        |   |            |     |   |            |   |   |
|                                                                 | Proceeds from line-of-credit from related party             |   |            | 191,000  |   |            |   | 151,998 |   |
|                                                                 | Repayment on line-of-credit to related party                |   |            | -        |   |            |   | - |   |
|                                                                 | Sale of Common Stock                                        |   |            | 42,000   |   |            |   |   |   |
|                                                                 | Total cash flows from financing activities                  |   |            | 233,000  |   |            |   | 151,998 |   |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
| Increase in cash and equivalents                                     |                                                        |   | (89,277         | )        |   |            | 5,956  |   |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
| Cash and cash equivalents, beginning of period                       |                                                        |   | 89,377          |     |   | $               | 20,100 |   |
| Cash and cash equivalents, end of period                             |                                                        | $      | 100             |     |   | $               | 26,056 |   |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
| Supplemental Disclosure                                              |                                                        |   |            |     |   |            |   |   |
|                                                                 | Income taxes paid                                           |   | $               | -        |   |            | $      | - |   |
|                                                                 | Interest paid                                               |   | $               | -        |   |            | $      | 558 |   |
| Supplemental Schedule of Noncash Investing and Financing Activities: |                                                        |   |            |     |   |            |   |   |
|                                                                 | Assets acquired and liabilities assumed in the acquisition: |   |            |     |   |            |   |   |   |
|                                                                 | Accounts receivable                                         |   | $               | -        |   |            | $      | 42,488 |   |
|                                                                 | Property and equipment                                      |   | $               | -        |   |            | $      | 737,185 |   |
|                                                                 | Intangible assets                                           |   | $               | -        |   |            | $      | 1,200,000 |   |
|                                                                 | Accounts payable and accrued liabilities                    |   | $               | -        |   |            | $      | (90,189 | ) |
|                                                                 |                                                        |   |            |     |   |            |   |   |   |
|                                                                 | Common stock issued in exchange for patent rights           |   | $               | -        |   |            | $      | 71,600 |   |

----

otes to Consolidated Financial Statements

1. Organization and Summary of Significant Accounting Policies

----

----

----

2. Acquisitions

|                                     |   |   |      |
|------------------------------------------|--------|--------|-----------|
| Current assets                           |   | $      | 57,488    |   |
| Property, plant and equipment            |   |   | 737,185   |   |
| Identifiable intangible and other assets |   |   | 1,200,000 |   |
| Total assets acquired                    |   |   | 1,994,673 |   |
|                                     |   |   |      |   |
| Current liabilities                      |   |   | 90,189    |   |
|                                     |   |   |      |   |
| Net assets acquired                      |   | $      | 1,904,484 |   |
| Cash acquired                            |   |   | 15,000    |   |
|                                     |   |   |      |   |
| Purchase price, net of cash acquired     |   | $      | 1,889,484 |   |

----

3. Property, Plant and Equipment

|                                 |   |        |          |   |   |   |
|--------------------------------------|--------|-------------|---------------|--------|--------|--------|
|                                 |   | 2008        |          |   | 2007   |   |
|                                 |   | (unaudited) |          |   |   |   |
|                                 |   |        |          |   |   |   |
| Buildings and leasehold improvements |   | $           | 501,500       |   |   | $      | 501,500 |   |
| Machinery and equipment              |   |        | 195,026       |   |   |   | 195,026 |   |
| Transportation equipment             |   |        | 24,538        |   |   |   | 24,538 |   |
| Furniture and fixtures               |   |        | 16,121        |   |   |   | 16,121 |   |
| Constructed asset in progress        |   |        | 12,700        |   |   |   | 0 |   |
|                                 |   |        | 749,885       |   |   |   | 737,185 |   |
| Less accumulated depreciation        |   |        |  64,094  |   |   |   | 42,730 |   |
|                                 |   | $           |  685,791 |   |   | $      |   694,455 |   |

----

4. Operating Leases

5. Related Party Transactions

----

6. Intangible Assets

|                     |   |        |      |   |   |   |
|--------------------------|--------|-------------|-----------|--------|--------|--------|
|                     |   | 2008        |      |   | 2007   |   |
|                     |   | (unaudited) |      |   |   |   |
|                     |   |        |      |   |   |   |
| Patent rights            |   |        | 71,600    |   |   |   | 71,600 |   |
| Customer relationships   |   |        | 1,125,000 |   |   |   | 1,125,000 |   |
| Accumulated amortization |   |        | (104,429  | )      |   |   | (69,350 | ) |
|                     |   | $           | 1,092,171 |   |   | $      | 1,127,250 |   |

| 2008   |   | $      | 70,400 |   |
|--------|--------|--------|--------|--------|
|   |   |   |   |   |
| 2009   |   |   | 70,400 |   |
|   |   |   |   |   |
| 2010   |   |   | 70,400 |   |
|   |   |   |   |   |
| 2011   |   |   | 70,400 |   |
|   |   |   |   |   |
| 2012   |   |   | 70,400 |   |

7. Earnings (Loss) Per Share

8. Income Taxes

|               |   | Six months (unaudited) |    |   | Three months (unaudited) |
|--------------------|--------|------------------------|---------|--------|--------------------------|
|               |   | 2008                   |    |   | 2007                     |   |   | 2008 |   |   | 2007 |   |
| Current            |   | $                      | (0      | )      |                     | $ | 24,696 |   |   | $ | (0 | ) |   | $ | 24,696 |   |
| Deferred (benefit) |   |                   | (27,400 | )      |                     |   | (20,800 | ) |   |   | (82,400 | ) |   |   | 30,700 |   |
| Total              |   | $                      | (27,400 | )      |                     | $ | 3,896 |   |   | $ | (82,400 | ) |   | $ | 55,396 |   |

----

|                                         |   | 2008        |     |   | 2007   |   |
|----------------------------------------------|--------|-------------|----------|--------|--------|--------|
|                                         |   | (unaudited) |     |   |   |   |
|                                         |   |        |     |   |   |   |
| Accrued liabilities not currently deductible |   | $           | (16,600  | )      |   | $      | (16,600 | ) |
| Deferred stock compensation                  |   |        | (12,200  | )      |   |   | (40,800 | ) |
| Deductible prepaid insurance                 |   |        | 6,700    |   |   |   | 2,300 |   |
| Net operating loss carryforwards             |   |        | (125,200 | )      |   |   | (64,800 | ) |
| Net Deferred Tax Asset                       |   | $           | (147,300 | )      |   | $      | (119,900 | ) |

|                                         |   | Six months       |    |
|----------------------------------------------|--------|------------------|---------|
|                                         |   | 2008 (unaudited) |    |   | 2007 (unaudited) |   |
| Computed expected income taxes               |   | $                | (47,400 | ) |   |   | (34.0 | )% |   | $ | (10,100 | ) |   |   | (34.1 | )% |
| Nondeductible expenses                       |   |             | 22,900  |   |   |   | 16.4 |   |   |   | 25,200 |   |   |   | 85.0 |   |
| Other, principally state taxes               |   |             | (2,900  | ) |   |   | (2.1 | ) |   |   | (12,900 | ) |   |   | (43.5 | ) |
| Provision (reversal) for valuation allowance |   |             | 0       |   |   |   | (0.0 | ) |   |   | 1,696 |   |   |   | 5.7 |   |
|                                         |   | $                | (27,400 | ) |   |   | (19.6 | )% |   | $ | 3,896 |   |   |   | 13.1 | % |

|                                         |   | Three months     |
|----------------------------------------------|--------|------------------|
|                                         |   | 2008 (unaudited) |   |   | 2007 (unaudited) |   |
| Computed expected income taxes               |   | $                | (87,600 | ) |   |   | (34.0 | )% |   | $ | 40,400 |   |   |   | 34.0 | % |
| Nondeductible expenses                       |   |             | 13,900 |   |   |   | 34.0 |   |   |   | 9,200 |   |   |   | 34.2 |   |
| Other, principally state taxes               |   |             | (8,700 | ) |   |   | 3.4 |   |   |   | 5,796 |   |   |   | 5.0 |   |
| Provision (reversal) for valuation allowance |   |             | 0 |   |   |   | (0.0 | ) |   |   | 0 |   |   |   | (0.0 | ) |
|                                         |   | $                | (82,400 | ) |   |   | 3.4 | % |   | $ | 55,396 |   |   |   | 73.2 | % |

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9. Contractual Obligations

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10. Employee Stock Plan

|                     |  FYE 2007 |
|--------------------------|----------------|
| Expected volatility      |  71.44%   |
| Expected dividends       |  0.00     |
| Expected term (in years) |  3.5      |
| Risk-free rate           |  2.67%    |

----

|                          |   |   |        |         |   |   |                                 |   |
|-------------------------------|--------|--------|-------------|--------------|--------|--------|--------------------------------------|--------|
|   Non-vested Options     |   |   |        | Options(000) |   |   | Weighted-AverageGrant-DateFair Value |   |
|                          |   |   |        |         |   |   |                                 |   |
| Non-vested at January 1, 2008 |   |   |  0     |         |   | $      | 0.00                                 |   |
|                          |   |   |        |         |   |   |                                 |   |
| Granted                       |   |   |  1,914 |         |   |   |  0.236                          |   |
|                          |   |   |        |         |   |   |                                 |   |
| Vested                        |   |   |  1,914 |         |   |   |  0.236                          |   |
|                          |   |   |        |         |   |   |                                 |   |
| Forfeited                     |   |   |  0     |         |   |   |  0.00                           |   |
|                          |   |   |        |         |   |   |                                 |   |
| Non-vested at March 31, 2008  |   |   |  0     |         |   | $      | 0.00                                 |   |

11. New Accounting Pronouncements

----

----

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|                                                                                                    |       |       |      |      |   |                                                                                                                                                                                                                 |
|---------------------------------------------------------------------------------------------------------|------------|------------|-----------|-----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     DESCRIPTION                                                                     | Serial No. | FilingDate | Reg. No.  | GrantDate |   | Status/Comments                                                                                                                                                                                                      |
|                                                                                                    |       |       |      |      |   |                                                                                                                                                                                                                 |
|  US PATENTExplosive Compositions                                                                   | 06/844,459 | 03/26/86   | 4,718,954 | 01/12/88  |   | EXPIREDOWNER:  UTeC Corporation, L.L.C.No more maintenance fees due.Responsible Attorney:  Mary M. Lee                                                                                                     |
|  FOREIGN PATENTCanadaContinuous Perimeter Explosive                                                | 2,341,942  | 03/22/01   | 2,341,942 | 05/04/04  |   |  ISSUEDOWNER:  UTeC Corporation, L.L.C.Corresponds to 4580-074 & 075Annuities Due March 22.Expires 03/22/21.Foreign Associate:  Ridout & MaybeeResponsible Attorney (U.S.):  Mary M. Lee |
|  US PATENTExplosive Primer                                                                         | 08/687,861 | 07/26/96   | 5,763,816 | 06/09/98  |   |  ISSUEDOWNER:  UTeC Corporation, L.L.C.Second Maintenance Fee Due 12/09/09Expires 07/26/16Responsible Attorney:  Mary M. Lee                                                                          |
|  US PATENT Continuous Explosive Charge Assembly and Method for Loading Same in an Elongated Cavity | 09/638,131 | 08/11/00   | 6,564,686 | 05/20/03  |   |  ISSUEDOWNER:  UTeC Corporation, L.L.C.1st Maintenance Fee Due 11/20/06Expires 08/11/20 (PTA=0)(Continuation filed - See file no. 4580-081)Responsible Attorney:  Mary M. Lee                         |

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| US PATENT(Divisional)Continuous Explosive Charge Assembly and Method for Loading Same in an Elongated Cavity | 10/286,322       | 10/31/02        | 6,722,251        | 04/20/04        | ISSUEDOWNER:  UTeC Corporation, L.L.C.Divisional of 4580-0751st Maintenance Fee Due 10/20/07Expires 08/11/20 (PTA=0)Responsible Attorney:  Mary M. Lee                                                                                                                          |
|--------------------------------------------------------------------------------------------------------------|------------------|-----------------|------------------|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  US PATENTAlternative Use of Military Propellants as Novel Blasting Agents                              | 08/383,526       | 02/03/95        | 5,608,184        | 03/04/97        |  ISSUEDOWNER:  UTeC Corporation, L.L.C.#3 Maintenance Fee Due 09/04/07Expires 02/03/15Possible Infringement by TPL in arbitration.(see file no. 4580-095).Responsible attorney: Mary M. Lee                                                                                     |
|                                                                                                         |             |            |             |            |                                                                                                                                                                                                                                                                                      |
| US PATENTBeneficial Use of Energy-Containing Wastes                                                          |  08/353,950 |   12/12/94 |   5,612,507 |   03/18/97 | EXPIREDCO-OWNED:  United Technologies Corp. & UTeC Corporation, L.L.C.Expired 03-19-01 for nonpayment of first maintenance fee.2nd maintenance fee not paid.Responsible attorney:  UTCReceived info from UTC attorney George Romanik 07/01/05 regarding nonpayment of fees. |
|                                                                                                         |             |            |             |            |                                                                                                                                                                                                                                                                                      |
| US PATENTBeneficial Use of Energy-Containing Wastes                                                          | 08/249,328  | 05/26/94        | 5,536,897        | 07/16/96        | EXPIREDCO-OWNED:  United Technologies Corp. & UTeC Corporation, L.L.C.Expired 7-17-00 for nonpayment of first maintenance fee.2nd maintenance fee not paid.Responsible attorney:  UTCReceived info from UTC attorney George Romanik 07/01/05 regarding nonpayment of fees.  |

----

| US PATENTDevelopment of New High Energy Blasting Products Using Demilitarized Ammonium Picrate               | 09/401,627            | 09/22/99        | 6,214,140        | 04/10/01        | ISSUEDOWNER:  UTeC Corporation, L.L.C.#2 Maintenance Fee Due 10/10/07Expires 09/22/19 (PTA=0)Responsible Attorney: Mary M. Lee                                                              |
|--------------------------------------------------------------------------------------------------------------|-----------------------|-----------------|------------------|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| INTERNATIONAL PATENTAlternative Use of Military Propellants as Novel Blasting Agents                         |   PCT/US96/01284 |            |             |            | CLOSEDCorresponds to 5,608,184.Chinese national application filed and then abandoned.                                                                                                            |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
|   U.S. Trademark“UTEC”                                                                      |   78/348,387     |   01/06/04 |   3,077,482 |   04/04/06 | REGISTEREDOWNER:  UTeC Corporation, L.L.C.8&15 Due 04/04/12Responsible Attorney:  Mary M. Lee                                                                                      |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| US PATENT(Divisional)Continuous Explosive Charge Assembly and Method for Loading Same in an Elongated Cavity | 10/793,294            | 03/04/04        |             |            | PENDINGOWNER:  UTeC Corporation, L.L.C.Division of 4580-075 & 081Appeal No. 2006-1396.Appeal briefing completed; awaiting decision by the Board.Responsible Attorney:  Mary M. Lee |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| US PATENTMethod of Manufacturing A Cap Sensitive Aqueous Gel Suspension Explosive                            |                  |            |   3,962,001 |   06/08/76 |   REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)Detagel Patent - EXPIRED                                                                                                                |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| US PATENTWater Resistant Extrudable Aqueous Gel Blasting Agent and Simplified Method of Manufacture          |                  |            |   4,213,809 |   07/22/80 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)600 Patent - EXPIRED                                                                                                                           |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| US PATENTProcess for Manufacturing Gas Entrained Aqueous Gel Explosive                                       |                  |            |   3,783,053 |   01/01/74 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)IR Slurry Patent - EXPIRED                                                                                                                     |
|                                                                                                         |                  |            |             |            |                                                                                                                                                                                             |
| US PATENTMethod of Forming in Place a Gelled Suspension Explosive                                            |                  |            |   3,676,236 |   07/11/72 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)IR Slurry Patent - EXPIRED                                                                                                                     |

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| US PATENT                                                                                                                                |   |   |             |            |                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------|-----------------|-------------------------------------------------------------------------------------------|
|   Thickened Aqueous AmmoniumNitrate - HexamethylenetetramineExplosive Containing AmmoniumPerchlorate as Sensitivity Stabilizer |   |   | 3,409,486        |   11/05/68 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)IR Slurry Patent - EXPIRED              |
|                                                                                                                                     |   |   |             |            |                                                                                      |
| US PATENTCanister for Aqueous Gel Explosive Primer                                                                                       |   |   |   4,126,239 |   11/01/78 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)Detagel Booster Bottle Patent - EXPIRED |

----

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|  Exhibit No. |  Document                              |  Location |
|-------------------|---------------------------------------------|----------------|
|  31          |  Rule 13a-41(a)/15d-14(a) Certificates |  Included |
|  32          |  Section 1350 Certifications           |  Included |

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