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

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

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

| Large accelerated filer [   ]                                            | Accelerated Filer [   ] |
|-----------------------------------------------------------------------------------------|----------------------------------------|
| Non-accelerated filer [   ](Do not check if a smaller reporting company) | Smaller reporting company [X]          |

----

----

Financial

----

| Financial Statement                                                            |   |
|--------------------------------------------------------------------------------|--------|
| Consolidated Balance Sheet                                                     | F-1    |
| Statement of Operations                                                        | F-2    |
| Statement of Stockholders' Equity                                              | F-3    |
| Statement of Cash Flows                                                        | F-5    |
| Notes to Financial Statement                                                   | F-6    |
|     Organization and Summary of Significant Accounting Policies | F-6    |
|     Acquisitions                                                | F-9    |
|     Property, Plant and Equipment                               | F-10   |
|     Operating Leases                                            | F-10   |
|     Related Party Transactions                                  | F-11   |
|     Intangible Assets                                           | F-12   |
|     Earnings (Loss) Per Share                                   | F-12   |
|     Income Taxes                                                | F-13   |
|     Contractual Obligations                                     | F-14   |
|     Employee Stock Plan                                         | F-15   |
|     New Accounting Pronouncements                               | F-16   |

----

Consolidated

|                                                          |   | 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 |   |

----

Comparative

|                                          |   | 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 |   |

----

Comparative

|                                                            |   |          |       |   |             |   |   | 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 | ) |

----

Comparative

|                                                                 |   | 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 |   |

----

Notes

| 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 | % |

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|                                         |   | 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 | % |

| 9. | Contractual Obligations |
|----|-------------------------|

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| 10. | Employee Stock Plan |
|-----|---------------------|

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|                     |   | 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. | Filing Date | Reg. No.  | Grant Date | 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 PATENTContinuous 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)                                                    | 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                                               | 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              |
|                                                                                                          |           |     |            |           |                                                                                                                                                                                                                                 |
|  US PATENTCanister for Aqueous Gel Explosive Primer                                                      |           |     |  3,409,486 |  11/05/68 | REGISTEREDOWNER:  UTeC (Gulf Oil Corporation)                        IR Slurry Patent - EXPIRED              |
|                                                                                                          |           |     |            |           |                                                                                                                                                                                                                                 |
|                                                                                                          |           |     |  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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