UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,
D.C.  FORM 10-Q (Mark One) X QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the
quarterly period ended June 30, 2008  TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For
the transition period from to Commission
file number 333-141875 UTEC, INC. (Exact
name of Registrant as specified in its charter)  NEVADA
20-5936198(State or other jurisdiction of incorporation or
organization)
(IRS Employer Identification No.)  2420 Springer Drive,
Suite 110 Norman, OK
73069(Address of principal executive offices)  (620) 783-1361(Registrants telephone number, including area
code) (Former name, former address and former fiscal year, if changed
since last report) Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes . [ X]  No .  [  ] Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in rule
12b-2 of the Exchange Act.  Large
accelerated filer [
 ] Accelerated
Filer [  ] Non-accelerated
filer [
 ] (Do not check if a smaller reporting
company) Smaller
reporting company [X]  Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes
 [   ]  No [X]  APPLICABLE ONLY TO CORPORATE ISSUERS As of August 8, 2008, the Company had 51,968,159 issued and
outstanding shares of its common stock.        PART I  FINANCIAL
INFORMATION The accompanying interim
unaudited financial statements of UTEC, Inc. (a Nevada corporation) are
condensed and, therefore, do not include all disclosures normally required by
accounting principles generally accepted in the United States of America. These
statements should be read in conjunction with the Company's most recent annual
financial statements for the year ended December 31, 2007 included in a Form 10
filed with the U.S. Securities and Exchange Commission (SEC) on May 14, 2008.
In the opinion of management, all adjustments necessary for a fair presentation
have been included in the accompanying interim financial statements and consist
of only normal recurring adjustments. The results of operations presented in the
accompanying interim financial statements for the six months ended June 30, 2008
are not necessarily indicative of the operating results that may be expected for
the full year ending December 31, 2008.            UTEC, INC.  Comparative Financial Statements and accompanying Notes  As of and for the six months Ended June 30, 2008        Table
of Contents  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 1 Acquisitions 4 Property,
Plant and Equipment 5 Operating
Leases 6 Related
Party Transactions 6 Intangible
Assets 7 Earnings
(Loss) Per Share 8 Income
Taxes 8 Contractual
Obligations 9 Employee
Stock Plan 11 New
Accounting Pronouncements 12


UTEC
Inc.Consolidated Balance
sheetAs of June 30, 2008
(unaudited) and December 31, 20072008
(unaudited)

2007ASSETSCurrent AssetsCash and cash
equivalents
$
           100

$
      89,377Accounts receivables
243,809

52,415Inventory
153,808

59,440Prepaid expenses
17,749

6,115Deferred Tax Asset (Note
8)
9,900

14,300Total Current
Assets
425,366

221,647Prepaid Ground Lease (Note
5)
58,950

64,300Intangible Assets, net (Note
6)
1,092,171

1,127,250Property, plant &
equipment, net (Note 3)
685,791

694,455Deferred Tax Asset (Note
8)
137,400

105,600Total assets
$   2,399,678

$  2,213,252LIABILITIESCurrent liabilitiesAccounts payable and accrued
liabilities
$
     336,181

$
    247,308Amounts payable to related
parties
150,664

115,062Short term note to related
parties
191,000

-Total
Current Liabilities
677,845

362,370STOCKHOLDERS'
EQUITYAuthorized:74,000,000 common shares, par
value of $0.001 per shareIssued
and outstanding:51,968,159 at
June 30, 2008
51,96853,756,159 at
December 31, 2007


53,7561,000,000 preferred shares, par
value of $0.001 per shareIssued and
outstanding:42,013 at
June 30, 2008
4242,013 at
December 31, 2007


42Additional paid in
capital
2,085,013

2,116,376Retained earnings
(deficit)
(415,190)

(319,292)Total
Stockholders' Equity
1,721,833

1,850,882Total liabilities and
stockholders' equity
$   2,399,678

$  2,213,252The accompanying notes are an
integral part of these financial statements. F-1





UTEC
Inc.Comparative Consolidated
Statement of OperationsSix-month
period ended June 30

Three-month
period ended June 302008
(unaudited)

2007
(unaudited)

2008
(unaudited)

2007
(unaudited)RevenueService revenue
$
        528,564

$
        477,025

$
         298,898

$
         273,834Product sales
538,502

376,918

-

357,120Total Sales
1,067,066

853,943

298,898

630,954Cost of Sales
(273,782)

(153,175)

-

(153,175)Gross profit
793,284

700,768

298,898

477,779Operating ExpensesGeneral and administrative
expense
355,949

260,536

246,107

157,731Selling expense
142,701

47,151

87,309

19,586Research and development
expense
417,931

422,722

207,057

181,570Total operating expenses
916,582

730,409

540,474

358,887Income (loss) before income
taxes
(123,298)

(29,641)

(241,576)

118,892Provision for income taxes
(benefit)
(27,400)

3,896

(82,400)

55,396Net loss
$
         (95,898)

$
         (33,537)

$
        159,176)

$
           63,496Earnings
(loss) per share - basic and diluted
$
           (0.002)

$
           (0.001)

$
           (0.003)

$
            0.001Weighted average number of
common sharesoutstanding as of June
30
52,826,939

52,072,254

51,968,159

53,706,194The accompanying notes are an
integral part of these financial statements.   F-2











UTEC
Inc.Comparative Consolidated
Statements of Stockholders' Equity
for the six-month period
ended June 30, 2008 (unaudited) and
the year ended December 31,
20072007Common 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
1,879,439Common
shares issued for finders fee at $0.001
2,525,000

2,525Preferred
shares issued for purchase of ESI at $0.001

20,000
20Common
shares issued pursuant to employee stock grants
1,914,000

1,914
105,487Common
shares issued for patent rights and contractual services
850,000

850
70,750Common
shares issue for consulting services
50,000

50
22,450Capital
contribution by shareholder for consulting services



38,250Net
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)2008Common 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
41,874Options
issue pursuant to employee option plan (unaudited)



32,250Net
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)The accompanying notes are an
integral part of these financial statements.   F-3





UTEC
Inc.Comparative Consolidated
Statements of Cash Flowsfor the six-month period
ended June 302008
(unaudited)

2007
(unaudited)Cash flows from operating
activities:Net Income (loss)

$
         (95,898)

$
       (33,537)Adjustments to reconcile net
income (loss) to net cashprovided by operating
activities:Depreciation

21,364

21,365Amortization
of intangibles

40,429

39,849Employee
option grants issued

32,250Employee
stock grants issued

-

54,659Employee
stock grants issued (cancellation)
(107,401)Deferred tax
benefit

(27,400)

3,896Accounts
receivables

(191,394)

(416,547)Inventories

(94,368)

-Prepaid
Expenses

(11,634)

-Accounts
payable and accrued liabilities
124,475

169,273Total cash flows from operating
activities
(309,577)

(161,042)Cash flows from investing
activitiesAsset
construction in progress

(12,700)

-Cash in UTEC
Corporation when contributed to UTEC Inc.
-

15,000Total cash flow from investing
activities
(12,700)

15,000Cash flows from financing
activitiesProceeds from
line-of-credit from related party
191,000

151,998Repayment on
line-of-credit to related party
-

-Sale of
Common Stock

42,000Total cash flows from financing
activities
233,000

151,998Increase in cash and
equivalents

(89,277)

5,956Cash and cash equivalents,
beginning of period
89,377

$
        20,100Cash and cash equivalents, end
of period

$
              100

$
        26,056Supplemental DisclosureIncome taxes paid

$
                -

$
               -Interest paid

$
                -

$
             558Supplemental Schedule of
Noncash Investing and Financing Activities:Assets acquired and liabilities
assumed in the acquisition:Accounts
receivable

$
                -

$
        42,488Property and
equipment

$
                -

$
       737,185Intangible
assets

$
                -

$
    1,200,000Accounts
payable and accrued liabilities
$
                -

$
       (90,189)Common stock issued in exchange
for patent rights
$
                  -

$
        71,600The accompanying notes are an
integral part of these financial statements.   F-4





UTEC, INC. Notes to Consolidated
Financial Statements June 30, 2008 and
December 31, 2007  1. Organization
and Summary of Significant Accounting Policies  a) Business activity  UTEC INC., formerly
Lyon Capital Venture Corp., is a Nevada corporation organized on November 8,
1993 as a For Profit corporation for the purpose of engaging in any lawful
activity.  The Company was in the development stage through December 31,
2006, and the year ended December 31, 2007 is the first year during which the
Company is considered an operating company and is no longer in the development
stage.  On January 10, 2007 the Company purchased 100% of the shares of
UTEC Corporation, Inc for a total consideration of 22,500,000 of the companys
par value $0.001 common shares and 20,000 of the companys par value $0.001
preferred shares.  The Company also issued 2,525,000 common shares in
finders fees.  The Companys business
is to offer state of the art testing and analysis to clients worldwide.
 The Company is a leader in commercial explosives technology including
development, analysis, testing and manufacturing.  The Company operates a
chemical research and development laboratory near Riverton, Kansas, which
specializes in commercial explosives development and analysis. The Company also
operates a destructive test facility near Hallowell, Kansas, which specializes
in determining the detonating characteristics of commercial explosives.  b) Basis of
Presentation  The accompanying
financial statements and notes thereto have been prepared pursuant to the rules
and regulations of the Security and Exchange Commission.  Accordingly,
certain disclosures normally prepared in accordance with accounting principles
generally accepted in the United States have been omitted.  The
accompanying financials statements and notes thereto should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Companys 2008 Form 10 Registration Statement.  The financial
information included herein is unaudited; however, such information reflects
solely normal recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for the interim period
presented.  The results of
operation for the three and six month periods ended June 30, 2008 and 2007, are
not necessarily indicative of the results to be expected for the full year.  c) Principles of
Consolidation  The financial
statements of the Company include the accounts of the Company and its wholly
owned subsidiary, UTEC Corporation.  All intercompany accounts and
transactions have been eliminated in consolidation.   d) Cash and Cash
Equivalents  For the purpose of the
statements of cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.  The Company had $100 and $89,377cash or cash equivalents at June 30, 2008 and December 31, 2007
respectively





e) Trade Accounts
Receivable and Credit Policy  Trade accounts
receivable consist of amounts billed to customers for purchases of services and
energetic materials. The Company extends credit to customers in accordance with
normal industry standards and terms, which are typically net 30 to 45 days.
 Credit risk arises as customers default on trade accounts receivable owed
to the Company. The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is recorded. If
amounts are subsequently determined to be uncollectible, they will be charged to
operations when that determination is made.  f) Revenue
Recognition  The Company recognizes
revenue when materials are shipped or services are provided, and the customer
takes ownership and assumes risk of loss, collection of the relevant receivable
is probable, and the sales price is fixed or determinable.  The Company
records customer shipping and handling charges as revenues with the associated
costs recorded to cost of sales.   g)
Inventories  Inventories, when the
Company has them, consist of purchased materials held for resale and are carried
at the lower of cost (first-in, first-out method) or market.  h) Property, Plant
and Equipment  Property, plant and
equipment are carried at fair value for assets contributed in connection with
the acquisition, and at cost for assets acquired subsequent to the acquisition
date, less accumulated depreciation from the date of acquisition through the
balance sheet date. The Company periodically assesses the recoverability of
property, plant and equipment and evaluates such assets for impairment whenever
events or changes in circumstances indicate that the net carrying amount of an
asset may not be recoverable. Asset impairment is determined to exist if
estimated future cash flows, undiscounted and without interest charges, are less
than the net carrying amount. Depreciation expense is computed on a
straight-line basis over the estimate useful lives of the assets as follows:  Building and leasehold improvements 10-25 years Machinery and equipment 10-15 years Furniture and fixtures & transportation equipment 3-7 years  Major additions and
improvements are capitalized in the month following the month in which the
assets or improvement are deemed to be placed in service. Maintenance and
repairs are expensed as incurred. Upon disposition, the net book value is
eliminated from the accounts, with the resultant gain or loss reflected in
operations.  i) Research and
Development Costs  Research and
development costs for the development of new products and update of existing
products are expensed as incurred.  j) Income
Taxes  The
Company recognizes the tax effects of transactions in the year in which such
transactions enter into the determination of net income, regardless of when
reported for tax purposes.  Deferred taxes are provided in the financial
statements under Financial Accounting Standards Board Statement No. 109 to give
effect to the resulting temporary differences which may arise from differences
in the bases of fixed assets, depreciation methods, allowances, share-based
compensation, and start-up costs based on the income taxes expected to be
payable in future years.  k) Concentrations  The Company maintains
balances in bank accounts that, at times, exceed federally insured limits.





Management believes the
risk of loss associated with this concentration is minimal.  For the three months
ended June 30, 2008, two customers accounted for approximately 32% and 12% of
the company sales.  For the six months
ended June 30, 2008, two customers accounted for approximately 48% and 18% of
the Companys net sales, respectively.  For the three months
ended June 30, 2007, two customers accounted for approximately 60% and 16% of
the company sales.  For the six months
ended June 30, 2007, two customers accounted for approximately 44% and 24% of
the Companys net sales.  At December 31, 2007
and June 30, 2008, one customer accounted for approximately 80% and 27%
respectively of the Companys accounts receivable.  l) Estimates  Preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period.  Actual amounts may differ from those reported.  Certain significant
estimates include the fair value of the Companys intangible assets and the
related amortization period.  These estimates are discussed in further
detail at Note 6.  m) Going Concern
Assumption  The Companys group of
activities consists solely of UTeC Corporation.  The Companys business
outlook for 2008 includes continuing the second year of a five (5) year
technical services contract with Hallowell Manufacturing LLC to support the
product and manufacturing technology at the Hallowell explosives plant site. The
business plan for the Company is to add to its portfolio of intellectual
property by signing agreements with other companies with existing technology in
the materials processing business.  The Company will develop those
technologies for use in undeveloped markets. The Company also plans to expand
its material sales business which currently constitutes less than 20% of its
revenue. The Companys focus in this area will be to develop overseas sources of
raw materials for sale to companies it already does business with or in markets
where it has a presence.  For the six months ended June 30, 2008 this
number has risen to about 48% of total sales.  We expect to end the fiscal
year 2008 with the share of the total revenue in excess of last years.  n)  Intangible
Assets Acquired  Intangible assets are
accounted for in accordance with Statement of Financial Accounting Standard No.
142, Goodwill and Other Intangible Assets.  Intangible assets
acquired consist of a customer list and patent rights.  These intangible
assets are amortized over their useful lives and tested for impairment if
certain circumstances indicate and impairment may exist.  As of June 2008
the remaining amortization period is fifteen years for the customer list and
patent rights.  Intangible assets that
are amortized are tested for impairment at the asset level associated with the
lowest level of cash flows.  An impairment exists if the carrying value of
the asset is i) not recoverable (the carrying value of the asset is greater than
the sum of the undiscounted cash flows) and ii) is greater than its fair
value.  o)  Advertising
Costs





Advertising costs are
expensed as incurred and for the three month periods ending June 30, 2008 and
2007 totaled approximately $0 and $2,700, respectively.  These same costs
for the period six month period ending June 30, 2008 and 2007 totaled
approximately $25,460 and $5,200.  These costs consist primarily of trade
show, web site and publication expenses.   2. Acquisitions  a) Acquisitions  On January 10, 2007 the company UTEC,
Inc. (formerly Lyon Capital Venture Corp, acquired UTEC Corporation, a global
chemical and materials services company.  The Company is a leader in
commercial explosives technology including development, analysis, testing and
manufacturing.  UTEC Corporation, with sales of $1.4 million (unaudited,
see Unaudited Pro forma results in this Note 2) for the twelve months ended
December 31, 2006, has been fully integrated into UTEC, Inc. as of the end of
calendar year 2007.   b) Purchase Price
and Value Assigned  The consideration for the UTEC
Corporation acquisition consisted of 22,500,000 shares of restricted stock and
20,000 preferred shares.  The preferred shares were assigned a nominal
value of $0.001 per share.  The common shares were valued at $0.08375 per
share arrived at by dividing the net assets acquired (see Note 2 (c)) by the
number of restricted stock issued in the exchange.  c) Allocation
of Purchase Price  The UTEC Corporation acquisition is
accounted for as a purchase business combination.  Assets acquired and
liabilities assumed are recorded in the accompanying consolidated balance sheet
at their estimate fair values as of January 10, 2007.  A final allocation
of purchase price to the assets acquired and liabilities assumed at the date of
acquisition is presented in the table below.  Current assets
$
    57,488Property, plant and
equipment
737,185Identifiable intangible and
other assets
1,200,000Total assets
acquired
1,994,673Current
liabilities
90,189Net assets
acquired
$1,904,484Cash acquired
15,000Purchase price, net
of cash acquired
$1,889,484   3. Property,
Plant and Equipment  Property, plant and
equipment consist of the following at June 30, 2008 and December 31, 2007:   2008

2007(unaudited)Buildings and
leasehold improvements
$ 501,500

$ 501,500Machinery and
equipment
195,026

195,026Transportation
equipment
24,538

24,538Furniture and
fixtures
16,121

16,121Constructed asset
in progress
12,700

0749,885

737,185





Less accumulated
depreciation
64,094

42,730$ 685,791

$
694,455  Depreciation expense
was $21,364 for each six-month period ended June 30, 2008 and 2007 and was
$10,682 for the three month period ended March 31, 2008 and 2007.  4. Operating
Leases The Company assumed a
non-cancelable operating lease for a vehicle originally dated August 23, 2005.
The lease requires monthly payments of $562 and expires August 23, 2008.  Total rent expense
related to operating leases was approximately $1,686 for the three-month period
ending June 31, 2008 and 2007 for each period and the total rent expense for the
six months ending June 30, 2008 and 2007 was approximately $3,372 for each
period.  Future minimum lease
payments for 2008 are $1,124.  Future ground lease
payments (see Note 5), subject to adjustment for inflation, are as follows:  2008 None 2009 None 2010 $85,800 2011 $85,800 2012 $85,800   5. Related Party
Transactions  a)  Shared
Services  The accounting office
of the Company and its subsidiary UTEC Corporation reside in Norman, Oklahoma
and also serve as the accounting office and headquarters for Energetic Systems,
Inc. LLC. (ESI).  For the three-month period ended June 30, 2008 and 2007,
ESI charged the Company $12,754 and $17,280 respectively for such services.
 For the six months ended June 30, 2008 and 2007 ESI charged the Company
$25,491 and $30,900 respectively, all of which is payable at within thirty days
of the invoice date.  b) Other related
party transactions  From time to time the
Company enters into arrangements for the provision of services from one or more
of its Directors, or companies in which its Directors have a financial
interest.  On January 11, 2007,
the Company entered into an agreement with Red Stone Management Services, a
company owned by Dr. Fortunato Villamagna, for the services of Dr. Villamagna as
CEO of the Corporation.  Payments to Red Stone under this agreement are
based on time actually spent on the business of the Company by Dr. Villamagna,
subject to a minimum annual fee of $40,000.  During the six months ended
June 30, 2008 and 2007, the Company has incurred management fee expense of
$20,000 pursuant to this agreement, all of which is included in Accounts Payable
to Related Parties, at June 30, 2008 and 2007 respectively.  On January 1, 2007 UTeC
Corporation (a wholly owned subsidiary effective January 10, 2007) entered into
a Ground Lease Agreement for the properties that it occupies in Cherokee County,
Kansas.  This lease is with Energetic Properties, LLC., a subsidiary of
Energetic Systems, Inc. LLC., a significant shareholder in the company.
 The initial term of the lease is seven (7) years, with provision to extend
for five additional one year renewal periods.  The annual rent is prepaid
through December 31, 2009; thereafter UTeC Corporation is obligated to pay an
annual rent of $85,800 per year subject to adjustment for changes in the
Consumer Price Index.  The discounted value of the lease is $75,000 with an
annual amortization of $10,700 with the net book value at June 30, 2008 and 2007
being $58,950 and $69,700.  The Agreement includes all other terms and
conditions which are normal and usual for leases of this type.





c) Advances from
Energetic Systems Inc., LLC  Energetic Systems,
Inc., LLC. (ESI) which owns approximately 42% of the restricted common shares of
UTEC, INC. and owns 100% of the predecessor company, UTeC Corporation, LLC that
contributed its assets to form UTEC Corporation, is the processor of a credit
facility of up to $200,000 from UTeC.  The amounts owing on that facility
at the end of June 30, 2008 and 2007 are $191,000 and $151,998 respectively.
 Interest expense accrued on the line of credit was $1,500 and $558 during
the six months ended June 30, 2008 and 2007, respectively and $1,380 and $0 for
the three month ended June 30, 2008 and 2007, respectively.  6. Intangible
Assets  Intangible assets
consist of the following at June 30, 2008 and December 31, 2007:  2008

2007(unaudited)Patent rights
71,600

71,600Customer relationships
1,125,000

1,125,000Accumulated amortization
(104,429)

(69,350)$
1,092,171

$
 1,127,250  The Patent rights
are based upon the contractual agreement between the Company and Ceramatec, as
described in Note 9.  The Company is amortizing these Patent rights over 17
years.  Customer relationships
represent the net present value of the discounted cash flows of customer
relationships contributed by the Company in connection with the acquisition.
 Although the Company does not typically have long-term contracts with
these customers, most of them have been customers of the Company for many years.
 The Company is amortizing the net present value of the estimated future
cash flows of these customers over seventeen (17) years, which is based on the
consistency, length and the unique nature of the customer relationships and the
service which the Company provides.  Amortization expense
for the next five years related to intangible assets is expected to be as
follows:  2008 $70,400 2009 70,400 2010 70,400 2011 70,400 2012 70,400  7. Earnings (Loss)
Per Share  Basic earnings (loss)
per share (EPS) excludes dilution and is calculated by dividing net income
(loss) available to common stockholders by the weighted-average number of shares
of common stock outstanding during the period.  Diluted EPS is computed in
a manner similar to that of basic EPS except that the weighted-average number of
common shares is increased to include the number of incremental common shares
(computed using the Treasury Stock method) that would have been outstanding if
all potentially dilutive common shares (such as stock options) were issued
during the period.  Diluted EPS is the same as basic EPS if the effect of
the incremental shares is anti-dilutive.  For the six  and
three months ended June 30, 2008 and 2007, basic and diluted earnings (loss) per
share were the same, as all potentially dilutive shares were anti-dilutive.  8. Income Taxes  The provision for
income taxes consists of the following for the six and three months ended June
30:  Six months
(unaudited)

Three months
(unaudited)2008

2007

2008

2007





Current
$
        (0)

$ 24,696

$
        (0)

$
 24,696Deferred
(benefit)
(27,400)

(20,800)

(82,400)

30,700Total
$(27,400)

$
  3,896

$(82,400)

$
 55,396   The Deferred tax asset
consists of the following at June 30, 2008 and December 31, 2007:  2008

2007(unaudited)Accrued
liabilities not currently deductible
$
 (16,600)

$
  (16,600)Deferred stock
compensation
(12,200)

(40,800)Deductible
prepaid insurance
6,700

2,300Net operating
loss carryforwards
(125,200)

(64,800)Net Deferred Tax
Asset
$(147,300)

$
(119,900)  In assessing the
realizability of the net deferred tax assets, management considers whether it is
more likely than not that some or all of the deferred tax assets will not be
realized.  The ultimate realization of deferred tax assets is dependent
upon either the generation of future taxable income during the periods in which
those temporary differences are expected to become deductible.  Management
considers the entire deferred tax asset to be fully realizable at June 30, 2008,
and accordingly, has not recorded a valuation allowance.  The Company is not
currently subject to any specific audit by any federal, state or local taxing
authority.  There are no unrecognized tax benefits or tax positions
previously taken which could give rise to uncertainty, and therefore there are
no calculations or classifications of interest, penalties, or effects on income
taxes related to such uncertainties.  At June 30, 2008, the
Company has net operating loss carryforwards totaling approximately $330,000,
which primarily begin to expire in 2022.  Actual income taxes
differ from expected income tax, computed by applying the U.S. Federal
corporate income tax rate of 34% to earnings (loss) from operations before
income taxes for the six and three months ended June 30 as follows:  Six
months 2008 (unaudited) 2007 (unaudited) Six
months2008
(unaudited)

2007
(unaudited)Computed expected
income taxes
$(47,400)

(34.0)%

$(10,100)

(34.1)%Nondeductible
expenses
22,900

16.4

25,200

85.0Other,
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

34.2Other,
principally state taxes
(8,700)

3.4

5,796

5.0Provision
(reversal) for valuation allowance
0

(0.0)

0

(0.0)$(82,400)

3.4%

$55,396

73.2%





9. Contractual
Obligations  a)  Ceramatec,
Inc.  Effective February 1,
2007 the company entered into a License and Supply Agreement with Ceramatec,
Inc. of Salt Lake City, Utah (License) for a world wide exclusive royalty-free
license to practice Cermatecs Gild Arc Plasma Oxidizer technology for the
destruction of solid and liquid hazardous chemicals and biologicals.  The
agreement continues to the full end of the term or terms for which patent rights
held by Ceramatec and related to the technology have not expired.  In connection with the
agreement, the Company granted 850,000 shares of its Common Stock to Ceramatec.
 Subject to any Securities and Exchange Commission regulations, Ceramatec
may sell its stock starting two years from the Effective Date of the agreement.
The Ceramatec agreement provided for (i) a license to the technology, (ii)
support with the technology and (iii) a supply agreement with Ceramatec in
exchange for the shares provided.  The shares to Ceramatec
were provided for item ( i ), the license. The support and supply agreement ( i
& ii ) were included in the supply agreement and payments made to Ceramatec
to purchase the equipment and units specified in the agreement.  The restricted stock
given in exchange for the exclusive licensing agreement with Ceramatec was
valued at $0.0842 per share.  This value was adopted from the calculation
of the value of the restricted shares given in exchange for the acquired
company, Utec Corporation.  See note 2 (b) of the Financial Statements.
 The agreement with Ceramatec is dated February 1, 2007 within three weeks
of the day UTEC Corporation was acquired.  Although the market price at the
close of business on February 1, 2007 was $0.52 per share a true trading market
for the stock had not been established during that brief period and Management
believed a more accurate fair value was represented by the value established in
the acquisition of Utec Corporation.  The Company has accounted for its
share-based payments in accordance with SFAS 123(R), Share Based
Payments, and EITF Issue 96-18, Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services.  If Ceramatec is not
able to sell its stock granted under this agreement for at least $700,000 within
the first two years after it is allowed to sell its stock under this agreement,
then any license granted under this agreement shall become non-exclusive.
 Ceramatec agreed to pay a finders fees of 85,000 shares to a third party
in connection with this agreement.  The Company is
amortizing the asset over seventeen (17) years, which is the estimated remaining
life of the patents to which the Company has exclusivity rights.  See Note
5.  During the term of the
License, the company is obligated to purchase plasma oxidizer units from
Ceramatec in order to maintain exclusivity under the license agreement. The
companys minimum obligations under this purchase arrangement are $100,000 in
2008, $200,000 in 2009 and $600,000 for each remaining year of the agreement. If
the minimum purchase requirement is not met for any year, the license grant of
this agreement shall automatically convert from exclusive to nonexclusive for
the remainder of the term of the agreement.  The License includes a
provision that entitles the Company to any improvements to the technology,
whether patentable or not, without further cost to the Company.   b)  Princeton
Research  Effective September 17,
2007 the company entered into an agreement with Princeton Research for corporate
services.  In exchange for these services the company issued 50,000 common
shares to Princeton.  The shares were valued at $0.45 per share equal to
the market value of the stock on the agreement signing date.  The services
were rendered in 2007 and the amortization of $22,500 was fully expensed before
by year end.





c) BioEnergy Applied
Technologies, LLC   On April 4, 2008, the
Company entered into a joint technical development and marketing agreement
(Marketing Agreement) with BioEnergy Technologies, LLC (BAT), a corporation
jointly owned by two directors of the company.  Pursuant to the term of the
Marketing Agreement, the Company and BAT have agreed to undertake a joint
technical development and marketing program to develop and sell certain patented
technology held by BAT and to pursue certain business opportunities.  The
parties will share equally in the net profits before taxes in connection with
the license or sale of the patented technology pursuant to the Marketing
Agreement.  As additional
consideration, for each year in which the grant of the Subject Matter under the
Marketing Agreement is exclusive to the Company, the Company will issue 200,000
options to purchase 200,000 shares of its common stock to BAT or its nominee.
 Options will be issued at the end of each year of exclusivity, beginning
April 1, 2009.  The options granted hereunder will be for a period of ten
(10) total years, exercisable at a price of $0.28 per share.   10. Employee Stock
Plan  Effective March 26, 2008 the
restricted shares issued pursuant to the Employee Stock Ownership Plan dated
January 11, 2007 were cancelled in their entirety, except for 16,000 which were
misplaced by the employee and will be cancelled in a timely manner.  The
Plan has since been rescinded.  In its place each employee signed an
Employee Stock Option Plan dated March 26, 2008. The plan contains no provision
for vesting and each employee may exercise their rights to purchase shares at
the strike price of $0.25 on the plan date.  The unexercised options
terminate at the end of five years or upon the employee being terminated from
the Company whichever is earlier.  The fair value of each option award
is estimated on the date of grant using a Black-Scholes valuation model that
uses the assumptions noted in the following table.  Expected volatilities
are based on implied volatilities from traded options on the Companys stock in
addition to other publicly traded companies stock within the market segment of
industrial waste management. This is due primarily to the fact that The Company
does not have enough history to properly ascertain the volatility rate.
 The expected term of options granted is also estimated since the company
does not have a history of granting stock rights and represents the period of
time that options granted are expected to be outstanding. The risk-free rate for
periods within the contractual life of the option is based on the Libor rate in
effect at the time of grant.   FYE 2007Expected volatility
71.44%Expected dividends
0.00Expected term (in years)
3.5Risk-free rate
2.67%   A summary of the status of The
Companys non-vested stock options as of June 30, 2008 is presented below:  Non-vested
Options
Options
(000)
Weighted-AverageGrant-DateFair
Value





Non-vested at January 1,
2008
0
$0.00Granted
1,914
0.236Vested
1,914
0.236Forfeited
0
0.00Non-vested at March 31,
2008
0
$0.00   For the three months ended March 31,
2008, the Company did not recognize compensation expense and a corresponding
increase to Common Stock and Additional Paid-in Capital based upon the estimated
fair value of the Common Stock at the date of the grant and the vesting period
of the grants due to the Plan being adopted so late in the quarter with no
appreciable time having lapsed for amortization to be taken.   For the three and six month period
ending June 30, 2008 share based compensation expense of $32,250 was
recognized.   11. New Accounting
Pronouncements  In September 2006, the
FASB issued Statement of Financial Accounting Standards (SFAS) No. 157,
Fair Value Measurements, as amended in February 2008 by FSP FAS 157-2,
Effective Date of FASB Statement No. 157. The provisions of SFAS
No. 157 are effective for the Company as of January 1, 2008. However,
FSP FAS 157-2 defers the effective date for all nonfinancial assets and
liabilities, except those items recognized or disclosed at fair value on an
annual or more frequently recurring basis, until January 1, 2009. SFAS
No. 157 defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. We do not expect
the adoption of this statement to have a material impact on our financial
statements.  In February 2007, the
FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities - Including an amendment of FASB Statement
No. 115. The provisions are effective for the Company as of
January 1, 2008. This statement permits entities to choose to measure many
financial instruments and certain other items at fair value and report
unrealized gains and losses on these instruments in earnings. We do not expect
the adoption of this statement to have a material impact on our financial
statements.  In December 2007, the
FASB issued SFAS No. 141(R), Business Combinations. The provisions,
which change the way companies account for business combinations, are effective
for the Company as of January 1, 2009. This statement requires the
acquiring entity in a business combination to recognize assets acquired and
liabilities assumed in the transaction; establishes the acquisition-date fair
value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose all information needed by
investors to understand the nature and financial effect of the business
combination. We do not expect the adoption of this statement to have a material
impact on our financial statements.  In December 2007, the
FASB also issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements - an amendment of Accounting Research Bulletin
No. 51, the provisions of which are effective for the Company as of
January 1, 2009. This statement requires an entity to classify
noncontrolling interests in subsidiaries as a separate component of equity.
Additionally, transactions between an entity and noncontrolling interests are
required to be treated as equity transactions. We are currently evaluating the
impact of this statement on our financial statements.





Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations. 2007
was the first year of operation for the Company., after it acquired the UTEC
Corporation from Energetic Systems Inc, LLC..  In 2007, the Company was
organized into three marketing units, Energetic Materials, Specialty Chemicals
and Raw Materials and Hazardous Chemicals and Biological Waste Destruction.
 The Companys historical legacy business was primarily constituted by the
first two marketing units and almost exclusively within the commercial
explosives market.  Revenue comparisons are included from these two
activities.  The
new marketing unit, Hazardous Chemicals and Biological Waste Destruction was in
a development stage during the year, and had no commercial revenues.  Focus
during the year was on licensing and validation of the Cold Plasma Oxidizer
technology, and on the development of the Companys Waste Destruction System,
identification of potential markets, and preparation of its business plan.
 This business unit will be independently staffed and structured in order
to pursue commercialization of Cold Plasma Oxidizer waste destruction systems
during 2008.  Revenues  Revenues
for the three and six months ended June, 2008 were $298,900 and $1,067,000,
respectively.  For the three and six months ended June 30, 2007 revenues
were $630,900 and $853,900, respectively. Major activities that contributed to
this revenue were primarily in the areas of contract research and product
development and independent product testing.  In addition, revenues
totaling $22,500 and $538,500 for the three and six months ended June 30, 2008,
came from the Specialty Chemicals Unit through the manufacture and sale of
inorganic chemical sensitizers to customers engaged in commercial explosives
production. For the three and six month periods ended June 30, 2007 revenue
from the same products totaled $376,900 for each period.  For the six
months ended June 30, 2008, this number has risen to about 48% of total sales.
 We project that 2008 revenue will increase with new business in both
areas, but most specifically in the Specialty Chemicals area as new materials
are made available to customers, and developments in new technologies are
pursued.  Expenses  The
Companys legacy business has historically been service based with temporary
employees retained on an as needed basis to support manufacturing activities.
 For the three and six month period ending June 30, 2008 the wage and
burden expense as a percent of total expenses was 50% and 48% respectively,
totaling $232,400 and $438,070, respectively.   The
Companys legacy business is engaged in the research, development, testing and
analysis of commercial explosives.  Some of the R&D activities have
been in the development of new or improved technologies or new product
development to be used internally within the company.





Some
of the other R&D activities during the last year have been in the testing,
analysis and QC (quality control) areas and the costs associated with these
activities were for the three and six months ended June 30, 2008, approximately
$70,000 and $151,000, respectively.  These costs are passed to the
Companys customers, as per the agreements the Company has with the various
customers.  The
Company owns all of the research and testing facilities and these facilities are
operated by Company personnel/employees.  None of the facilities are
operated by the Companys customers or licensees or any other third parties.  Travel
related expenses, which mostly constitute business support and development
activities, for the three and six month periods ending June 30, 2008 were
$44,200 and $82,900 respectively, reflecting increased travel pursing financing
arrangements and higher travel costs.  For the three and six month periods
ending June 30, 2007 these same costs were $19,000 and $42,000, respectively.  Accounting
and management expenses for the three months ending June 30, 2008 and the six
months ended June 30, 2008, were $56,000 and $119,000, respectively, which
includes accruals of $16,000 and $32,000, respectively.  For the same
periods June 30, 2007 the costs were $9,000 and $38,500.  The
company did not purchase any capital items in the six months ending June 30,
2008, but the Company is building an asset worth about $12,700 which will be
placed in service later this year.  In the three month period ending March
31, 2008, a significant reversal of amortization expense was recorded to reflect
the cancellation of the restricted stock issued to Directors, Officers and
employees of the Company in 2007 totaling $107,000.  These restricted
shares were replaced with options on March 26, 2008.  For the three
andsix months ended June 30, 2008,
amortization expense of $32,250 was recorded for these new options.  Assets The
Company invoices its services and products as they are provided or shipped to
its customers.  The majority of its sales are to customers who are large
privately held or publicly traded organizations, many of whom have been in
business for a number of years.  As a consequence, the Companys record in
collecting its accounts receivable is exemplary.  Although the nature of
the Companys business is expected to grow and change in the next several years,
it is not expected that targeted customers profiles will differ significantly.
 The Company therefore does not anticipate a change in credit risk.  The
Company was self-funding for most of the year, drawing periodically on a credit
facility provided to it by one of its shareholders. The Company has also had to
rely on internally advanced short term funding for the three months ended June
30, 2008, in the amount of $191,000.  The company expects to pay this note
in full before the end of 2008 and use cash flow from internally generated funds
for the balance of the year ended December 31, 2008.   In
addition to accounts receivable, the Company maintains a small inventory of
supplies and materials necessary to support its legacy manufacturing and testing
business.  This inventory





turns regularly.
 Some components are hazardous materials, and they are stored by the
Company in federally and state-regulated storage facilities.  To the extent
that any of the items included in inventory became obsolete during the year, the
items were written off and disposed of.  Intangible
assets consist mainly of the Companys portfolio of intellectual property which
is the basis for the Companys research and development and testing activities.
Patents currently held by the Company are listed in the table below:   DESCRIPTION
Serial
No.
Filing
Date
Reg.
No.
Grant
Date
Status/CommentsUS
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. LeeFOREIGN
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.
LeeUS
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.
LeeUS 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. LeeUS 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. LeeUS
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. LeeUS
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.
LeeINTERNATIONAL
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. LeeUS 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. LeeUS PATENTMethod
of Manufacturing A Cap Sensitive Aqueous Gel Suspension Explosive


3,962,001
06/08/76
REGISTEREDOWNER:
 UTeC (Gulf Oil Corporation)
                       Detagel
Patent - EXPIREDUS 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 - EXPIREDUS
PATENTProcess for Manufacturing Gas Entrained Aqueous Gel
Explosive


3,783,053
01/01/74
REGISTEREDOWNER:
 UTeC (Gulf Oil Corporation)
                       IR
Slurry Patent - EXPIREDUS PATENTMethod
of Forming in Place a Gelled Suspension Explosive


3,676,236
07/11/72
REGISTEREDOWNER:
 UTeC (Gulf Oil Corporation)
                       IR
Slurry Patent - EXPIREDUS
PATENT





Thickened Aqueous Ammonium
Nitrate - Hexamethylenetetramine Explosive Containing Ammonium Perchlorate
as Sensitivity Stabilizer


3,409,486
11/05/68
REGISTEREDOWNER:
 UTeC (Gulf Oil Corporation)
                       IR
Slurry Patent - EXPIREDUS
PATENTCanister for Aqueous Gel Explosive Primer


4,126,239
11/01/78
REGISTEREDOWNER:
 UTeC (Gulf Oil Corporation)
                       Detagel
Booster Bottle Patent - EXPIRED  In
addition, these patents, any licensed technology, and the know-how that resides
within the Company represent the Companys overall technology portfolio which
goes beyond the patents directly held by the Company.  Property,
plant and equipment is composed of the Companys physical facilities at Riverton
and Hallowell, Kansas, and related equipment and storage used in its business.
 The Companys facilities are located on lands leased from a subsidiary of
Energetic Systems Inc., LLC., pursuant to a prepaid lease.  Liabilities  The
Companys liabilities primarily consist of current amounts payable or accrued to
trade creditors, and amounts owing to related parties for management fees,
expenses, and shared services. Certain
of the materials the company uses or handles are hazardous materials.
 These materials are stored in federally and state licensed storage
facilities, under permits granted to the Company.  As of June 30, 2008, the
company was not in violation of any of its license and permits required to carry
on its business.  Liquidity and
Capital Resources  As
of June 30, 2008, the company had $100 cash on hand.  This was a temporary
situation and with a temporary infusion of cash from an internal source company
operations were not negatively affected.  Periodically, the Company finds
itself in a negative cash flow position.  While the Company has limited
liquidity, it did finish the year funding its operations with internally
generated cash, with the exception of some short term temporary funding required
during the third quarter.  When UTEC Corporation was formed and acquired by
UTEC, Inc., management believed that the Company would need approximately
$500,000 to properly fund operations until such time as the Company was able to
generate enough cash flow from increased or new business to generate appropriate
amounts of working capital.  This money was to be raised via a secondary
offering or through private placements.  Due to current financial market
conditions, the Company was unable to externally finance, through independent
third parties, the projected $500,000 management believed would be necessary to
properly fund operations.  The Company exceeded managements cash flow
projections and with short term financing from Energetic Systems, Inc. LLC (ESI)
was able to meet its obligations.  To keep these short term borrowings to a
minimum, the Company negotiated extended payment terms with some of our





vendors.
Management believes the Company will continue to have negative working capital
for 2008 or until such time as market conditions improve and we can either raise
sufficient funds via a secondary offering or private placement.  ESI has
continued to fund the Company's short term needs in 2008 and has indicated a
willingness to do so until such time as other funds become available.  As
for years beyond 2008, Management believes the new business being developed will
provide sufficient funds to adequately fund working capital for the foreseeable
future.  Additionally, we are continuing our efforts to locate a
substantial investor to fund many of our new business projects (e.g. waste
destruction) and as part of that investment provide working capital for our
ongoing legacy business needs. To
fund the expansion of the companys business into the Hazardous Chemicals and
Biological Waste Destruction business, the company will need to raise
significant capital with debt and/or equity financing. If the company is
unsuccessful in securing additional funding, the commercialization schedule for
the new Waste Destruction marketing plan will be delayed.  The
Company believes it will generate sufficient cash flow to cover its current
business responsibilities over the next 12 months, but if short term funding is
necessary, the Company has assets available to act as security to guarantee
short term funding from conventional loan sources. If necessary, the management
may guarantee these potential loans, but there is no current written or oral
agreement for such guarantees. The Company has from time to time sufficient
receivables to act as security for short term funding guarantees.  Item 3.
 Quantitative and Qualitative Disclosures About Market Risk  Not Applicable.  Item 4T. Controls
and Procedures.  The management of UTEC,
Inc. is responsible for establishing and maintaining adequate internal control
over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under
the Exchange Act). UTEC, Inc.s internal control system was designed to provide
reasonable assurance to the Companys management and Board of Directors
regarding the preparation and fair presentation of published financial
statements in accordance with U.S. generally accepted accounting principles and
reliability of financial reporting. All internal control systems, no matter how
well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.  Management maintains a
comprehensive system of controls intended to ensure that transactions are
executed in accordance with managements authorization, assets are safeguarded,
and financial records are reliable. Management also takes steps to ensure that
information and communication flows are effective, and to monitor performance,
including performance of internal control procedures.  UTEC, Inc.s
management assessed the effectiveness of the Companys internal control over
financial reporting as of June 30, 2008 based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated





Framework. Based on
this assessment, management believes that, as of June 30, 2008, the Companys
internal control over financial reporting is effective.  PART II  OTHER INFORMATION  Item 6. Exhibits Exhibits:  Exhibit
No.
Document
Location31
Rule
13a-41(a)/15d-14(a) Certificates
Included32
Section
1350 Certifications
Included





SIGNATURES Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.   UTEC, INC.    August
26, 2008 /s/
Fortunato Villamagna Date Fortunato Villamagna, Director & CEO,