Integrated Environmental Technologies 10-K 2008 FY Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-K

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

For the fiscal year ended December 31, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-26309

INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.

(Exact name of registrant as specified in its charter)

Nevada	98-0200471
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4235 Commerce Street
Little River, South Carolina	29566
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number:     (843) 390-2500

Copies of Communications to:

Stoecklein Law Group

402 West Broadway

Suite 690

San Diego, CA 92101

(619) 704-1310

Fax (619) 704-1325

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

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨    No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨

Indicate by check mark whether the registrant a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small 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 Act).

Yes ¨    No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2008 (the last business day of the registrant's most recently completed second fiscal quarter) was $3,961,823 based on a share value of $0.07.

The number of shares of Common Stock, $0.001 par value, outstanding on February 10, 2009 was 79,058,467 shares.

INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.

FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2008

Index to Report on Form 10-K

PART I		Page
Item 1.	Business	2
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 8.	Financial Statements and Supplementary Data	35
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	35
Item 9A (T)	Control and Procedures	36
Item 9B.	Other Information	37
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	37
Item 11.	Executive Compensation	42
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
Item 13.	Certain Relationships and Related Transactions, and Director Independence	46
Item 14	Principal Accounting Fees and Services	47
PART IV
Item 15.	Exhibits, Financial Statement Schedules	48

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:

o   our current lack of working capital;

o   implementation of our business plan within the oil and gas industry with Benchmark;

o   increased competitive pressures from existing competitors and new entrants;

o   increases in interest rates or our cost of borrowing or a default under any material debt agreements;

o   the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;

o   substantial dilution to our stockholders as the result of the issuance of our common stock in exchange for debt and/or equity financing, including additional shares to Benchmark;

o   potential change in control upon completion of financing agreements;

o   deterioration in general or regional economic conditions;

o   adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

o   changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

o   loss of customers or sales weakness;

o   excessive product failure and related warranty expenses;

o   inability to achieve future sales levels or other operating results;

o   the unavailability of funds for capital expenditures and/or general working capital; and

o   operational inefficiencies in distribution or other systems.

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For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.

Throughout this Annual Report references to “we”, “our”, “us”, “IET”, “the Company”, and similar terms refer to Integrated Environmental Technologies, Ltd. and its 100%-owned subsidiary, I.E.T., Inc.

PART I

ITEM 1.                      BUSINESS

General Business Development

Integrated Environmental Technologies, Ltd., formerly Naturol Holdings, Ltd., was incorporated in the State of Delaware in February of 1999.  On January 17, 2002, we completed a reverse triangular merger between our wholly-owned subsidiary, Coronado Subsidiary Corp. (“CSC”), a Nevada corporation, and Naturol, Inc. (“Naturol”), a Nevada corporation.  Pursuant to the terms of the merger, Naturol merged with CSC wherein CSC ceased to exist and Naturol became our wholly-owned subsidiary.

On August 27, 2003, as the sole stockholder of Naturol, we authorized the amendment to Naturol’s Articles of Incorporation to change its name to Integrated Environmental Technologies, Ltd., a Nevada Corporation, which was subsequently changed to I.E.T., Inc. on June 29, 2004.  I.E.T., Inc.’s primary place of business is at 4235 Commerce Street, Little River, South Carolina, USA.

On January 11, 2008, we entered into an Agreement and Plan of Merger and Reincorporation with Integrated Environmental Technologies, Ltd., a newly-formed Nevada corporation ("IET NV"), in order to change the domicile of the Company from Delaware to Nevada.  Pursuant to the terms of the Agreement and Plan of Merger and Reincorporation, IET merged with and into IET NV, making IET NV the surviving corporation.  The merger for reincorporation was completed on February 18, 2008.

The merger and reincorporation agreement was approved by the unanimous consent of the Board of Directors of IET on December 21, 2007 and by IET NV on January 11, 2008, and by a majority of the stockholders of IET at their annual meeting of stockholders held on December 21, 2007.

All of our current operations are conducted through I.E.T., Inc.  I.E.T., Inc. currently operates through two divisions:  the EcaFlo®Division and the Essential Oils Extraction Division.  The EcaFlo® Division has been and is anticipated to be the sole source of revenues for the Company for the foreseeable future.

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OUR BUSINESS

In September of 2003, we entered into an agreement with Electro-Chemical Technology, Ltd. and Laboratory Electrotechnology, Ltd. (collectively “ECT”) for an exclusive, royalty-bearing license allowing us to utilize the patents and the technical information owned by ECT to purchase, manufacture/assemble (with the exception of flow-through electrolytic modules, or “FEMs”), market, lease, sell, distribute and service licensed products throughout the United States of America for the use in certain licensed applications.

On September 15, 2006, we cancelled our license agreement with ECT.  This action was prompted by ECT’s failure to uphold contractual agreements contained within our license agreement and its amendments regarding market applications, R & D for the market applications, technical support, FEM-3 supply and pricing, failure to honor product warranties, and increasing FEM-3 failures in performance.

On August 22, 2006, we entered into a supply agreement with Aquastel, Inc., a Florida corporation who develops, manufactures, markets and sells products based on electrochemical activation (“ECA”) technology.  On September 13, 2006, this agreement was amended by addendum for exclusivity.  Aquastel agreed to supply us with C-50 and C-100 cells for use in our proprietary ECA equipment on an exclusive basis in the United States of America.  IET agreed to purchase at least 300 cells per annum during the term of the agreement.  The term of the agreement is for 3 years, terminating on August 22, 2009.

Electrochemical activation (“ECA”) is the process of passing ordinary water or a diluted saline solution (0.01 – 1.0%) through a specially-designed electrolytic cell in order to modify its functional properties without adding reagents.  EcaFlo® solutions (anolyte and catholyte) have the demonstrated ability to:

·   Destroy microorganisms such as botrytis fungus, salmonella, e-coli, listeria and anthrax spores;

·   Neutralize chemical agents such as Soman and VX;

·   Purify water; and

·   Clean and Degrease.

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Our EcaFlo® technology division designs, markets, assembles and sells equipment that can produce two basic types of EcaFlo® solutions:

1)   Anolyte solutions are strong oxidizing solutions with a pH range of 3.5 – 8.5 and an Oxidation-Reduction Potential (ORP) of +600 to +1200 mV.  Anolyte can potentially be used as a broad-spectrum germicidal agent to kill all types of microorganisms including viruses, fungi and bacteria.

2)   Catholyte solutions are anti-oxidizing, mild alkaline solutions with a pH range of 10.5 to 12.0 and ORP of –600 to –900 mV.  Catholyte solutions can potentially be used as degreasers or detergents.

Based on extensive research, both anolyte and catholyte solutions:

·   Are environmentally friendly;

·   Are non-toxic to both humans and animals;

·   Do not require special handling;

·   Are powerful biocides;

·   Can be safely disposed of in sewage systems;

·   Are fast-acting;

·   Can be used in all stages of disinfection and cleaning;

·   At recommended concentrations, do not bleach surfaces or materials;

·   Can be applied in liquid, ice or aerosol (fog) form;

·   Are hypoallergenic;

·   Yield by-products that are non-toxic, environmentally friendly and leave no synthetic chemical residue;

·   Can be generated on-site, thus eliminating handling and storage of chemicals; and

·   Can be produced on-site from tap water and salt in required quantities and concentrations of active ingredients, pH and salinity (mineralization).

In addition, anolyte application, as a hard-surface disinfectant on a daily basis for more than ten years, demonstrated that microorganisms do not develop resistance against anolyte over time.

The characteristics described above position EcaFlo® equipment for potential applications in a number of areas directly related to personal health and safety.

EcaFlo® Competition

Competition for products which resemble our EcaFlo® devices is expected to intensify and to increase as our devices enter the commercial marketplace.  Our competitors do not include companies that produce basic-to-complex water filtration systems, even though many are substantially larger and have greater financial, research, manufacturing, and marketing resources.  While effective and cost-efficient, these companies simply produce filtrated water, unlike our EcaFlo® devices that produce electrochemically active, but entirely safe, water that kills harmful microorganisms on contact.  We regularly monitor the progress of other ECA-types of companies in the United States, as well as worldwide.

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Important competitive factors for our EcaFlo® products include product quality, environmental sensitivity, price, ease of use, customer service, and reputation.  Industry competition is based on the following:

·   Scientific and technological capability;

·   Proprietary know-how;

·   The ability to develop and market processes;

·   Access to adequate capital;

·   The ability to attract and retain qualified personnel; and

·   The availability of patent protection.

Essential Oils Extraction Division

By virtue of the fact that we have received no response to our repeated attempts to contact SPDG and The Coach House Group, with whom we originally agreed to pursue the United States market for the Essential Oils Extraction technology associated with this Division, we have concluded business relationships and have written off the $84,000 deposit given to The Coach House Group for an essential oils extraction plant.  Our Board of Directors will further consider any next steps that may be associated with this Division of the Company, recognizing that we are not in a financial position to pursue the development of the essential oils extraction technology at this time.

As a general overview, the essential oils extraction technology formerly held under this Division is associated with providing for an effective, low-cost extraction of high-value bioactive compounds and oils from plants and other sources.  Extracting bioactive compounds is a rapidly growing global business. The applications developed using the Essential Oils extraction technologies are deemed by us to be superior in almost every respect to both steam distillation and solvent extraction, the world’s principal methods for producing such extracts.  Solvent extraction, the current method of choice, is under increasing attack due to its reliance on solvents known to be toxic, carcinogenic, and/or flammable.  The Essential Oils extractiontechnologies have none of these harmful and dangerous attributes.

Personnel

We currently employ 8 full-time, permanent employees, one special projects consultant, one scientific and ECA consultant, and one Department of Defense/biochemical specialist consultant.  Our employees are engaged in management, marketing and sales, engineering, production and administrative services.

Amended Employment Agreements

William E. Prince. On May 30, 2007, we executed an amended employment agreement with our President and CEO, William E. Prince, wherein we extended the termination date from December 31, 2009 to March 30, 2012.  Additionally, we increased Mr. Prince’s annual salary from $74,400 to $130,000, which shall be paid in equal, bi-weekly installments retroactive to April 1, 2007.

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Marion C. Sofield. On May 30, 2007, we executed an amended employment agreement with our Executive Vice President, Marion C. Sofield, wherein we extended the termination date from December 31, 2009 to March 30, 2012.  Additionally, we increased Ms. Sofield’s annual salary from $72,000 to $110,000, which shall be paid in equal, bi-weekly installments retroactive to April 1, 2007.

Consultants

United Capital Group, Inc.  On January 29, 2007, we entered into a consulting agreement with United Capital Group, Inc., wherein United Capital agreed to provide the Company with services of an advisory or consultative nature to provide a plan for various investor and public relations services.  The term of the agreement was for six months terminating on August 29, 2007.  We agreed to compensate United Capital with 2,000,000 shares of our common stock with registration rights (issued on February 2, 2007).  On August 26, 2008, we entered into another consulting agreement with United Capital Group wherein United Capital was to provide the same services outlined in the previous agreement.  The term of this agreement was also for six months, and terminated on February 26, 2008.  We agreed to compensation United Capital with $5,000 per month for the term of the agreement.

John Sanders. On May 29, 2007, we entered into a consulting agreement with John Sanders, wherein Mr. Sanders agreed to assist the Company with corporate development in order to enhance the Company’s shareholder value.  The term of the agreement began on May 29, 2007 and terminated on May 28, 2008.  We agreed to pay Mr. Sanders the equivalent of $2,500 per month by issuing 50 units of our 10% convertible debenture (includes 150,000 restricted shares of common stock and 100,000 Series “C” Warrants, exercisable at $0.25 per share through December 31, 2008) and pay for mutually agreed upon travel and expenses incurred in the performance of the agreement.  The 50 units were issued to Mr. Sanders on June 28, 2007.

CBG Advanced Studies, Inc. On September 7, 2007, we entered into a consulting agreement with CBG Advanced Studies, Inc. (“CBG”), wherein CBG agreed to assist the Company in developing appropriate and effective market penetration plans relative to the use of our EcaFlo® equipment and solutions within U.S. military and civilian decontamination market areas.  The term of the agreement began on September 7, 2007 and will terminate on August 31, 2008.  We agreed to compensate CBG with 30,000 shares of our restricted common stock on a quarterly basis, $2,000 per month for the first three (3) months, and pay for mutually agreement upon travel and expenses incurred in the performance of the agreement.

Pentagon Technical Services, Inc.  We entered into a Representative Agreement with Pentagon Technical Services, Inc. on August 1, 2005.Due to conflicts with the Benchmark Exclusive License and Distribution Agreement, our agreement with Pentagon was terminated on July 31, 2007.  However, discussions are ongoing with Pentagon and Benchmark, seeking to reach an agreement that will effectively benefit all parties in advancing the technology.

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Gary J. Grieco.  On August 1, 2007, we entered into a consulting agreement with Gary J. Grieco, wherein Mr. Grieco agreed to provide expertise in the matter of stock sales and market support for the Company.  The original term of the agreement began on July 1, 2007 and terminated on December 31, 2007.  We entered into a subsequent consulting agreement with Mr. Grieco on January 31, 2008 for a term of six months.  We agreed to compensate Mr. Grieco with $2,500 per month plus pay for travel and expenses incurred in the performance of the agreement.  Both parties have agreed to extend the agreement on a month-to-month basis.

TEN Associates, LLC.  On March 3, 2008, we entered into a consulting agreement with TEN Associates, LLC, wherein TEN Associates agreed to provide the Company with investor relations services.  The term of the agreement began on March 3, 2008 and terminated on June 3, 2008.  We agreed to compensate TEN Associates with $3,000 per month for the three months.

EGR International.  On January 1, 2008, we entered into a consulting agreement with EGR International, wherein EGR International agreed to provide the Company with consulting services for special project development on a month-to-month basis.  We agreed to compensate EGR International with $2,500 per month.

Legend Capital Management, LLC.  On October 20, 2008, we entered into a consulting agreement with Legend Capital Management LLC, wherein Legend Capital Management, LLC agreed to devise and prepare a plan for investor relations and financing for the Company.  The original term of the agreement began on October 20, 2008 and terminated on January 20, 2009.  Both parties have agreed to extend the agreement on a month-to-month basis.  We agreed to compensate Legend Capital Management LLC with $18,000 ($3,000 on November 1, 2008, and a monthly fee of $7,500 commencing on November 20, 2008 and payable on the 20th of each successive month thereafter during the original term of the agreement).  Additionally, we agreed to issue Legend Capital Management LLC, warrants to purchase 200,000 shares of the Company’s restricted common stock at $0.10 per share, exercisable for five (5) years.

Exclusive License and Distribution Agreement

On June 20, 2007, in connection with the Stock Acquisition Agreement with Benchmark, we entered into an Exclusive License and Distribution Agreement, wherein we granted the exclusive, worldwide right, license, and authority to market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in Oilfield Applications to Benchmark Energy Products. The agreement provides for special pricing of equipment to Benchmark and per-gallon technology fees, paid to IET on the EcaFlo® fluids sold by Benchmark, for a five-year period consistent with the license period.

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Supply Agreement with D2W2, LLC

On June 6, 2008, we entered into a supply agreement with D2W2, LLC, wherein D2W2 agreed to purchase our products (certain electro-chemical activation equipment) for resale. The term of the agreement commenced on June 6, 2008 and will continue for two years and shall automatically renew for a full five year term provided satisfactory marketing, testing and sales progress is made by D2W2, and, shall continue thereafter, year to year, upon the same terms and conditions, unless either party notifies the other that it wishes to renegotiate or terminate.

Exclusive Distributorship Agreement with Mickey’s Sales & Service

On September 8, 2008, the Company entered into an exclusive distributorship agreement with Mickey’s Sales & Service (“Mickey’s”), wherein IET granted to Mickey’s the exclusive right to purchase, inventory, promote, and resell EcaFlo® products in North Carolina and Virginia.  The term of the agreement commenced on September 8, 2008 and will continue for three years renewable annually upon agreement by both parties, based on performance and market applications.  In addition, Mickey’s was granted the exclusive rights to purchase, inventory, promote, and resell EcaFlo® products in South Carolina, with a right of first refusal, reviewed by the Company on a case-by-case basis, to respond to leads and accomplish sales.

Exclusive Supply Agreement with Aquastel, Inc.

On August 22, 2006, we entered into a supply agreement with Aquastel, Inc., wherein Aquastel agreed to supply us with C-50 and C-100 cells.  On September 13, 2006, this agreement was amended by addendum for exclusivity.  The term of the agreement is for 3 years, terminating on August 22, 2009.

Patents, Proprietary Rights and Licenses

We have filed a process patent for an industry-specific application of our EcaFlo® solutions, delivered by our EcaFlo® equipment, and will continue to develop other intellectual property rights to protect and preserve our proprietary technology and our right to capitalize on the results of our research and development activities.  We also will rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to provide competitive advantages for our products in our markets and to develop new products.

We will continue to develop electrolytic cells and pursue greater-volume capacities.  In addition, we will continue to explore industry-partner relationships that will benefit specific market customers and IET.  A national sales and marketing effort will be launched upon securing working capital to meet the needs (production increase) that such an advertising campaign will likely produce.  We will further develop the provisional status of our process patent claims toward the goal of securing the most accurate and protective state of said patent, as well as finalizing the preparation and submitting additional intellectual property patents relative to our EcaFlo® equipment and solutions.  Generally, our manufacturing facility requires some upfits, such as the addition of testing bays (to increase our ability to perform maximum levels of quality assurance prior to shipping equipment), additional lighting and climate control for a portion of the area.  Plans have been developed to address these needs and IET will spend a small amount of money making the improvements that will afford us the opportunity to put more EcaFlo® equipment out the door to customers, hence increasing sales-generated income.  We have obtained UL certification for NSF-61, and we have secured the UL electrical certification.

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ITEM 1A.                   RISK FACTORS

Risks Relating to an Investment in IET

We are required to make accounting estimates and judgments in preparing our consolidated financial statements.

In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States, we make certain estimates and assumptions that affect the accounting for and recognition of assets, liabilities, revenues and expenses.  These estimates and assumptions must be made because certain information that is used in the preparation of our consolidated financial statements is dependent on future events, or cannot be calculated with a high degree of precision from data available.  In some cases, these estimates are particularly difficult to determine and we must exercise significant judgment.  The estimates and the assumptions having the greatest amount of uncertainty, subjectivity and complexity are related to our accounting for bad debts, returns and allowances, warranty and repair costs, derivatives, and asset impairments.  Actual results could differ materially from the estimates and assumptions that we use, which could have a material adverse effect on our financial condition and results of operations.

Our auditor’s report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.

As a result of our deficiency in working capital at December 31, 2008, our auditors have included a paragraph in their report regarding substantial doubt about our ability to continue as a going concern.  Our plans in this regard are to seek additional funding through future equity private placements, with traditional financing firms, with an industry partner, or debt facilities, and through sales-generated revenue.

We have minimal operating history, which raises substantial doubt as to our ability to successfully develop profitable business operations.

We have a limited operating history.  However, our management team has extensive experience in project development and managing corporate assets.  A highly successful professional who brings more than three decades of business development experience to us from the environmental engineering industry heads our marketing and sales department.  The Company’s engineering department is staffed by an experienced mechanical engineer with a military background who has expertise that centers on the primary mechanical and electrical aspects of our technologies.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a business in our intended industries.  Outside of the high levels of expertise noted above and our concentrated effort to be the leading provider in our industries, there is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably.

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Our future operating results will depend upon many factors, including:

·   The continuation of our efforts to raise adequate working capital through equity investment and the generation of sales revenues;

·   The continued success of lab testing that supports the development of our EcaFlo® technology product lines;

·   Demand for our EcaFlo® equipment and solutions;

·   The level of our competition;

·   Our ability to maintain key management and technical support staff, and to attract more employees with similar characteristics; and

·   The continuation of our efforts to efficiently develop products to commercialize while maintaining quality and controlling costs.

To achieve profitable operations, we must, alone or with others, successfully act on the factors stated above, along with continually developing ways to enhance our production efforts.

As we move forward in production stage business operations, even with our good faith efforts, potential investors have a high possibility of losing their investment.

Due to the intrinsic nature of our business, we expect to see growth in competition and the development of new and improved technologies within the realm of electro-chemical activation processes and products.  While we will always keep a close eye on technological advancement in these areas, management forecasts are not necessarily indicative of our ability to compete with newer technology, as it may develop.  Management forecasts should not be relied upon as an indication of future performance.  While management believes its estimates of projected occurrences and events are within the timetable of its business plan, our actual results may differ substantially from those that are currently anticipated.

We will need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.

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Based on our current proposed plans and assumptions, we anticipate that we will need additional capital to fund our operations.  Furthermore, the commercialization expenses of our EcaFlo® Division will be substantial, i.e., in excess of the amount of cash that we currently have.  Accordingly, we will have to (i) obtain additional debt or equity financing in order to fund the further development of our products and working capital needs, and/or (ii) enter into a strategic alliance with a larger company to provide our required funding.  As a result of our low-priced stock, and our continuous need for additional capital, we anticipate issuing significant amounts of our common stock in exchange for either debt or equity.  This continued issuance of our common stock will have a substantial dilutive impact on our current stockholders.  If we are unable to obtain additional equity or debt financing, in the near future, we may be forced to terminate operations.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock.  Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10.  Those rules require broker-dealers, before effecting transactions in any penny stock, to:

·   Deliver to the customer, and obtain a written receipt for, a disclosure document;

·   Disclose certain price information about the stock;

·   Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

·   Send monthly statements to customers with market and price information about the penny stock; and

·   In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities.  These additional procedures could also limit our ability to raise additional capital in the future.

Our stock is thinly-traded; as a result you may be unable to sell at or near ask prices or at all if you need to liquidate your shares.

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The shares of our common stock have historically been thinly-traded on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early-stage company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.  Due to these conditions, we can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their shares.

We are subject to significant competition from large, well-funded companies.

The industries we intend to compete in are characterized by intense competition and rapid and significant technological advancements.  Many companies, research institutions and universities are working in a number of areas similar to our primary fields of interest to develop new products, some of which may be similar and/or competitive to our products.  Furthermore, many companies are engaged in the development of water “purifying” products which may be similar and/or competitive to our products and technology.  Most of the companies with which we compete have substantially greater financial, technical, manufacturing, marketing, distribution and other resources than us.

We are highly dependent on William E. Prince, our CEO, president and chairman.  The loss of Mr. Prince, whose knowledge, leadership and technical expertise upon which we rely, would harm our ability to execute our business plan.

Our success depends heavily upon the continued contributions of William E. Prince, whose knowledge, leadership and technical expertise would be difficult to replace, and on our ability to retain and attract technical and professional staff.  If we were to lose his services, our ability to execute our business plan would be harmed and we may be forced to cease operations until such time as we could hire a suitable replacement for Mr. Prince.  We also have other key employees who manage our operations and perform critical engineering and design functions, as well as direct the overall marketing and sales of our products.  If we were to lose their services, senior management would be required to expend time and energy to replace and train their replacements.  To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract the sufficient number and quality of staff.

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Potential issuance of additional common stock could dilute existing stockholders.

We are authorized to issue up to 200,000,000 shares of common stock.  To the extent of such authorization, our Board of Directors has the ability, without seeking stockholder approval, to issue additional shares of common stock in the future for such consideration as the Board of Directors may consider sufficient.  We are not currently seeking additional equity financing, which if sought or obtained may result in additional shares of our common stock being issued.  The issuance of additional common stock in the future will reduce the proportionate ownership and voting power of the common stock held by our existing stockholders.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

We have a limited number of personnel that are required to perform various roles and duties as well as be responsible for monitoring and ensuring compliance with our internal control procedures.  As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.  Investors relying upon this misinformation may make an uninformed investment decision.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, FINRA has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period, then we will be ineligible for quotation on the OTC Bulletin Board.  As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.  As of the date of this filing, we have one late filing reported by FINRA.

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ITEM 1B.                   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.                      PROPERTIES

Our main production facility is located at 4235 Commerce Street in Strand Industrial Park, Little River, South Carolina.  The building is approximately 12,000 square feet and is located on two lots.  We agreed to lease this facility commencing on January 1, 2006 for a period of three (3) years with annual rent of $73,791 in 2006 and $71,291 in 2007 and 2008.  We agreed to renew the lease for a term of five years for $71,291 per year.  The renewal term shall be upon the same covenants, conditions, and provisions as provided in the original lease.

ITEM 3.                      LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

ITEM 4.                      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.                      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES

Market Information

Our Common Stock is traded in the over-the-counter securities market through the Financial Industry Regulatory Authority ("FINRA") Automated Quotation Bulletin Board System, under the symbol “IEVM”. We have been eligible to participate in the OTC Bulletin Board since July 19, 2000 under the trading symbol “NTUH”.  On June 4, 2004, our trading symbol changed in conjunction with our name change.  The following table sets forth the quarterly high and low bid prices for our Common Stock during our last two fiscal years, as reported by a Quarterly Trade and Quote Summary Report of the OTC Bulletin Board.  The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

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	2008		2007
	High	Low	High	Low
1st Quarter	0.095	0.055	0.12	0.055
2nd Quarter	0.095	0.05	0.16	0.075
3rd Quarter	0.1	0.04	0.3	0.111
4th Quarter	0.1	0.04	0.165	0.025

Holders of Common Stock

As of February 10, 2009, we had approximately 134 stockholders of record of the 79,058,467 shares outstanding.  The closing bid stock price on February 10, 2009 was $0.06.

Dividends

The Board of Directors has not declared any dividends due to the following reasons:

1.   The Company has not yet adopted a policy regarding payment of dividends;

2.   The Company does not have any money to pay dividends at this time;

3.   The declaration of a cash dividend would result in an impairment of future working capital; and

4.   The Board of Directors will not approve the issuance of a stock dividend.

Securities Authorized for Issuance under Equity Compensation Plans

2002 Stock Option Plan

We have reserved for issuance an aggregate of 2,000,000 shares of common stock under our 2002 Stock Option Plan, which we adopted in July of 2002.  As of December 31, 2008, 1,075,000 options have been granted under this plan..  This plan is intended to encourage directors, officers, employees and consultants to acquire ownership of common stock.  The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for our continued success and growth, to aid in retaining individuals who put forth such efforts, and to assist in attracting the best available individuals to the Company in the future.

Officers (including officers who are members of the board of directors), directors (other than members of the stock option committee to be established to administer the stock option plan) and other employees and consultants and its subsidiaries (if established) will be eligible to receive options under the stock option plan.  The committee will administer the stock option plan and will determine those persons to whom options will be granted, the number of options to be granted, the provisions applicable to each grant and the time periods during which the options may be exercised.  No options may be granted more than ten years after the date of the adoption of the stock option plan.

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Non-qualified stock options will be granted by the committee with an option price equal to the fair market value of the shares of common stock to which the non-qualified stock option relates on the date of grant.  The committee may, in its discretion, determine to price the non-qualified option at a different price.  In no event may the option price with respect to an incentive stock option granted under the stock option plan be less than the fair market value of such common stock to which the incentive stock option relates on the date the incentive stock option is granted.

Each option granted under the stock option plan will be exercisable for a term of not more than ten years after the date of grant.  Certain other restrictions will apply in connection with this plan when some awards may be exercised.  In the event of a change of control (as defined in the stock option plan), the date on which all options outstanding under the stock option plan may first be exercised will be accelerated.  Generally, all options terminate 90 days after a change of control.

Consultant and Employee Stock Compensation Plan

Effective August 27, 2003, we adopted a Consultant and Employee Stock Compensation Plan.  The maximum number of shares that may be issued pursuant to the plan is 2,500,000 shares.  As of December 31, 2008, 2,398,000 shares have been granted under this plan.

Consultant and Employee Stock Compensation Plan

Effective January 21, 2004, we adopted another Consultant and Employee Stock Compensation Plan.  The maximum number of shares initially available pursuant to the plan was 500,000 shares.  On December 27, 2004, we amended the compensation plan to make available an additional 4,000,000 shares of common stock.  As of December 31, 2008, 3,855,684 shares have been granted under this plan.

Equity Compensation Plans Information

We currently maintain equity compensation plans to allow the Company to compensate employees, directors, consultants and certain other persons providing bona fide services to the Company or to compensate officers, directors and employees for accrual of salary, through the award of our common stock.  The following table sets forth information as of December 31, 2008 regarding outstanding shares granted under the plans, warrants issued to consultants and options reserved for future grant under the plans.

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Plan Category	Number of shares to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a))
Equity compensation plans approved by stockholders		--	$	--		--
Equity compensation plans not approved  by stockholders		0	$	0.116		1,171,316	(1)
Total		0	$	0.116		1,171,316

(1)   Includes 925,000 options from the 2002 plan, 102,000 shares from the 2003 plan and 144,316 shares from the 2004 plan, available for issuance.

These plans are intended to encourage directors, officers, employees and consultants to acquire ownership of common stock.  The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for its continued success and growth, to aid in retaining individuals who put forth such effort, and to assist in attracting the best available individuals to the Company in the future.

Recent Sales of Unregistered Securities

On October 20, 2008, we issued 30,000 shares of our restricted common stock to Gerald H. Turley pursuant to his consulting agreement dated September 7, 2007.  We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that he was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to his investment decision.

On November 25, 2008, we issued a total of 643,000 shares of our restricted common stock to the following employees and directors:

Name	Title	Number of Shares
William E. Prince	Employee & Director	365,000
Marion C. Sofield	Employee & Director	190,000
S. Larry Jones	Employee	35,000
Stuart A. Emmons	Employee	10,500
Valgene Dunham	Director	15,000
James C. Pate	Former Director	2,500
E. Wayne Kinsey III	Director	12,500
David N. Harry	Director	12,500

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We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipients, immediately prior to issuing the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of its investment.  The recipients had the opportunity to speak with our president and directors on several occasions prior to their investment decisions.

On December 16, 2008, we sold a total of 285,000 shares of our restricted common stock to 1 accredited investor for a total purchase price of $28,500, all of which was paid in cash. The 285,000 shares were issued on December 23, 2008. We believe that the issuance and sale of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506. The shares were sold directly by us and did not involve a public offering or general solicitation. The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decision, including the financial statements and 34 Act reports. We reasonably believed that the recipient, immediately prior to the sale of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The recipients had the opportunity to speak with our management on several occasions prior to their investment decision. There were no commissions paid on the issuance and sale of the shares.

Issuance of Warrants & Options

On October 20, 2008, we agreed to issue warrants to purchase 200,000 shares of our common stock, exercisable for $0.10 per share and expiring 5 years from issuance to Legend Capital Management LLC pursuant to the consulting agreement executed on October 20, 2008.  We believe that the issuance of the warrants was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the warrants was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the warrants, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

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On January 7, 2009, pursuant to the promissory note executed on January 7, 2009 with Gregory P. Jonas, we agreed to issue warrants to purchase 250,000 shares of our common stock, exercisable for $0.10 per share and warrants to purchase 34,722 shares of our common stock, exercisable for $0.18 per share.  The warrants expire on December 31, 2011.  As additional consideration for the loan, we agreed to issue options for 25,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.  We believe that the issuance of the warrants and options was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the warrants and options was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the warrants and options, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On January 16, 2009, we agreed to issue warrants to purchase 1,250,000 shares of our common stock, exercisable for $0.10 per share and warrants to purchase 173,610 shares of our common stock, exercisable for $0.18 per share, expiring on December 31, 2011 to Christopher Lank pursuant to the promissory note executed on January 16, 2009.  As additional consideration for the loan, we agreed to issue options for 125,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.  We believe that the issuance of the warrants and options was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the warrants and options was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the warrants and options, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

On March 13, 2009, we agreed to issue warrants to purchase 300,000 shares of our common stock, exercisable for $0.10 per share expiring on December 31, 2011 to Harvey M. Burstein pursuant to the promissory note executed on March 13, 2009.  We believe that the issuance of the warrants was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the warrants was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the warrants, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

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On March 17, 2009, we agreed to issue warrants to purchase 500,000 shares of our common stock, exercisable for $0.10 per share expiring on December 31, 2011 to John Teichman pursuant to the promissory note executed on March 17, 2009.  We believe that the issuance of the warrants was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2).  The recipient of the warrants was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make its investment decision, including the Company’s financial statements and 34 Act reports.  We reasonably believe that the recipient, immediately prior to issuing the warrants, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment.  The recipient had the opportunity to speak with our president and directors on several occasions prior to its investment decision.

Issuer Purchases of Equity Securities

The Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2008.

ITEM 6.                      SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.                      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report. References in the following discussion and throughout this annual report to “we”, “our”, “us”, “IET”, “the Company”, and similar terms refer to Integrated Environmental Technologies, Ltd. and its 100%-owned subsidiary, IET, Inc., unless otherwise expressly stated or the context otherwise requires.

OVERVIEW AND OUTLOOK

Integrated Environmental Technologies, Ltd. is a manufacturing company that designs and builds equipment incorporating innovative technologies which are focused on the enhancement of the environment and the health, safety, and well-being of current and future generations.  Our wholly-owned subsidiary, I.E.T., Inc. designs, manufactures, markets, sells, and installs proprietary EcaFlo® equipment, featuring the electro-chemical activation (ECA) technology, in the United States and throughout the world.

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We evolved from a development-stage company to an income-generating original equipment manufacturing company.  We have focused our attentions on several critical issues:

·   Raising equity capital;

·   Developing our ability to construct EcaFlo® equipment;

·   Developing and enhancing our testing protocol with researchers at Coastal Carolina University, and independent companies and laboratories;

·   Developing a relationship and entering into an agreement with Benchmark;

·   Researching market application areas and identifying and establishing distributorship agreements;

·   Continuing to develop and maintain relationships with university and independent laboratories for research assistance on EcaFlo® applications; and

·   Furthering the process of building a brand identity and sales track record through the appearance at various trade and professional shows and conferences.

We have incurred losses since inception.  For the fiscal year ended December 31, 2008, we had a net loss of $1,535,712 as compared to a net loss of $1,950,182 for the fiscal year ended December 31, 2007.  Our ability to proceed with our plan of operation has continuously been a function of our ability to increase revenues and raise sufficient capital to continue our operations.

Management intends to continue to closely monitor the costs associated with the production of EcaFlo®devices in an attempt to minimize capital shortages.  As we continue to expand operational activities and execute our business plan for oilfield operations with our industry partner and licensee, Benchmark Energy Products, we anticipate experiencing positive cash flows from operations in future quarters.  Debt borrowings may be considered from time to time if needed.

On June 20, 2007, we executed a Stock Acquisition Agreement with Benchmark Performance Group, Inc. (“Benchmark”).  Pursuant to the Stock Acquisition Agreement, Benchmark agreed to purchase 35,000,000 shares of our common stock for a total purchase price of $3,500,000 (“Purchase Price”) or $0.10 per share.  The purchase price will be paid in seven (7) installments over a period of 30 months.  On August 26, 2008, we executed an addendum to the investment agreement and contract with Benchmark, wherein we agreed that as a result of an economic down-turn, it was in the best interest of the Company and Benchmark to make the fifth installment payment early and prior to October 31, 2008 as previously agreed in the original investment agreement.  As consideration for the acceleration of the fifth installment, we reduced the payment amount to $400,000 from $500,000.  As of September 30, 2008, we have received five installments for a total of $1,900,000.  From the remaining sixth and seventh installments we anticipate receiving a total of $1,500,000 ($500,000 in April 2009 and $1,000,000 in October 2009).

In connection with the Stock Acquisition Agreement, we entered into an Exclusive License and Distribution Agreement with Benchmark, wherein we granted the exclusive, world-wide right, license and authority to market, sell and distribute for use in the manufacture of fluids and solutions in Oilfield Applications to Benchmark.

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Recent Developments

On August 18, 2008, we received our product registration for EcaFlo® Anolyte from the United States Environmental Protection Agency (“EPA”).  This registration process has been completed in order to make important marketing and efficacy claims about our EcaFlo® Anolyte product and its ability to be used as a high-level (hospital) disinfection/antimicrobial product.  Additionally, other business models are now allowed because this registration permits the distribution of EcaFlo® Anolyte by container, as well as for use on-site where produced.  The US EPA has conducted thorough investigations of the scientific data relative to EcaFlo® Anolyte, as well as requiring a full battery of independent, yet Company-sponsored, lab testing which was performed by fully-certified, EPA-approved labs.  Based on the results of this extensive research, we have been granted our registration of EcaFlo® Anolyte.  This product is a highly effective, “green” biocide that may be used for hard-surface disinfection for many applications, including medical, dental, veterinary, schools, gyms and sports equipment; bacteria control for food safety; oil and gas; water treatment; and infection control.  A copy of the press release we issued in reference to the above is attached hereto as exhibit 99.1.

On September 10, 2008, we issued a press release announcing that we continue to sell EcaFlo® equipment to a leading North Carolina-based supplier of janitorial and sanitation products and solutions primarily involved in supplying state, county and local governments with disinfecting and sanitizing products.

On September 24, 2008, we issued another press release announcing the sale of additional EcaFlo® equipment to two new customers representing interests in new market areas.  One company is promoting the use of EcaFlo® equipment and solutions in the agricultural industry, for use in livestock area surface disinfection.  The other company plans to use the EcaFlo® equipment to produce solutions to effectively treat biofilm build-up and various other agricultural applications, such as veterinary clinics and dairy processing facilities that require thorough and dependable hard-surface disinfection.

Results of Operations for the Fiscal Year Ended December 31, 2008 and 2007

The following table summarizes selected items from the statement of operations at December 31, 2008 compared to December 31, 2007.

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SALES AND COST OF GOODS SOLD:

	Fiscal Year Ended December 31,						Increase (Decrease)
	2008			2007			$			%
Sales	$	509,673		$	411,179		$	98,494		24	%
Cost of Goods Sold		290,738			164,897			125,841		76	%
Gross Profit		218,935			246,282			(27,347	)	(11	%)
Gross Profit Percentage of Sales		43	%		60	%		--		(17	%)

Sales

Our sales for the fiscal year ended December 31, 2008 were $509,673 compared to sales of $411,179 in the fiscal year ended December 31, 2007.  This resulted in an increase in sales of $98,494, or 24%, from the same period a year ago.  The increase in sales was as a result of our marketing and research and development efforts, which have increased the recognition of EcaFlo® Anolyte in various markets as a proven and superior alternative to traditional biocides.  Sales of EcaFlo® equipment and solutions were severely impaired during the period of time that the U.S. Environmental Protection Agency (EPA) was studying, reviewing and making determinations about our product and the requirement for an EPA product registration for “EcaFlo® Anolyte.”  By law, we were required to restrict our marketing claims and to cause no distribution of our product to occur other than on-site generation and usage.  On August 18, 2008 we received our product registration for EcaFlo® Anolyte from the EPA.  We fully expect sales of our EcaFlo® equipment and solutions to expand rapidly from the receipt of our product registration number.

According to our oilfield distributor and industry partner, Benchmark Energy Products, Benchmark continues to market Excelyte® (Benchmark’s product name for EcaFlo® Anolyte), to the oil and gas industry,but the industry, which is resistant to change, continues to use several “old technology” biocides developed during the past 30 years.  Benchmark has spent significant time and resources educating the industry about the benefits of Excelyte® vs. the older biocides.  Testing has confirmed that the biocide most widely used in the industry today is ineffective with current well treatment practices and industry attempts to utilize increasingly poorer quality water.  Benchmark has engaged a highly regarded oil and gas industry biotechnology laboratory as an independent “expert” to help Benchmark mount a “turnaround” in industry thinking concerning the dynamic required for biocides to be effective with current well stimulation practices.  The findings reported by this laboratory have validated that Excelyte® outperforms all other biocides currently in use by the oil and gas industry, with the added benefit of being the first totally “green” biocide.

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In addition, Benchmark and the Company have extended the deadline for fixing the minimum technology fees payable to the Company under the Exclusive License and Distribution Agreement while a major pumping services company, which has completed its laboratory testing and expressed a high interest in obtaining some level of exclusivity on the product, completes its field testing of Excelyte®.  The testing is expected to be completed in the first or second quarter of 2009.

Cost of goods sold / Gross profit percentage of sales

Our cost of goods sold for the fiscal year ended December 31, 2008 was $290,738, an increase of $125,841, or 76% from $164,897 for the fiscal year ended December 31, 2007.  The increase in our cost of goods sold is as a result of moderate price increases in regular inventory and some extraordinary expenses for products sold into Canada.  We are continuing to update and upgrade our product line and we closely monitor the cost of all of our products.  We believe the cost of sales will increase slightly less as a percentage of sales when we have additional sales.

Gross profit margins decreased by 17% from the prior fiscal year due to a lack of EcaFlo® equipment sales, since our pricing structure allows for more profit on equipment sales than on replacement parts and laboratory testing supplies.

EXPENSES:

	Fiscal Year Ended December 31,						Increase (Decrease)
	2008			2007			$			%
Expenses:
Professional and administrative fees	$	306,860		$	581,948		$	(275,088	)	(47	%)
Salary		672,951			748,911			(75,960	)	(10	%)
Depreciation and amortization		1,971			2,280			(309	)	(14	%)
Office and miscellaneous		439,260			485,461			(46,201	)	(10	%)
Bad debt expense		37,841			-			37,841		--
Total operating expenses	$	1,458,883		$	1,818,600		$	(359,717	)	(20	%)
Loss from operations		(1,239,948	)		(1,572,318	)		(332,370	)	(21	%)
Other income (expense):
Interest expense		(308,444	)		(377,864	)		(69,420	)	(18	%)
Total other expense		(308,444	)		(377,864	)		(69,420	)	(18	%)
Net loss	$	(1,548,392	)	$	(1,950,182	)	$	(401,790	)	(21	%)

Professional and Administrative Fees

Professional and administrative fees for the fiscal year ended December 31, 2008 were $306,860, a decrease of $275,088, or 47%, from $581,948 for the fiscal year ended December 31, 2007.  The decrease in professional and administrative fees was the result of reducing costs associated with outside professional services and consultants while maintaining strong levels of support to meet the company’s developing business.  Whenever possible, we are trying to reduce outside consultants, but we will still need some assistance for areas of our business in which we do not have sufficient in-house expertise.

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Salary Expenses

Salary expenses for the fiscal year ended December 31, 2008 was $672,951, a decrease of $75,960, or 10%, from $748,911 for the fiscal year ended December 31, 2007.  The decrease in salary expenses was the result of decreasing hourly employee payroll expenses and reducing our engineering staff, while accomplishing the production necessary for meeting the Company’s sales of equipment.  We expect salary expense to increase in the future as the Company grows and as sales volume increases.  We may need to continue issuing stock and stock options in exchange for services and adequate personnel compensation.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for the fiscal year ended December 31, 2008 was $1,971, a decrease of $309, or 14%, from $2,280 for the fiscal year ended December 31, 2007.  Depreciation expenses decreased slightly as the full depreciable value of some equipment was reached.  At this point in time, we anticipate our depreciation expenses to remain fairly steady.

Office and Miscellaneous

Office and miscellaneous expenses for the fiscal year ended December 31, 2008 was $439,260, a decrease of $46,201, from $485,461 for the fiscal year ended December 31, 2007.  The decrease in office and miscellaneous was as a result of having well-stocked our office and the lack of need for one-time equipment purchases during this period of time.

Bad Debt

We did not incur bad debt expense during the fiscal year ended December 31, 2007 as compared to $37,841 being expensed during the fiscal year ended December 31, 2008.  We have historically had limited write-offs as the result of bad debts.  We continually evaluate the creditworthiness of our customers and typically require a deposit of 40% - 50% of the total purchase price with each EcaFlo® equipment order.  We evaluate the collectability of accounts receivable regularly and it is our policy to record an allowance when the results of the evaluation indicate an increased risk related to the customer's ability to meet their financial obligations.

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Loss from Operations

The loss from operations for the fiscal year ended December 31, 2008 was $1,239,948, versus a loss from operations of $1,572,318 for the fiscal year ended December 31, 2007, a change in loss from operations of $332,370.  The decrease in the loss from operations in 2008 was the result of substantial decreases in professional and administrative fees, salary expenses, and office and miscellaneous expenses.

Interest Expense

Interest expense for the fiscal year ended December 31, 2008 were $308,444 as compared to $377,864 for the same period in 2007.  Our interest expense in 2008 decreased as a result of having paid off several higher-interest loans.

Net Loss

Our net loss for the fiscal year ended December 31, 2008 was $1,548,392, a decrease of $401,790, or 21%, from $1,950,182 for the fiscal year ended December 31, 2007.  We continue to have a net loss and believe the loss will be reduced and profitability will be attained in future quarters as the sales of our products increase.

Operation Plan

The technology that drives our short-term and long-term plans is electro-chemical activation (ECA), which is the center point of our EcaFlo® technology.  Our plan of operation focuses on continuing the process of commercialization of EcaFlo®equipment and EcaFlo® solutions, known as anolyte and catholyte.

Our direct attention continues to be focused on providing our EcaFlo® devices to the markets at-hand:  the oil and gas industry, food safety and agricultural applications, storm-water treatment, water and wastewater treatment, and other hard surface sanitation opportunities.  In many cases, clinical and laboratory testing and research have now moved to field trials by end-users.  Anticipated positive results in field testing should result in increased sales in future quarters.  As a new “green” product, regulatory constraints continue to provide unforeseen challenges, which we address and overcome systematically.

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Liquidity and Capital Resources

The following table summarizes total current assets, total current liabilities and working capital at December 31, 2008 compared to December 31, 2007.

	December 31,			December 31,		Increase / (Decrease)
	2008			2007		$			%
Current Assets	$	225,413		$	437,094	$	(211,681	)		(48	%)
Current Liabilities		895,135			286,491		608,644			212	%
Working Capital (deficit)	$	(669,722	)	$	150,603	$	(820,325	)		(545	%)

Liquidity is a measure of a company’s ability to meet potential cash requirements.  We have historically met our capital requirements through the issuance of stock, by borrowings, and through sales-generated revenue.  In the future, we anticipate we will be able to provide the necessary liquidity we need by the revenues generated from the sales of our products and the incremental equity investment, by contract from Benchmark Performance Group, Inc.  We will continue to consider financing opportunities with strategic industry partners outside of the oil and gas industry.

As of December 31, 2008, we continue to use traditional and/or debt financing, in addition to sales-generated revenue, to provide the capital we need to run the business.  In the future, we need to generate enough revenues from the sales of our products in order for us to not have to sell additional stock or obtain additional loans.

On June 20, 2007, we entered into an investment agreement and contract with Benchmark Performance Group, Inc.  The contract provides for an equity investment of $3,500,000 over a period of 30 months in 7 installments and for technology fees paid to IET per gallon of EcaFlo® fluids sold by Benchmark within the oil and gas industry.  On August 26, 2008, we executed an addendum to the investment agreement and contract with Benchmark, wherein we agreed that as a result of an economic down-turn, it was in the best interest of the Company and Benchmark to make the fifth installment payment early and prior to October 31, 2008 as previously agreed in the original investment agreement.  As consideration for the acceleration of the fifth installment, we reduced the payment amount to $400,000 from $500,000.  As of December 31, 2008, we have received five installments for a total of $1,900,000.  From the remaining sixth and seventh installments we will receive a total of $1,500,000 ($500,000 in April 2009 and $1,000,000 in October 2009).  A copy of the addendum was attached as exhibit 10.21 to our quarterly report filed on November 13, 2008.

Financing.  On August 17, 2006, the Company received an unsecured loan of $25,000 from Robert Lucas, at an interest rate of 19.99% per annum.  Pursuant to the note agreement, the Company agreed to issue 100,000 shares of common stock as a loan fee.  On April 3, 2007, the shares were issued.  As of December 31, 2008 and 2007, interest paid was $5,575 and $2,069, respectively.  As of December 31, 2008, the remaining principal balance of the note is $23,300.

On January 22, 2008, we borrowed $16,000 from an officer of the Company for a flat interest rate of $1,000.  The principal and interest were repaid on January 25, 2008.

On April 16, 2008, the Company entered into a loan agreement with a corporate officer for the principal amount of $9,000.  Pursuant to the loan agreement, the Company promised to repay the principal amount of $9,000 plus a flat interest of $500.  The loan and interest were repaid on May 13, 2008.

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On April 23, 2008, we entered into a Share Purchase Agreement with AD Capital, LLC (“AD Capital”).  Pursuant to the agreement, AD Capital agreed to purchase up to an aggregate of $150,000 and a minimum of $60,000 in convertible debentures from us.  Further, we agreed to pay a due diligence fee in the amount of $10,000 and issue two warrants to purchase up to 300,000 shares of our common stock, of which 150,000 are exercisable at a strike price of $0.05 per share and the remaining 150,000 are exercisable at $0.25 per share.  Both sets of warrants expire on April 23, 2013.  As of March 31, 2008, AD Capital had advanced $35,000 towards the agreement.  We paid $5,000 of the due diligence fee, receiving net proceeds of $30,000.  The remaining $115,000 was funded during April 2008 net of the due diligence fee, and was paid in full on May 5, 2008.

On June 18, 2008, we entered into a loan agreement with a stockholder of the Company for the principal amount of $50,000.  Pursuant to the loan agreement, we agreed to repay the principal amount plus a flat interest fee of $2,500 by July 5, 2008.  On July 3, the parties agreed to an extension to the term of the loan through August 5, 2008.  In consideration of this extension, the Company agreed to an “in-kind” service (refurbishment of a FEM piece of equipment at no charge for labor or materials).  On July 16, 2008 and August 7, 2008, we paid $30,000 and $12,500 toward the loan and the remaining balance of $10,000 was repaid on August 27, 2008.

On July 15, 2008, we entered into a promissory note with The Morton Fishman Revocable Trust for the principal amount of $150,000.  In consideration for the loan, we agreed to pay The Morton Fishman Revocable Trust, from the proceeds of the loan, $10,000 in administration fees and $2,000 in legal fees associated with the transaction.  In addition, we agreed to issue warrants to purchase 200,000 shares of our common stock, exercisable for $0.05 per share and expiring 2 years from issuance (on 7/15/10).  Pursuant to the promissory note, we promised to pay The Morton Fishman Revocable Trust the principal sum of $150,000 together with interest of 16% per annum on or before August 27, 2008.  The note agreement allowed for an extension for an additional 45 days from August 27, 2008 by notifying The Morton Fishman Revocable Trust in writing and paying $5,000 and interest due through August 27, 2008. The loan was repaid in full on August 27, 2008.

On August 14, 2008, we entered into a loan agreement with an officer of the company for the principal amount of $5,000.  There was no interest on the loan.  On August 20, 2008, we paid $4,000 toward the loan and the balance of $1,000 was repaid on August 27, 2008.

On August 14, 2008, we entered into a loan agreement with a stockholder of the Company for the principal amount of $10,000. There was no interest on the loan. On August 27, 2008, we paid $7,500 toward the loan and the balance of $2,500 was repaid on September 5, 2008.

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Subsequent

On January 7, 2009, we executed a promissory note with Gregory P. Jonas for the principal amount of $25,000.  Pursuant to the promissory note, we agreed to repay the principal amount and interest at the yearly rate of 6% by May 15, 2009.  In the event that the principal amount and interest is not repaid by May 15, 2009, we agree to pay a penalty of $212.50 per month until the balance is paid in full and the interest rate will increase to 12% per annum beginning on May 16, 2009.  In consideration for the loan, we agreed to issue Mr. Jonas 250,000 warrants exercisable for $0.10 per share and 34,722 warrants exercisable for $0.18 per share. The warrants will expire on December 31, 2011.  In addition, Mr. Jonas shall have the right to convert either one-half or the entire note (including interest) to restricted shares of the Company’s common stock at $0.10 per share.  In the event that Mr. Jonas elects to convert the entire note to restricted shares of common stock, we will issue an additional 93,750 warrants exercisable at $0.20 per share. If Mr. Jonas elects to convert one-half of the note to restricted shares common stock, we will issue an additional 46,875 warrants exercisable at $0.20 per share.  The warrants will be effective on the conversion date and will expire on December 31, 2011.  As additional consideration for the loan, we agreed to issue options for 25,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.

On January 16, 2009, we executed a promissory note with Christopher Lank for the principal amount of $125,000.  Pursuant to the promissory note, we agreed to repay the principal amount and interest at the yearly rate of 6% by May 15, 2009.  In the event that the principal amount and interest is not repaid by May 15, 2009, we agree to pay a penalty of $1,000 per month until the balance is paid in full and the interest rate will increase to 12% per annum beginning on May 16, 2009.  In consideration for the loan, we agreed to issue Mr. Lank 1,250,000 warrants exercisable for $0.10 per share and 173,610 warrants exercisable for $0.18 per share. The warrants will expire on December 31, 2011.  In addition, Mr. Lank shall have the right to convert either one-half or the entire note (including interest) to restricted shares of the Company’s common stock at $0.10 per share.  In the event that Mr. Lank elects to convert the entire note to restricted shares of common stock, we will issue an additional 468,750 warrants exercisable at $0.20 per share. If Mr. Lank elects to convert one-half of the note to restricted shares common stock, we will issue an additional 234,375 warrants exercisable at $0.20 per share.  The warrants will be effective on the conversion date and will expire on December 31, 2011.  As additional consideration for the loan, we agreed to issue options for 125,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.

On February 27, 2009, we executed a promissory note with Gary Grieco for the principal amount of $37,500.  Pursuant to the promissory note, we agreed to repay the principal amount and interest at the yearly rate of 6% by May 15, 2009.

On March 13, 2009, we executed a promissory note with Harvey M. Burstein for the principal amount of $30,000.  Pursuant to the promissory note, we agreed to repay the principal amount and interest at the yearly rate of 15%, with a total interest payment of not less than 5% of the loan amount, by May 11, 2009.  In the event that the principal amount and interest is not repaid by May 11, 2009, we agree to pay a penalty of $3,000 per month until the balance is paid in full.  In consideration for the loan, we agreed to issue Mr. Burstein 300,000 warrants exercisable for $0.10 per share. The warrants will expire on December 31, 2011.  In addition, Mr. Burstein shall have the right to convert the entire note (including interest) to restricted shares of the Company’s common stock at $0.10 per share.

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On March 17, 2009, we executed a promissory note with an individual for the principal amount of $90,000.  Pursuant to the promissory note, we agreed to repay the principal amount and a fee of $13,500 by May 11, 2009.  In the event that the principal amount and interest is not repaid by May 11, 2009, we agree to pay a penalty of $4,500 per month until the balance is paid in full.  In consideration for the loan, we agreed to issue 500,000 warrants exercisable for $0.10 per share. The warrants will expire on December 31, 2011.  In addition, there is a right to convert the entire note (including interest) to restricted shares of the Company’s common stock at $0.10 per share.

Satisfaction of our cash obligations for the next 12 months.

As of December 31, 2008, our cash balance was $33,357.  Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, proceeds from our stock acquisition agreement with Benchmark, additional sales of our common stock, third-party financing, and/or traditional bank financing.  We intend to make appropriate plans to insure sources of additional capital in the future to fund growth and expansion, and may consider additional equity or debt financing or credit facilities.

Since inception, we have financed cash flow requirements through debt financing and the issuance of common stock for cash and services.  As we continue to expand operational activities, we may continue to experience net negative cash flows from operations, pending receipt of sales or development fees, and will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings, giving consideration to loans and working diligently to move sales ahead to the extent necessary to provide working capital.

We may continue to incur operating losses over the majority or some portion of the next twelve months.  Our lack of operating history makes predictions of future operating results difficult to ascertain.  Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving technology markets.  Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth.  To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel.  There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

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As a result of our cash requirements and our lack of working capital, although not anticipated, we may continue to issue stock in exchange for loans and/or equity, which may have a substantial dilutive impact on our existing stockholders.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern.  The Company’s ability to continue as a going concern is dependent on attaining profitable operations.  The Company's cash position may be inadequate to pay all of the costs associated with testing, production and marketing of products.  Management will consider borrowings and security sales to mitigate the effects of its cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Summary of product and research and development that we have accomplished and that we will continue to perform for the term of our plan.

I.E.T., Inc., EcaFlo® Equipment and EcaFlo® Solutions

Current research initiatives are centered on providing specific water quality regulatory agencies with reports that will serve to quell any question that may arise regarding the potential of negative impact on the environment (i.e.: estuary) associated with the use of EcaFlo® anolyte and catholyte solutions. We are finding that, through the use of test data and technical expertise, we are able to better educate environmental regulators and gain their support and endorsement for certain ECA applications within the storm water treatment arena, the petroleum industry, and with food and beverage safety control agencies. At petroleum industry trade shows, our marketing and sales department personnel presented test results showing potential customers that aliquots of petroleum well “frac” waters treated with EcaFlo® device-generated anolyte solution showed bacterial kill in less than 5 minutes. Furthering that data, our approach is to point out that the use of EcaFlo® solutions to obtain these successful results can eliminate the need for voluminous regulatory compliance paperwork and the higher cost associated with the use of traditional biocidal chemicals that are currently used to treat “frac” water.

We are continuing our research to identify opportunities where we can provide our innovative technology in value-added services within the food and beverage production and processing industry, medical and healthcare markets, the hospitality industry, as well as in homeland defense applications.

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We are continuing to work together with Coastal Carolina University, as well as independent laboratories and other universities associated with several of our customers’ specific research requirements, to develop a more comprehensive approach to documenting test results that pertain to the use of EcaFlo®solutions in a plethora of applications.

Further research and development efforts will be implemented with our strategic university partners, going concerns within the oil and gas and food safety industries, and with nationally-accredited research labs. We view research and development as an integral portion of our product development plan and will use the measurable outcomes from research projects as catalysts for market development. The results of this research guide us in determining what to further implement into our EcaFlo® equipment designs.

On May 7, 2008, we announced that as a result of two invitations to showcase our equipment at the Chemical Biological Incident Response Force’s Indian Head Base (Maryland), our EcaFlo® equipment and solutions were accepted to be listed on the United States Department of Homeland Security’s website.

The United States Environmental Protection Agency (“EPA”) has conducted thorough investigations of the scientific data relative to our EcaFlo® Anolyte product, as well as requiring a full battery of independent, yet Company-sponsored, lab testing which was performed by fully-certified, EPA-approved labs.  Based on the results of this extensive research, we were granted our registration of EcaFlo® Anolyte on August 18, 2008.  This product is a highly effective, “green” biocide that may be used for hard-surface disinfection for many applications, including medical, dental, veterinary, schools, gyms and sports equipment; bacteria control for food safety; oil and gas; water treatment; and infection control.  This registration process has been completed in order to make important marketing and efficacy claims about our EcaFlo® Anolyte product and its ability to be used as a high-level (hospital) disinfection/antimicrobial product.  Additionally, other business models are now allowed because this registration permits the distribution of EcaFlo® Anolyte by container, as well as for use on-site where produced.  A copy of the press release we issued in reference to the above is attached hereto as exhibit 99.1. In addition, we have concluded further testing on another specific MRSA-“family” strain of bacteria to present to the EPA for consideration for adding another specific claim to our already extensive list of product registration label claims. On March 16, 2009, we received written authorization from the EPA allowing us to make specific claims relative to EcaFlo® Anolyte’s efficacy on the specific microorganism known as MRSA.

Benchmark, along with a service company, are concluding thorough oilfield bacteria testing in a third-party, independent lab and field testing of Excelyte® to ascertain specific comparison data between Excelyte® and traditionally-used oilfield chemicals.  The results of this testing will pinpoint specific uses for Excelyte® beyond the use for frac waters, which expands the known oilfield market through additional applications.

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Significant changes in the number of employees.

We currently employ 8 full-time, permanent employees. These employees are engaged in management, marketing and sales, engineering, production and administrative services. We continue to anticipate an increase in employees in the next twelve months as we add assembly personnel, shipping and receiving personnel and additional administrative support personnel.

Consultants

CBG Advanced Studies, Inc. On September 7, 2007, we entered into a consulting agreement with CBG Advanced Studies, Inc. (“CBG”), wherein CBG agreed to assist the Company in developing appropriate and effective market penetration plans relative to the use of our EcaFlo® equipment and solutions within U.S. military and civilian decontamination market areas. The term of the agreement began on September 7, 2007 and terminated on August 31, 2008. We agreed to compensate CBG with 30,000 shares of our restricted common stock on a quarterly basis and $2,000 per month for the first three (3) months, and to pay for mutually agreed upon travel and expenses incurred in the performance of the agreement.

Duke Van Kalken.  On June 30, 2008, we entered into a contractor agreement with Duke Van Kalken, President of Aquastel, for a period of one year.  Mr. Van Kalken is to provide assistance to the Company with marketing and sales on a commission basis.

United Capital Group, Inc.  On August 26, 2008, we entered into a consulting agreement with United Capital Group, Inc., wherein United Capital Group, Inc. agreed to provide the Company with investor and public relations services. The term of the agreement began on August 26, 2008 and terminated on February 26, 2009. We agreed to compensate United Capital Group, Inc. with $5,000 upon execution of the agreement and a monthly fee of $5,000 commencing on September 26, 2008 and payable on the 26th of each successive month thereafter during the term of the agreement.

EGR International.  On January 1, 2008, we entered into a consulting agreement with EGR International, wherein EGR International agreed to provide the Company with consulting services for special project development on a month-to-month basis.  We agreed to compensate EGR International with $2,500 per month.

Legend Capital Management, LLC.  On October 20, 2008, we entered into a consulting agreement with Legend Capital Management LLC, wherein Legend Capital Management, LLC agreed to devise and prepare a plan for investor relations and financing for the Company.  The original term of the agreement began on October 20, 2008 and terminated on January 20, 2009.  Both parties have agreed to extend the agreement on a month-to-month basis.  We agreed to compensate Legend Capital Management LLC with $18,000 ($3,000 on November 1, 2008, and a monthly fee of $7,500 commencing on November 20, 2008 and payable on the 20th of each successive month thereafter during the original term of the agreement).  Additionally, we agreed to issue Legend Capital Management LLC, warrants to purchase 200,000 shares of the Company’s restricted common stock at $0.10 per share, exercisable for five (5) years.

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Subsequent

Harvey M. Burstein.  On March 13, 2009, we entered into a consulting agreement with Harvey M. Burstein, wherein Mr. Burstein agreed to provide a plan for various investor and public relations services for the Company.  The term of the agreement began on March 13, 2009 and will terminate on May 13, 2009.  We agreed to compensate Mr. Burstein with $5,000, payable upon completion of the agreement.  The fee will be paid in full on or before May 13, 2009.

Exclusive License and Distribution Agreement

On June 20, 2007, in connection with the Stock Acquisition Agreement with Benchmark, we entered into an Exclusive License and Distribution Agreement, wherein we granted the exclusive, worldwide right, license, and authority to market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in Oilfield Applications to Benchmark Energy Products. The agreement provides for special pricing of equipment to Benchmark and per-gallon technology fees, paid to IET on the EcaFlo® fluids sold by Benchmark, for a five-year period consistent with the license period.

Benchmark and the Company have extended the deadline for fixing the minimum technology fees payable to the Company under the Exclusive License and Distribution Agreement while a major pumping services company, which has expressed an interest in obtaining some level of exclusivity, completes its laboratory analysis and field testing of anolyte. The analysis and testing is expected to be completed in the first or second quarter of 2009.

Supply Agreement with D2W2, LLC

On June 6, 2008, we entered into a supply agreement with D2W2, LLC, wherein D2W2 agreed to purchase our products (certain electro-chemical activation equipment) for resale. The term of the agreement commenced on June 6, 2008 and will continue for two years and shall automatically renew for a full five year term provided satisfactory marketing, testing and sales progress is made by D2W2, and, shall continue thereafter, year to year, upon the same terms and conditions, unless either party notifies the other that it wishes to renegotiate or terminate.

Exclusive Distributorship Agreement with Mickey’s Sales & Service

On September 8, 2008, the Company entered into an exclusive distributorship agreement with Mickey’s Sales & Service (“Mickey’s”), wherein IET granted to Mickey’s the exclusive right to purchase, inventory, promote, and resell EcaFlo® products in North Carolina and Virginia.  The term of the agreement commenced on September 8, 2008 and will continue for three years renewable annually upon agreement by both parties, based on performance and market applications.  In addition, Mickey’s was granted the exclusive rights to purchase, inventory, promote, and resell EcaFlo® products in South Carolina, with a right of first refusal, reviewed by the Company on a case-by-case basis, to respond to leads and accomplish sales.

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Exclusive Supply Agreement with Aquastel, Inc.

On August 22, 2006, we entered into a supply agreement with Aquastel, Inc., wherein Aquastel agreed to supply us with C-50 and C-100 cells.  On September 13, 2006, this agreement was amended by addendum for exclusivity.  The term of the agreement is for 3 years, terminating on August 22, 2009.

Critical Accounting Policies and Estimates

Our discussion of financial conditions and results of operations is based upon the information reported in our financial statements.  The preparation of these statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of our financial statements.  We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable at the time.  Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics, mechanical problems, general business conditions and other factors.  Our significant estimates are related to the valuation of warrants and options.

Revenue Recognition

We recognize sales revenue when title passes and all significant risks of ownership change, which occurs either upon shipment or delivery based on contractual terms.  We are in discussions with Benchmark relative to the fact that Benchmark’s own trucking group prefers to pick up the EcaFlo® equipment that is ordered and paid for, in order to deliver the equipment to their own locations.  We believe that the sale has occurred when the equipment is on our loading dock awaiting pick-up by Benchmark, but will obtain written resolution before future sales are recorded in this manner.

Off-Balance Sheet Arrangements.

As of December 31, 2008, we did not have any off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Concentration of Credit Risk

We sell products to customers in diversified industries and geographical regions.  During the years ended December 31, 2008 and 2007, we had three customers, which represented 41%, 16%, and 12% and 52%, 11%, and 7% of sales, respectively.  We continually evaluate the creditworthiness of our customers and typically require a deposit of 50% of the total purchase price with each EcaFlo® equipment order.

We evaluate the collectibility of accounts receivable regularly and it is our policy to record an allowance when the results of the evaluation indicate an increased risk related to the customer's ability to meet their financial obligations.  As of December 31, 2008 and 2007, there was $37,841 and $0 reserve, respectively, for bad debts.

ITEM 8.                      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements and Financial Statement Schedules appearing on page F-1 through F-19 of this Form 10-K.

ITEM 9.                      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with our independent auditors on accounting or financial disclosures.

ITEM 9a (T).              CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Principal Financial Officer, William E. Prince, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Mr. Prince concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control, as is defined in the Securities Exchange Act of 1934.  These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable.  There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls.  Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based upon this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2008.

This annual report does not include an attestation report of the Company’s registered public accounting firm, Weaver & Martin, LLC, regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.                    OTHER INFORMATION

None.

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PART III

ITEM 10.                                DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Since the Annual Stockholder's Meeting on December 21, 2007, we have a classified Board of Directors.  The Board of Directors currently consists of five (5) directors:  two Class I directors who will hold office for a three-year term, two Class II directors who will hold office for a two-year term, and one Class III director who will hold office for a one-year term.

The officers serve at the pleasure of the Board of Directors.

Information as to our current directors and executive officers is as follows:

Name	Age	Title	Term	Class
William E. Prince	57	President, CEO, Chairman, Treasurer	Since 2003	Class I
Marion Sofield	46	Secretary, Director	Since 2004	Class II
Dr. Valgene L. Dunham	65	Director	Since 2004	Class III
E. Wayne Kinsey, III	56	Director	Since June 21, 2007	Class I
David N. Harry	50	Director	Since June 21, 2007	Class II

Duties, Responsibilities and Experience

William E. Princehas served as Chairman of the Board, Chief Executive Officer, and a Director of the Company since August 27, 2003.  Presently, Mr. Prince is also the President of I.E.T., Inc.  Mr. Prince served as Executive Director of the Albemarle Economic Development Commission from 1999 to August 2003.  Mr. Prince was Branch and Regional Manager of Law/Gibb Group, an employee-owned international environmental engineering consulting firm, from 1996 to 1999.  Mr. Prince was Vice President and Branch Manager for Froehling & Robertson, a family-owned environmental consulting firm from 1994 to 1996.  From 1990 to 1994, Mr. Prince served as Vice President for Business Development and was a principal and owner with Ragsdale Consultants, Inc., and DSA Design Group, both privately-held engineering and environmental consulting firms.  From 1979 to 1990, Mr. Prince held various management positions with Law Engineering and Environmental Services, an employee-owned international consulting firm.  Primary responsibilities were new ventures and company growth.

Marion Sofield has served as Secretary of the Company since April 23, 2004 and has served as a Director of the Company since August 5, 2004.  Presently, Ms. Sofield is also Vice President of Operations for I.E.T., Inc.  Formerly the Executive Director of Matrix Technology Alliance, Inc. (2003-2004), Ms. Sofield joined our staff to develop and implement operating systems and production capabilities that have moved the Company into a production mode.  That responsibility continues as we now move into mass production mode.  Ms. Sofield has eight years of experience, from 1993-2002, in economic development management and has owned and operated two successful businesses of her own.  From 1983 through 1987, Ms. Sofield served as a Corporate Secretary/Treasurer for Lord-Wood, Larsen Associates, Inc., a civil engineering firm formerly located in West Hartford, Connecticut.  Ms. Sofield, a 1983 graduate of Radford University, was honored in Washington, D.C. as the 2003 Business Person of the Year by the United States of America’s Business Advisory Council.

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Dr. Valgene L. Dunham has served as a Director of the Company since January 19, 2004.  Dr. Dunham recently retired from the position of Vice President for Grants, Contract Administration and Research Planning for Coastal Carolina University in South Carolina, and continues to serve as a liaison between Coastal Carolina University and IET on research programs.  In the fall semester of 2002, Dr. Dunham served as the Special Assistant to the President of Coastal Carolina University.  In the summer of 2002, Dr. Dunham served as Interim Provost of Coastal Carolina University.  From 1995 through 2002, Dr. Dunham served as Dean of the College of Natural & Applied Sciences of Coastal Carolina University.  In 1969, Dr. Dunham received his Ph.D. in Botany from Syracuse University in New York.  In 1965, Dr. Dunham received his Masters in General Science from Syracuse University in New York.

E. Wayne Kinsey, III has served as a Director of the Company since June 21, 2007.  Since 1981, Mr. Kinsey has served as President and CEO of Benchmark Performance Group, Inc.  He began his career in the oilfield pumping services industry in 1975 as an equipment operator in Seagraves, Texas.  By 1981, Mr. Kinsey had become Distribution Manager for Benchmark’s materials procurement, specialty blending and transportation and distribution facility in Odessa, Texas.  More importantly, he had concluded by 1981 that running a successful chemicals management and supply organization - especially one serving the demanding oil and gas service industry - - required much more than just an inventory of chemicals.  Thus, Chemical Blending Services, Inc. was born.  In the ensuing 25 years, Benchmark has grown under Mr. Kinsey's leadership from a simple “service first” chemical supplier into one of the world’s foremost developers and manufacturers of industrial and specialty chemicals, with an emphasis on chemical products and chemical solutions for the oil well pressure pumping service industry.  One thing has remained constant however - a determination and commitment to provide the customer with a level of service and technical support it can find from no other chemical supplier.  In 2004, Mr. Kinsey was appointed to the Board of Directors of the Texas Enterprise Fund by Texas Speaker of the House Tom Craddick.  In 1993, Mr. Kinsey worked in support of the founding of the Hillcrest School (for children with learning differences) in Midland, Texas, and he served for several years as a member of the School's Board of Directors.  In 1997, Mr. Kinsey was appointed by then Governor George W. Bush to the Continuing Advisory Committee for Special Education.  In 2001, he was appointed to the Advisory Board of Directors of Houston Achievement Place.  A number of the patents held by Benchmark bear Mr. Kinsey’s name as an inventor.

David N. Harryhas served as a Director of the Company since June 21, 2007.  Mr. Harry is the Executive Vice President and Chief Technical Officer of Benchmark.  He received his BS and MS from Stephen F. Austin State University and conducted work toward his doctoral in limnology and hydrology at Texas A&M University.  Mr. Harry began his career as an analytical chemist in 1977.  After spending two years in testing laboratories, Mr. Harry joined a major oilfield pressure pumping services company, where he served between 1979 and 1982 as a field chemist, District Engineer and then Regional Sales Engineer.  After another two years as Technical Manager for an independent pressure pumping services company, Mr. Harry joined Benchmark in 1984 to assist it with its growing dry and liquid chemical blending business.  Mr. Harry has been Benchmark's Chief Technical Officer since 1990, and directs all of Benchmark’s quality control, technical support and product development activities.  Under his technical leadership, over 35 patents have been issued to Benchmark, nine of which bear his name as inventor.  Mr. Harry is a member of the Society of Petroleum Engineers and the American Society of Quality Control.

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Election of Directors and Officers.

Directors are elected to serve under a classified board:  Class I directors serve 3 years, Class II directors serve two years and Class III directors serve one year.  Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

No Executive Officer or Director of the Company has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

No Executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

No Executive Officer or Director of the Company is the subject of any pending legal proceedings.

Involvement in Certain Legal Proceedings

No Executive Officer or Director of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him/her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

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No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

Audit Committee and Financial Expert

We do not have an Audit Committee.  Our directors perform some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls.  The Company does not currently have a written audit committee charter or similar document.

We have no financial expert.  We believe the cost related to retaining a financial expert at this time is prohibitive.  Further, because of our start-up operations, we believe the services of a financial expert are not warranted.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater-than-ten-percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.  Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of this filing they were all current in their filings.

Code of Ethics

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

(1)   Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2)   Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;

(3)   Compliance with applicable governmental laws, rules and regulations;

(4)   The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5)   Accountability for adherence to the code.

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We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

Our decision to not adopt such a code of ethics results from our having only two officers and five directors operating as the management for the Company.  We believe that the limited interaction which occurs having such a small management structure for the Company eliminates the current need for such a code, in that violations of such a code would be reported to the party generating the violation.

Corporate Governance

Nominating Committee

We do not have a Nominating Committee or Nominating Committee Charter.  Our Board of Directors performs some of the functions associated with a Nominating Committee.  We have elected not to have a Nominating Committee in that we are an initial-stages operating company with limited operations and resources.

Director Nomination Procedures

Generally, nominees for Directors are identified and suggested by the members of the Board or management using their business networks.  The Board has not retained any executive search firms or other third parties to identify or evaluate director candidates in the past and does not intend to in the near future.  In selecting a nominee for director, the Board or management considers the following criteria:

1.   whether the nominee has the personal attributes for successful service on the Board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to the affairs of the Company;

2.   whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations;

3.   whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to the Company’s current or future business, will add specific value as a Board member; and

4.   whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing Board member to continue his service.

The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for Board membership.  Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director.  During 2008, the Company received no recommendation for Directors from its stockholders.

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The Company will consider for inclusion in its nominations of new Board of Directors nominees proposed by stockholders who have held at least 1% of the outstanding voting securities of the Company for at least one year.  Board candidates referred by such stockholders will be considered on the same basis as Board candidates referred from other sources.  Any stockholder who wishes to recommend for the Company’s consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to the Company’s Secretary at the following address:  4235 Commerce Street, Little River, South Carolina 29566.

ITEM 11.                    EXECUTIVE COMPENSATION

Overview of Compensation Program

The Board of Director’s (the “Board”) has responsibility for establishing, implementing and continually monitoring adherence with IET's compensation philosophy.  The Board ensures that the total compensation paid to the Executives is fair, reasonable and competitive.  We do not currently have a Compensation Committee.

Compensation Philosophy and Objectives

The Board believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by IET, and which aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of IET and only having two executive officers, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends on establishing a Compensation Committee to evaluate both performance and compensation to ensure that IET maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of our peer companies. To that end, the Board believes executive compensation packages provided by IET to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

The Board makes all compensation decisions for the Executives and approves recommendation regarding equity awards to all elected officers of IET. Decisions regarding the non-equity compensation of other executive officers are made by the Board.

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Setting Executive Compensation

Based on the foregoing objectives, the Board has structured IET's annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by IET and reward the executives for achieving such goals.

2008 Executive Compensation Components

For the fiscal year ended December 31, 2008, IET continued to have two executive officers, whose contracts were amended on May 30, 2007.  We amended our chief executive officer's, William E. Prince, employment agreement to increase his annual salary from $74,400 to $130,000 and extended the termination date from December 31, 2009 to March 30, 2012.  We also amended our executive vice president's, Marion C. Sofield, employment agreement o increase her annual salary from $72,000 to $110,000 and extended the termination date from December 31, 2009 to March 30, 2012.

No actions took place in 2008 relative to Executive Compensation.

SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by our executive officer William E. Prince for the last three fiscal years ended December 31, 2008, 2007 and 2006 and the total compensation paid or earned by our executive vice president of operations Marion C. Sofield for the last fiscal years ended December 31, 2008 and 2007.

SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compen-sation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compen-sation ($)		Total ($)
William E. Prince,
CEO/President/ Director	2008	$	129,620		-0-	$	18,250		-0-		-0-		-0-	$	4,800	$	152,670
	2007	$	115,267		-0-		-0-	$	54,287		-0-		-0-		-0-	$	169,554.00
	2006	$	74,400		-0-	$	8,400		-0-		-0-		-0-	$	12,417.81	$	95,217.81
Marion C. Sofield,
Executive Vice President/Secretary/ Director	2008	$	108,778		-0-	$	9,500		-0-		-0-		-0-	$	4,800	$	123,078
	2007	$	92,964		-0-		-0-	$	27,144		-0-		-0-		-0-	$	120,108

Employment Agreements

William E. Prince. On May 30, 2007, we executed an amended employment agreement with our President and CEO, William E. Prince, wherein we extended the termination date from December 31, 2009 to March 30, 2012.  Additionally, we increased Mr. Prince’s annual salary from $74,400 to $130,000, which shall be paid in equal, bi-weekly installments retroactive to April 1, 2007.

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Marion C. Sofield. On May 30, 2007, we executed an amended employment agreement with our Executive Vice President, Marion C. Sofield, wherein we extended the termination date from December 31, 2009 to March 30, 2012.  Additionally, we increased Ms. Sofield’s annual salary from $72,000 to $110,000, which shall be paid in equal, bi-weekly installments retroactive to April 1, 2007.

Termination of Employment

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in Cash Consideration set out above which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.

Compensation Committee

We currently do not have a compensation committee of the board of directors.  Until a formal committee is established our entire board of directors will review all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation.

Option Grants in Last Fiscal Year

During the year ended December 31, 2008, we did not grant any options to our officers and directors.

During the year ended December 31, 2007, we granted the following options to our officers and directors:

(i)   500,000 options to our chief executive officer and a director, William E. Prince,

(ii)   250,000 options to our secretary and a director, Marion C. Sofield,

(iii)   25,000 options to our director, Dr. Valgene Dunham, and

(iv)   25,000 options to our former director, James C. Pate.

Director Compensation

All directors will be reimbursed for expenses incurred in attending Board or committee, when established, meetings.  From time to time, certain directors who are not employees may receive shares of our common stock.

The following table sets forth the summary compensation information for the fiscal year ended December 31, 2008 for each of our non-employee directors:

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DIRECTOR COMPENSATION
Name	Fees Earned or Pain in Cash ($)		Stock Awards ($)			Option Awards ($)		Non-Equity Incentive Plan Compen- sation ($)		Change in Pension Value and Nonqualified Deferred Compensation ($)		All Other Compen- sation ($)		Total ($)
Valgene Dunham		-0-	$	750	(2)		-0-		-0-		-0-		-0-	$	750
David N. Harry		-0-	$	625	(3)		-0-		-0-		-0-		-0-	$	625
E. Wayne Kinsey III		-0-	$	625	(4)		-0-		-0-		-0-		-0-	$	625
James C. Pate(1)		-0-	$	125	(5)		-0-		-0-		-0-		-0-	$	125

(1)   Mr. Pate is a former director of the Company, effective December 21, 2007.

(2)   Amount represents the estimated total fair market value of 15,000 shares of common stock (7,500 of which were for 2007 compensation) issued to Mr. Dunham for services as a director under SFAS 123(R).

(3)   Amount represents the estimated total fair market value of 12,500 shares of common stock (5,000 of which were for 2007 compensation) issued to Mr. Harry for services as a director under SFAS 123(R).

(4)   Amount represents the estimated total fair market value of 12,500 shares of common stock (5,000 of which were for 2007 compensation) issued to Mr. Kinsey for services as a director under SFAS 123(R).

(5)   Amount represents the estimated total fair market value of 2,500 shares of common stock (all of which were for 2007 compensation) issued to Mr. Pate for services as a director under SFAS 123(R).

ITEM 12.                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on February 10, 2009 relating to the beneficial ownership of our common stock by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 79,058,467 shares of common stock outstanding.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after February 10, 2009 pursuant to options, warrants, conversion privileges or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.

Security Ownership of Management

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Name of Beneficial Owner (1)	Number of Shares	Percent Beneficially Owned (2)
William E. Prince, President & Director 4235 Commerce St. Little River, SC 29566	1,577,500 (3)	2%
Marion C. Sofield, Vice President, Secretary & Director 4235 Commerce Street Little River, SC 29566	802,500 (4)	1%
Dr. Valgene L. Dunham, Director 4235 Commerce Street Little River, SC 29566	56,000 (5)	--
E. Wayne Kinsey III, Director (6) 4235 Commerce Street Little River, SC 29566	20,012,500	25%
David N. Harry, Director 4235 Commerce Street Little River, SC 29566	12,500	--
All Directors & Officers as a Group	22,461,000	28%

(1)   As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to Common Stock (i.e., the power to dispose of, or to direct the disposition of, a security).

(2)   Rounded to the nearest whole percentage.

(3)   Includes 500,000 options to purchase shares of our common stock at $0.12 per share (expire on December 31, 2011).

(4)   Includes 250,000 options to purchase shares of our common stock at $0.12 per share (expire on December 31, 2011).

(5)   Includes 25,000 options to purchase shares of our common stock at $0.11 per share (expire on December 31, 2011).

(6)   Benchmark Performance, Inc. was issued 20,000,000 shares of common stock pursuant to a Stock Acquisition Agreement dated June 20, 2007.  Mr. Kinsey is the President, CEO and 81.4% stockholder of Benchmark.

ITEM 13.                    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPNDENCE

On June 20, 2007, we executed a Stock Acquisition Agreement with Benchmark Performance Group, Inc. (“Benchmark”).  Pursuant to the Stock Acquisition Agreement, Benchmark agreed to purchase 35,000,000 shares of our common stock for a total purchase price of $3,500,000 (“Purchase Price”) or $0.10 per share, which will be paid in seven (7) installments.  Of the 35,000,000 shares of common stock, 5,000,000 were issued on June 27, 2007, and 5,000,000 on November 2, 2007.  In connection with the Stock Acquisition Agreement we entered into an Exclusive License and Distribution Agreement with Benchmark, wherein we granted the exclusive, world-wide right, license and authority to market, sell and distribute for use in the manufacture of fluids and solution for use in Oilfield Applications to Benchmark.  E. Wayne Kinsey, III, a current Director of the Company, is the President and CEO of Benchmark and David N. Harry, a current Director of the Company, is Executive Vice President and Chief Technical Officer of Benchmark.

Director Independence

The Board of Directors has not made the determination if any of its Directors are considered independent directors in accordance with the director independence standards of the American Stock Exchange.  Therefore, as of the date of this filing, each director should be considered as non-independent.

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ITEM 14.                    PRINCIPAL ACCOUNTING FEES AND SERVICES

(1) AUDIT FEES

The aggregate fees billed for professional services rendered by Weaver & Martin, LLC, for the audit of our annual financial statements and review of the financial statements included in our Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2008 and 2007 were $35,500 and $34,150, respectively.

(2) AUDIT-RELATED FEES

The aggregate fees billed by Weaver & Martin LLC for professional services rendered for audit-related fees for fiscal years 2008 and 2007 were $6,070 and $16,500, respectively.

(3) TAX FEES

The aggregate fee to be billed by Weaver & Martin LLC for professional services to be rendered for tax fees for fiscal year 2008 was $6,070 and for fiscal year 2007 was $7,650.

(4) ALL OTHER FEES

There were no other fees to be billed by Weaver & Martin LLC for the fiscal years 2008 and 2007 other than the fees described above.

(5) AUDIT COMMITTEE POLICIES AND PROCEDURES

We do not have an audit committee.

(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

Not applicable.

ITEM 15.                    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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(a)

1.   The financial statements listed in the "Index to Consolidated Financial Statements" on page F-1 are filed as part of this report.

2.   Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

3.   Exhibits included or incorporated herein: See index to Exhibits.

(b)           Exhibits

			Incorporated by reference
Exhibit number	Exhibit description	Filed herewith	Form	Period ending	Exhibit No.	Filing date
2(a)	Agreement and Plan of Merger between Coronado Explorations Ltd and Naturol, Inc.		8-K		2(a)	10/25/01
2(b)	Amendment No. 1 to the Agreement and Plan of Merger between Coronado Explorations Ltd and Naturol, Inc.		8-K		2(b)	1/25/02
2(c)	Agreement and Plan of Merger and Reincorporation		8-K		2(c)	3/10/08
3(i)(a)	Certificate of Incorporation of Coronado Explorations Ltd. – Dated February 2, 1999		10SB12G		2(a)	6/9/99
3(i)(b)	Amended and Restated Articles of Incorporation of Coronado Explorations Ltd. – Dated May 20, 1999		10SB12G		2(b)	6/9/99
3(i)(c)	Certificate of Amendment of Certificate of Incorporation of Coronado Explorations Ltd. – Dated October 5, 2000		10-KSB	1/31/02	3(i)(c)	4/30/02
3(i)(d)	Articles of Incorporation of Naturol, Inc. – Dated June 9, 2001		10-KSB	1/31/02	3(i)(d)	4/30/02
3(i)(e)	Certificate of Amendment to Articles of Incorporation of I.E.T., Inc.		10-QSB	6/30/04	3	8/23/04
3(i)(f)	Certificate of Amendment of Certificate of Incorporation of Naturol Holdings Ltd. – Dated May 5, 2004		10-QSB	3/31/04	3(i)	5/14/04
3(i)(g)	Certificate of Merger between Coronado Subsidiary Corp. and Naturol, Inc. – Dated January 14, 2001		8-K		3(i)(g)	1/25/02
3(i)(h)	Articles of Incorporation of Integrated Environmental Technologies, Ltd. – Dated January 11, 2008		8-K		3(i)(h)	3/10/08
3(i)(i)	Articles of Merger of Integrated Environmental Technologies, Ltd., Nevada corporation and Integrated Environmental Technologies, Ltd., Delaware corporation – Dated February 15, 2008 (Nevada)		8-K		3(i)(j)	3/10/08
3(i)(j)	Certificate of Merger of Integrated Environmental Technologies, Ltd., Nevada corporation and Integrated Environmental Technologies, Ltd., Delaware corporation – Dated February 18, 2008 (Delaware)		8-K		3(i)(j)	3/10/08
3(ii)(a)	Bylaws of Coronado Explorations Ltd. – Dated February 9, 2001		8-K		3(ii)(e)	1/25/02
3(ii)(b)	Bylaws of Naturol, Inc. – Dated June 9, 2001		10-KSB	1/31/02	3(ii)(f)	4/30/02
3(ii)(c)	Bylaws of Integrated Environmental Technologies, Ltd., a Nevada corporation – Dated January 11, 2008		8-K		3(ii)(c)	3/10/08
10.1	License Agreement among Integrated Environmental Technologies Ltd., Electro-Chemical Technologies Ltd. and Laboratory of Electrotechnology Ltd. – Dated September 4, 2003		10-QSB	9/30/03	10.8	11/19/03
10.2	Supply Agreement – Dated September 4, 2003		10-QSB	9/30/03	10.9	11/19/03
10.3	Letter Agreement between SPDG Naturol Ltd. and Integrated Environmental Technologies Ltd. – Dated October 14, 2003		10-QSB	9/30/03	10.10	11/19/03
10.4	Collaborative Agreement with Integrated Environmental Technologies Ltd. and Coastal Carolina University – Dated December 11, 2003		8-K		10.2	1/08/04
10.5	Contract of Sale – JMW Investments – Dated January 2, 2004		8-K		10.1	3/1/04
10.6	Consultant and Employee Stock Compensation Plan – Dated January 21, 2004		S-8		10.3	1/22/04
10.7	Letter of Intent with Pentagon Technical Services – Dated June 15, 2004		10-QSB	6/30/04	10	8/23/04
10.8	Amendment to License and Supply Agreement with Electro-Chemical Technologies		10-QSB	9/30/04	10	11/12/04
10.9	Consulting Agreement of Joseph Schmidt, dated November 18, 2004.		8-K		10.1	1/07/05
10.10	Letter Amending Joseph Schmidt’s Consulting Agreement.		8-K		10.2	1/07/05
10.11	Consulting Agreement of XXR Consulting, Inc., dated December 8, 2004.		8-K		10.3	1/07/05
10.12	Employment Agreement of William E. Prince, dated January 3, 2005.		8-K		10.4	1/07/05
10.13	Employment Agreement of Marion Sofield – January 3, 2005		8-K		10.5	1/07/05
10.14	Addendum to Marion Sofield’s Employment Agreement – Dated February 28, 2005		10-KSB	12/31/04	10.6	3/30/05
10.15	Employment Agreement of Steve Johnson – Dated February 10, 2005		10-KSB	12/31/04	10.7	3/30/05
10.16	DaVinci-Franklin Fund I, LLC – Dated April 1, 2005		8-K		10.1	4/13/05
10.17	Agreement with Red River Capital Partners dated June 14, 2006		10-QSB	6/30/06	10	8/14/06
10.18	Stock Acquisition Agreement dated June 20, 2007		8-K		10.1	8/21/07
10.19	Exclusive License and Distribution Agreement dated June 20, 2007		8-K		10.2	8/21/07
10.20	Registration Rights Agreement dated June 21, 2007		8-K		10.3	8/21/07
16	Letter of Andersen, Andersen & Strong, L.C. regarding change in certifying accountant – Dated April 18, 2002		8-K		16	4/26/02
31	Certification pursuant to Section 302 of the Sarbanes-Oxley Act	X
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act	X

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.

By: /S/ William E. Prince                                                                

       William E. Prince, President

Date: March 31, 2009

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

Signature	Title	Date
/S/ William E. Prince	President, CEO, Chairman,	March 31, 2009
William E. Prince	Chief Accounting Officer
/S/ Marion Sofield	Vice President of Operations,	March 31, 2009
Marion Sofield	Secretary, Director
/S/ Dr. Valgene Dunham	Director	March 31, 2009
Dr. Valgene Dunham

50

INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2008 AND 2007

	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statement of Operations	F-4
Consolidated Statement of Stockholders' Equity	F-5
Consolidated Statement of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-19

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Integrated Environmental Technologies, Ltd.

We have audited the accompanying consolidated balance sheet of Integrated Environmental Technologies, Ltd. and subsidiary as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the two years in the period December 31, 2008.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. Our audits of the financial statements include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Integrated Environmental Technologies, Ltd. and subsidiary as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses and had negative cash flows that raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in the Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/S/ Weaver & Martin LLC

Weaver & Martin LLC

Kansas City, Missouri

March 31, 2009

F-2

Integrated Environmental Technologies, Ltd.
Consolidated Balance Sheets
	December 31,		December 31,
	2008		2007
Assets
Current Assets:
Cash	$	33,357	$          72,334
Accounts receivable		22,505	49,184
Inventory		133,043	309,634
Prepaid expenses		36,508	5,942
Total current assets		225,413	437,094
Equipment		13,045	13,045
Accumulated depreciation		(10,523)	(8,552)
Total building and equipment		2,522	4,493
	$	227,935	$        441,587
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	172,085	$          91,817
Accrued expenses		123,750	96,374
Notes payable		98,300	98,300
Convertible notes		501,000	-
Total current liabilities		895,135	286,491
Convertible notes		-	288,306
Shareholders' Equity (Deficit)
Common stock 200,000,000 shares authorized
par value $.001, 79,058,467 and 68,010,467 shares issued
and outstanding at December 31, 2008 and 2007		79,058	68,010
Stock bought not issued, 120,000 shares
at December 31, 2007		-	120
Paid-in capital		7,786,789	6,783,315
Retained earnings (deficit)		(8,533,047)	(6,984,655)
Total shareholders' equity (deficit)		(667,200)	(133,210)
Total liabilities and shareholders' equity (deficit)	$	227,935	$        441,587

See notes to consolidated financial statements

F-3

Integrated Environmental Technologies, Ltd.
Consolidated Statements of Operations
	Year Ended December 31,
	2008			2007
Sales	$	509,673		$	411,179
Cost of sales		290,738			164,897
Gross profit		218,935			246,282
Professional and administrative fees		306,860			581,948
Salary		672,951			748,911
Depreciation and amortization		1,971			2,280
Office & miscellaneous expense		439,260			485,461
Bad debt expense		37,841			-
Total operating expenses		1,458,883			1,818,600
Loss from operations		(1,239,948	)		(1,572,318	)
Other income (expense):
Interest expense		(308,444	)		(377,864	)
Total other income (expense)		(308,444	)		(377,864	)
Net loss	$	(1,548,392	)	$	(1,950,182	)
Weighted average shares outstanding		72,736,922			57,452,604
Net loss per share basic and diluted	$	(0.02	)	$	(0.03	)

See notes to  consolidated financial statements.

F-4

Integrated Environmental Technologies, Ltd.
Statement of Shareholders' Equity
								Stock
								Bought or			Retained			Total
	Common stock				Paid In			Earned Not			Earnings			Shareholders'
	Shares		Amount		Capital			Issued			(Deficit)			Deficit
Balance January 1, 2007		47,142,383	$	47,142	$	4,584,956		$	268		$	(5,034,473	)	$	(402,107	)
Stock issued		268,000		268		(404	)		(268	)		-			(404	)
Stock sold		12,236,000		12,236		1,227,313			-			-			1,239,548
Warrants exercised		2,350,000		2,350		291,400			-			-			293,750
Stock for services		2,782,684		2,783		178,147			120			-			181,050
Warrants and options issued for services		-		-		242,494			-			-			242,494
Convertible note converted into stock		1,608,400		1,608		68,103			-			-			69,711
Stock issued for a loan or interest costs		1,050,000		1,050		54,750			-			-			55,800
Stock issued for accrued expenses		573,000		573		56,727			-			-			57,300
Beneficial conversion feature		-		-		79,830			-			-			79,830
Net loss		-		-		-			-			(1,950,182	)		(1,950,182	)
Balance, December 31, 2007		68,010,467		68,010		6,783,316			120			(6,984,655	)		(133,210	)
Stock issued		120,000		120		-			(120	)		-			-
Stock for services		643,000		643		49,925			-			-			50,568
Warrants issued for services		-		-		35,334			-			-			35,334
Stock sold		10,285,000		10,285		918,215			-			-			928,500
Net loss		-		-		-			-			(1,548,392	)		(1,535,712	)
Balance, December 31, 2008		79,058,467	$	79,058	$	7,786,790		$	-		$	(8,533,047	)	$	(667,200	)

See notes to  consolidated financial statements.

F-5

Integrated Environmental Technologies, Ltd.
Consolidated Statements of Cash Flows
	Year Ended December 31,
	2008		2007
Cash flows from operating activities:
Net loss	$	(1,548,392)	$ (1,950,182)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		1,971	2,280
Accretion of interest on convertible notes		212,694	116,569
Stock issued for loan or interest costs		-	60,511
Stock, options and warrants issued for services		85,902	466,723
Beneficial Conversion		-	79,830
Changes in operating assets and liabilities:
Cash, restricted		-	50,000
Accounts receivable		26,679	(44,902)
Inventory		176,591	(138,694)
Deposits and prepaids		(30,566)	-
Accounts payable		80,268	(60,859)
Accrued expenses		27,376	(77,406)
Cash used in operating activities		(967,477)	(1,496,130)
Cash flows from financing activities:
Proceeds from notes payable		-	85,000
Payments on notes payable		-	(196,483)
Proceeds from exercise of warrants		-	293,750
Proceeds from sale of convertible notes		-	124,461
Proceeds from the sale of common stock		928,500	1,239,549
Cash provided by financing activities		928,500	1,546,277
Increase (Decrease) in cash		(38,977)	50,147
Cash beginning of period		72,334	22,187
Cash end of period	$	33,357	$       72,334
Supplemental disclosure of cash flow information:
Cash paid for interest	$	88,249	$       80,556
Cash paid for income taxes		-	-
Non-cash financing activities:
Stock and warrants issued for services	$	85,902	$     507,623
Notes converted to stock	$	-	$     125,711

See notes to consolidated financial statements.

F-6

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Description of Business

All of the Company’s current operations are conducted through I.E.T., Inc. (IET), a wholly-owned subsidiary.  IET currently designs, manufactures, and sells EcaFlo® equipment, which utilizes the Electro-Chemical Activation (ECA) process to generate environmentally responsible EcaFlo® solutions – anolyte and catholyte – for use in managing and controlling bacteria, fungi, viruses and other unwanted microorganisms in an effective and economically beneficial manner over a variety of commercial and industrial applications.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company’s wholly-owned subsidiary after elimination of intercompany transactions.

Accounting Estimates

The preparation of these consolidated financial statements requires the use of estimates by management in determining assets, liabilities, revenue, and expenses and related disclosures.  Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, and notes payable.  The fair value of these instruments approximates their carrying value.

Concentration of Credit Risk

IET sells products to customers in diversified industries and geographical regions.  During the years ended December 31, 2008 and 2007, three of the Company’s customers represented 41%, 16%, and 12%, and 52%, 11%, and 7% of sales, respectively.  The Company continually evaluates the creditworthiness of its customers and typically requires a deposit of 50% of the total purchase price with each EcaFlo® equipment order.

The Company evaluates the collectability of accounts receivable regularly and it is our policy to record an allowance when the results of the evaluation indicate an increased risk related to the customer’s ability to meet their financial obligations.  As of December 31, 2008 and 2007, there was no reserve for bad debts.

F-7

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with an initial maturity of three months or less, plus all certificates of deposit.

Inventories

Inventories are stated at the lower of cost or market using the first-in, first out (FIFO) method.  The inventory at December 31, 2008 and 2007 consisted of materials.

Property and Equipment

Property and equipment consisting of improvements, machinery, equipment, computers, furniture, and fixtures are recorded at cost, and are depreciated using the straight-line method over their estimated useful lives.  Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized.  When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.  A summary of the estimated useful lives is as follows:

Description	Useful Life
Machinery and equipment	5-7 years
Vehicles	5 years
Furniture and fixtures	5 years
Computers and software	3-5 years

Impairment of Long-Lived Assets

The Company reviews the carrying value of long-lived assets at each balance sheet date to determine if any impairment exists.  Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes.  Potential impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the Company’s cost of capital.  Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.

Revenue Recognition

The Company recognizes sales revenue when title passes and all significant risks of ownership change, which occurs either upon shipment or upon delivery based on contractual terms.

F-8

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes. Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using the enacted tax rated in effect in the years in which the differences are expected to reverse. Recognition of deferred tax assets is limited to amounts management considers more likely than not of realization in future periods.

Loss Per Share

Basic and diluted loss per share was computed in accordance with Statement of Financial Accounting Standards No. 128.  Basic loss per share is computed by dividing the net loss available to common shareholders (numerator) by the weighted average of common shares outstanding (denominator) during the period and excludes the potentially diluted common shares.  Diluted net loss per share gives effect to all potential diluted common shares outstanding during a period.  There were no potentially diluted common shares outstanding on December 31, 2008 and 2007.

Research and Development Costs

Research and development costs relating to both future and current products are charged to expense as incurred.  These costs aggregated approximately $14,724 and $0 in 2008 and 2007, respectively.

Reclassifications

Certain reclassifications have been made to prior periods to conform to current presentations.

Recently Issued Accounting Standards

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133”.  This statement amends FASB Statement No. 133 to require enhanced disclosures about an entity’s derivative and hedging activities and thereby improve the transparency of financial reporting.  This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, and encourages, but does not require, comparative disclosures for earlier periods at initial adoption.  The adoption of SFAS 161 is not expected to have a material impact on the Company’s financial position, results of operation, or cash flows.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”.  This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).  This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”.  The adoption of SFAS 162 is not expected to have a material impact on the Company’s financial position, results of operation, or cash flows.

F-9

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – an interpretation of FASB Statement No. 60”.  SFAS No. 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.  This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts.  This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities.  The adoption of SFAS 163 is not expected to have a material impact on the Company’s financial position, results of operation, or cash flows.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations”.  This statement replaces SFAS 141 and defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its fair value at that date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51”.  This statement amends ARB 51 to establish accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company’s ability to continue as a going concern is dependent upon obtaining additional sources of capital or borrowings until the Company is able to attain future profitable operations.  The accompanying financial statements do not include any adjustments that might be necessary should the company be unable to continue as a going concern.

F-10

NOTE 3 - NOTES PAYABLE

Notes payable at December 31, 2008 and 2007 consisted of demand notes with interest rates of 10% to approximately 18% and totaled $98,300,

Fiscal 2007

We had a line of credit from Crescent Bank in the amount of $50,250 with interest at prime plus 1%. The bank required that we maintain a balance in a restricted account totaling $50,000. On May 17, 2007, the line of credit was paid off and closed.

Pursuant to the note agreement for a $75,000 short-term loan, we issued 250,000 shares of common stock as liquidated damages for the failure to repay the loan within 90 days. The note was paid in full by December 31, 2007.

We borrowed $40,000 from an individual at an interest rate of 12%.  There was a dispute over the timing of the attempted repayment of this loan.  The note was paid in full by December 31, 2007 as we issued 1,070,900 shares of common stock as payment for the principal and accrued interest.

We borrowed $25,000 from an individual at an interest rate of 12%.  The note was paid in full by December 31, 2007 as we issued 537,500 shares of common stock as payment for the principal and accrued interest.

We borrowed $25,000 from an individual which accrued interest at a rate of 18% per annum and is unsecured.  Pursuant to the note agreement, we agreed to issue 100,000 shares of common stock as a loan fee.

Fiscal 2008

In fiscal 2008 we borrowed short-term funds at various times from Officers and shareholders at various interest rates.  All loans were repaid by December 31, 2008.

On April 23, 2008, we entered into a Share Purchase Agreement with AD Capital, LLC (“AD Capital”).  Pursuant to the agreement, AD Capital agreed to purchase up to an aggregate of $150,000 and a minimum of $60,000 in convertible debentures from us.  Further, we agreed to pay a due diligence fee in the amount of $10,000 and issue two warrants to purchase up to 300,000 shares of our common stock, of which 150,000 are exercisable at a strike price of $0.05 per share and the remaining 150,000 are exercisable at $0.25 per share.  Both sets of warrants expire on April 23, 2013.  The value of the warrants as calculated using the Black-Scholes model was $16,740 and this was expensed as a loan fee.  The loan has been repaid.

F-11

On July 15, 2008, we entered into a Promissory Note Agreement with The Morton Fishman Revocable Trust.  Pursuant to the agreement, the Company borrowed $150,000 at an interest rate of 16% per annum, due on or before August 27, 2008.  We agreed to pay administration and legal fees of $12,000, which were deducted from the net proceeds of the loan.  Further, we agreed to issue warrants to purchase up to 200,000 shares of our common stock at a strike price of $0.05 per share, which expire July 15, 2010.  The value of the warrants as calculated using the Black-Scholes model was $5,914 and this was expensed as a loan fee.  The loan has been repaid.

NOTE 4 - CONVERTIBLE NOTES

We entered into a consulting agreement for one year that specified payment for services by issuing 50 units consisting of 50 10% Convertible Debentures (conversion price of $0.40, convertible until January 2, 2009), 150,000 shares of common stock and 100,000 Series “C” Warrants ($0.25 per share, exercisable until December 31, 2008).  The value assigned to the instruments was based on the fair market value of each and consisted of $8,766 for the convertible notes, $12,097 for the stock and $4,137 for the warrants.

In 2007, we sold 702 units consisting of 10% Convertible Debentures (conversion price of $0.40 per share, convertible until January 2, 2009), 2,106,000 shares of common stock and 1,404,000 Series “C” Warrants ($0.25 per share, exercisable until December 31, 2008) for a total purchase price of $351,000.  We allocated the proceeds from the units between the convertible note, common stock and warrants based on the fair market value of each instrument.  The allocation was $124,452 to convertible notes, $168,758 to common stock and $57,790 to warrants.

We have accreted interest between the date of sale of the convertible notes to maturity to reflect the difference between what was received for the notes and what will be paid at maturity. At December 31, 2008 and 2007, we accreted interest to expense totaling $212,694 and $116,569 respectively and the un-accreted interest was $-0- at December 31, 2008.

We had a beneficial conversion on the sale of the 2007 convertible notes based on the conversion price and the price of the stock at the date of sale.  The expense of the beneficial conversion was $79,830.

NOTE 5 - COMMON STOCK

Fiscal 2007

We issued 268,000 shares of restricted common stock that was un-issued as of December 31, 2006.

We sold 130,000 shares of common stock for cash totaling $13,000.

F-12

We sold 702 units consisting of 10% Convertible Debentures (conversion price of $0.40, convertible until January 2, 2009),  2,106,000 shares of common stock, and 1,404,000 Series “C” Warrants ($0.25 per share, exercisable until December 31, 2008).  Amounts allocated to equity for the stock and warrant sale were $226,548 (see Note 4).

On June 20, 2007, we entered into a “Stock Acquisition Agreement” with Benchmark Performance Group, Inc. (“Benchmark”).  Pursuant to the agreement, Benchmark agreed to purchase 35,000,000 shares of common stock for a total purchase price of $3,500,000 or $0.10 per share. We issued 10,000,000 shares pursuant to the agreement resulting in total proceeds of $1,000,000. There are 25,000,000 shares remaining to be issued pursuant to the agreement in 2008 and 2009.  Upon issuance of each 10,000,000 shares, we will initiate a registration of the shares,

Pursuant to the Agreement, Benchmark shall have the right to maintain an equity position in the Company equal to the equity position it would own upon the issuance of all shares due under the agreement. If at any time during the Anti-Dilution Period, the Company were to issue any shares of common stock which would impair the equity position of Benchmark, then the Company shall issue a warrant to purchase shares of common stock at an exercise price of $0.10 per share, which would upon exercise, reinstate their equity position. The warrants will be exercisable at any time through October 31, 2009.

In addition, Benchmark can acquire additional shares of common stock whereby the purchase would give Benchmark 51% of our total outstanding equity. Benchmark will be able to purchase these additional shares at any time through October 31, 2009, at an exercise price equal to the weighted average per share price of common stock over the 22 trading days prior plus a 15% per share control premium to the date we receive written notice of their desire to make this purchase.

Warrants were exercised for 2,350,000 shares for proceeds of $293,750.

We issued 2,000,000 shares of common stock in connection with consulting services and recorded professional fees in the amount of $100,000, the fair value of the services received.

We issued 600,000 shares of common stock to 3GC, Ltd. in connection with the consulting agreement.  As of December 31, 2007, professional fees in the amount of $66,000 were expensed, representing the fair value of the shares on the date of grant.

We entered into consulting agreements and issued 32,684 shares.  We recorded a consulting expense of $5,234 based on the fair market value of the shares on the date of the agreement.

We entered into a consulting agreement that specified payment for services by issuing 50 units consisting of 50 10% Convertible Debentures (conversion price of $0.40, convertible until January 2, 2009), 150,000 shares of common stock and 100,000 Series “C” Warrants ($0.25 per share, exercisable until December 31, 2008). (See Note 4).  The amount allocated to equity was $16,234.  The services were provided over a one-year period and for the year ended December 31, 2008 and 2007, we have recorded $10,418 and $5,816, respectively, as professional fee expense.

F-13

We entered into a consulting agreement with a term of one year.  We agreed to issue 120,000 shares of our common stock, to be issued quarterly in 30,000 share increments. The value of the services was recorded based on the market value of our stock at the date of the agreement and totaled $12,000.  At December 31, 2008 and 2007, we recorded professional fee expense of $8,000 and $4,000, respectively.

We issued 1,608,400 shares of our common stock at a conversion rate of $.04 and $.05 per share for a total amount of $69,711, as payment in full on loans.

Pursuant to note agreements we issued 1,050,000 shares of common stock as liquidated damages (value of $57,300).

 We issued 573,000 shares of common stock as payment for accrued professional fees in the amount of $57,300.

 We issued 22,058 shares of common stock for services.  As of December 31, 2007, we recorded professional fees of $2,426.

Fiscal 2008

We issued 120,000 shares of restricted common stock that were un-issued as of December 31, 2007.

We sold 10,000,000 shares to Benchmark for $900,000 and 285,000 shares for $28,500.

Our Board of Directors approved the issuance of 643,000 shares of common stock to certain employees and Directors as compensation.  The total expense was $32,150, which represented the fair market value of our shares on the date the awards were made.  Amortization of expense in fiscal 2008 for stock issued for services in 2007 totaled $18,418.

F-14

NOTE 6 - OPTIONS AND WARRANTS

Fiscal 2007

We have reserved for issuance an aggregate of 6,500,000 shares of common stock under our Stock Option Plan.On March 26, 2007, the Board awarded 325,000 options to purchase stock at $0.11 per share expiring December 31, 2011, and 750,000 options to purchase stock at $0.12 per share expiring December 31, 2011.  The fair market value of the options based on the Black Scholes model is $116,738 using the following assumptions:  Strike Price $0.11 and $0.12; Stock Price $0.11; Volatility 226%; Term 4.75 years; Dividend Yield 0%; Interest Rate 4.48%.  The cost was included as salary expense.

The Board of Directors authorized an offer to the series “C” warrant holders wherein they would be entitled to exercise up to 3,000,000 series “C” warrants for $0.125 per share with notification of intent to exercise by June 18, 2007.  2,350,000 warrants were exercised.

50,000 warrants issued in 2005 to purchase stock at $.20 per share expired on December 16, 2008.

The Board approved 5,000,000 Series “D” Warrants.  The series “D” warrants granted the investor the right to purchase shares of common stock at $0.10 per share.

We issued 1,000,000 Series “D” warrants to a consultant with an exercise price of $0.10 per share for consulting services. These warrants expired on December 31, 2007.  The fair market value of the warrants based on the Black-Scholes model is $57,162 using the following assumptions:  Strike Price $0.10; Stock Price $0.11; Volatility 151%; Term .75 of a year; Dividend Yield 0%; Interest Rate 4.48%.  As of December 31, 2007, we recorded $57,162 in professional fees.

We issued 1,200,000 Series “D” warrants to consultants with an exercise price of $0.10 per share for consulting services.  The warrants expired on December 31, 2007.  The fair market value of the warrants based on the Black-Scholes model is $68,594 using the following assumptions Strike Price $0.10; Stock Price $0.11; Volatility 151%; Term .75 of a year; Dividend Yield 0%; Interest Rate 4.48%.  As of December 31, 2007, we have recorded professional fees in the amount of $68,594.  These warrants were subsequently cancelled May 2, 2007, pursuant to the cancellation of the Agreement.

Fiscal 2008

We granted 350,000 warrants at an exercise price of $.05 per share, 200,000 warrants at an exercise price of $.10 per share, and 150,000 warrants at an exercise of $.25 per share.  The value of the warrants as calculated using the Black-Scholes model was $35,334 using the following weighted average assumptions:  Strike Price $0.11; Stock Price $0.08; Volatility 118%; Term 3.1 years; Dividend Yield 0%; Interest Rate 2.54%.

A summary of stock options and warrants is as follows:

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	Options		Average Price		Warrants			Average Price
Outstanding: 01/01/07		-	$	0.116		6,150,000		$	.0250
Granted		1,075,000-		-		3,704,000			0.160
Cancelled		-		-		2,300,000			0.100
Exercised		-		-		(2,350,000	)		0.125
Outstanding  12/31/07		1,075,000-		0.116		5,204,000			0.249
Granted		-		-		700,000			0.11
Cancelled		-		-		(5,204,000	)		0.249
Exercised		-		-		-			-
Outstanding12/31/08		1,075,000	$	0.116		700,000		$	0.11

NOTE 7 - LICENSE AGREEMENTS

On June 20, 2007, in connection with the Stock Acquisition Agreement with Benchmark, the Company entered into an Exclusive License and Distribution Agreement, wherein the Company granted the exclusive, worldwide right, license, and authority to market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in Oilfield Applications to Benchmark Energy Products.  The agreement provides for special pricing of equipment to Benchmark and per-gallon technology fees, paid to IET on the EcaFlo® fluids sold by Benchmark, for a five-year period consistent with the license period.

NOTE 8 – RELATED-PARTY TRANSACTIONS

In fiscal 2007 and 2008, we had consulting agreements with a shareholder and a Director with payments of $2,500 a month for each person.

On May 30, 2007, we entered into an amended employment agreement with two executives whereby the original terms were extended from December 9, 2009 to March 30, 2012.  Further, the agreement increased each Executive’s annual compensation from $72,000 to $110,000 and $74,400 to $130,000.  As of December 31, 2008, the future minimum payments are as follows:

Related-party compensation requirements
2009	$	240,000
2010		240,000
2011		240,000
Thereafter		60,000
Total	$	780,000

NOTE 9 - INCOME TAXES

For the year ended December 31, 2008, the Company incurred net operating losses and accordingly, no provision for income taxes has been recorded.  In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2008, the Company had approximately $8,086,000 of federal and state net operating losses.  The net operating loss carry forwards, if not utilized will begin to expire in 2017-2023.

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The components of the Company’s deferred tax asset are as follows:

	As of December 31,
	2008			2007
Deferred tax assets:
Net operating loss carry forwards	$	2,830,000		$	1,686,400
Total deferred tax assets		2,830,000			1,686,400
Less: Valuation allowance		(2,830,000	)		(1,686,400	)
Net deferred tax assets	$	-0-		$	-0-

For financial reporting purposes, the Company has incurred a loss since inception to December 31, 2008.  Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable.  Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets at December 31, 2008.  Further, management does not believe it has taken the position in the deductibility of its expenses that creates a more likely than not potential for future liability under the guidance of FIN 48.

A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:

	Year ended December 31,
	2008			2007
Federal and state statutory rate		34	%		34	%
Interest on convertible notes not deductible		(6	%)		(5	%)
Change in valuation allowance tax assets		(28	%)		(29	%)
		-			-

NOTE 10 - COMMITMENTS AND CONTINGENCIES

On August 22, 2006, we entered into a supply agreement with Aquastel, Inc., wherein Aquastel agreed to supply us with C-50 and C-100 cells on an exclusive basis in the United States.  The term of the agreement is for 3 years, terminating on August 22, 2009.  At the end of the term, the parties will attempt to renegotiate in good faith to extend the agreement.

On June 20, 2007, in connection with the Stock Acquisition Agreement with Benchmark, we entered into an Exclusive License and Distribution Agreement, wherein we granted the exclusive, world-wide right, license and authority to market, manufacture, sell and distribute EcaFlo® fluids and solutions for use in Oilfield Applications to Benchmark Energy Products.  The agreement provides for special pricing of equipment to Benchmark and per gallon technology fees, paid to IET on the EcaFlo® fluids sold by Benchmark, for a five-year period consistent with the license period.

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NOTE 11 - SUBSEQUENT EVENTS

On January 7, 2009, the Company borrowed $25,000 from an individual at an annual interest rate of 6%.  The loan and interest are due May 15, 2009.  In the event that the principal and interest are not paid by this date, the Company will incur a penalty of $212.50 per month, and the interest rate will increase to 12% per annum beginning May 16, 2009.  Pursuant to the Promissory Note, we agreed to issue 250,000 warrants exercisable for $0.10 per share of restricted common stock and 34,722 warrants exercisable for $0.18 per share, all expiring December 31, 2011.  In the event that the lender elects to convert the note to restricted shares of the Corporation’s common stock at $0.10 per share, the Company further agrees to issue 93,750 warrants exercisable at $0.20 per share.  The lender may also elect to convert one-half of the note to restricted shares of common stock at $0.10 per share, in which case the Company agrees to issue 46,875 warrants exercisable at $0.20 per share.  These warrants will be effective on the conversion date, and will expire December 31, 2011.  As additional consideration for the loan, we agreed to issue options for 25,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.

On January 16, 2009, the Company borrowed $125,000 from an individual at an annual interest rate of 6%.  The loan and interest are due May 15, 2009.  In the event that the principal and interest are not paid by this date, the Company will incur a penalty of $1,000 per month, and the interest rate will increase to 12% per annum beginning May 16, 2009.  Pursuant to the Promissory Note, we agreed to issue 1,250,000 warrants exercisable for $0.10 per share of restricted common stock and 173,610 warrants exercisable for $0.18 per share, all expiring December 31, 2011.  In the event that the lender elects to convert the note to restricted shares of the Corporation’s common stock at $0.10 per share, the Company further agrees to issue 468,750 warrants exercisable at $0.20 per share.  The lender may also elect to convert one-half of the note to restricted shares of common stock at $0.10 per share, in which case the Company agrees to issue 234,375 warrants exercisable at $0.20 per share.  These warrants will be effective on the conversion date, and will expire December 31, 2011.  As additional consideration for the loan, we agreed to issue options for 125,000 shares per year for three years at a 10% discount to market price as determined by a prior ten-day trading average.

On February 26, 2009, we borrowed $37,500 from a shareholder at an annual interest rate of 6%.  The loan and interest are due on May 15, 2009.

On March 13, 2009, we entered a consulting agreement for with a shareholder for a term of two months.  The services are to be of an advisory and consultative nature to provide a plan for various investor and public relations services.  Compensation will be paid in the amount of $5,000 upon completion of the agreement.

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On March 13, 2009, we borrowed $30,000 from a shareholder at an annual interest rate of 15%, with a total interest payment of not less than 5% of the loan amount.  In the event that the principal and interest are not paid by this date, the Company will incur a penalty of $3,000 per month, and the interest rate will increase to 12% per annum beginning May 16, 2009.  In addition, we agreed to issue 300,000 warrants exercisable for $0.10 per share of restricted common stock, expiring December 31, 2011.  The loan and interest are due May 11, 2009.  The lender shall have the right to convert the entire note, including interest, to restricted shares of common stock at $0.10 per share.

On March 17, 2009, we borrowed $90,000 from an individual for a flat interest of $13,500.  In addition, the Company agreed to issue 500,000 warrants exercisable for $0.10 per share of restricted common stock, expiring December 31, 2011.  The principal and interest are due May 11, 2009.  In the event that the principal and interest are not paid by this date, the Company will incur a penalty of $4,500 per month until the balance is paid in full  In addition, the lender shall have the right to convert the entire note, including interest, to restricted shares of common stock at $0.10 per share.

F-19