UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,
2015
[ ] TRANSITION REPORT PURSUANT TO
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) |
| |
|
|
| (843) 390-2500 |
| (Registrant’s telephone number, including area code) |
Indicate by check mark whether the
registrant (1) 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 whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant
is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] |
Accelerated filer [ ] |
| |
|
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) |
Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of May 8, 2015, there were 304,164,263 shares of the registrant’s
common stock, par value $0.001 per share, outstanding.
INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.
INDEX TO FORM 10-Q
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information
included in this quarterly report on Form 10-Q and other filings of the registrant under the Securities Act of 1933, as amended
(the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well
as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act
and Section 21E of the Exchange Act. 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 objectives of management for future operations; any statements concerning
proposed new services or developments; any statements regarding future economic conditions or performance; any statements of 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 quarterly report on Form 10-Q. Except as may be required under
applicable securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You should,
however, consult further disclosures we make in future filings of our annual reports on Form 10-K, quarterly reports on Form 10-Q
and current reports on Form 8-K. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995
most likely do not apply to our forward-looking statements because we are considered a penny stock issuer.
PART I – FINANCIAL
INFORMATION
Item
1. Financial Statements
The consolidated balance sheet as of March
31, 2015 and the related consolidated statements of operations and consolidated statements of cash flows for the three months ended
March 31, 2015 and 2014 for Integrated Environmental Technologies, Ltd. and its wholly-owned subsidiary I.E.T., Inc. (collectively
referred to herein as “IET” or the “Company”) included in Item 1, have been prepared by us, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and
footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”)
have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the
SEC. The consolidated financial statements include our wholly-owned subsidiary and all significant inter-company transactions and
balances have been eliminated. In the opinion of management, the accompanying consolidated financial statements include all adjustments,
which are of a normal and recurring nature, necessary to present fairly our financial position and results of operations. It is
suggested that the following consolidated financial statements be read in conjunction with the consolidated financial statements
and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.
The results of operations for the three months
ended March 31, 2015 and 2014 are not necessarily indicative of the results of the entire fiscal year or of any other period.
Integrated Environmental Technologies, Ltd.
Consolidated Balance Sheets
(Unaudited)
| | |
| March 31, 2015 | | |
| December 31, 2014 | |
| | |
| | | |
| | |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 1,629,158 | | |
$ | 371,292 | |
| Accounts receivable | |
| 96,539 | | |
| 37,098 | |
| Prepaid expenses | |
| 19,747 | | |
| 11,780 | |
| Inventory | |
| 95,706 | | |
| 117,690 | |
| Other receivable | |
| - | | |
| 111,200 | |
| Total current assets | |
| 1,841,150 | | |
| 649,060 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 276,163 | | |
| 259,468 | |
| Total assets | |
$ | 2,117,313 | | |
$ | 908,528 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity (Deficiency) | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 255,486 | | |
$ | 154,167 | |
| Accrued expenses | |
| 303,310 | | |
| 403,520 | |
| Customer deposits | |
| 2,000 | | |
| 2,000 | |
| Convertible debentures | |
| 501,125 | | |
| 501,125 | |
| Note payable | |
| 26,829 | | |
| 46,546 | |
| Total current liabilities | |
| 1,088,750 | | |
| 1,107,358 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| Stockholders’ equity (deficiency): | |
| | | |
| | |
| Common stock, $.001 par value; 400,000,000 shares authorized; 303,992,835 and 253,178,774 shares issued and outstanding, respectively | |
| 303,993 | | |
| 253,179 | |
| Additional paid-in capital | |
| 23,501,035 | | |
| 21,262,811 | |
| Accumulated deficit | |
| (22,776,465 | ) | |
| (21,714,820 | ) |
| Total stockholders’ equity (deficiency) | |
| 1,028,563 | | |
| (198,830 | ) |
| Total liabilities and stockholders’ equity (deficiency) | |
$ | 2,117,313 | | |
$ | 908,528 | |
The accompanying notes are an integral part of these consolidated
financial statements.
Integrated Environmental Technologies, Ltd.
Consolidated Statements of Operations
(Unaudited)
| | |
| Three Months Ended
March 31,
| |
| | |
| 2015 | | |
| 2014 | |
| | |
| | | |
| | |
| Revenues: | |
| | | |
| | |
| Sales | |
$ | 144,077 | | |
$ | 12,061 | |
| Leasing and licensing fees | |
| 6,000 | | |
| 6,000 | |
| | |
| 150,077 | | |
| 18,061 | |
| Cost of sales | |
| 56,430 | | |
| 4,245 | |
| | |
| | | |
| | |
| Gross profit | |
| 93,647 | | |
| 13,816 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| General and administrative | |
| 587,709 | | |
| 297,477 | |
| Sales and marketing | |
| 422,682 | | |
| 160,367 | |
| Research and development | |
| 134,010 | | |
| 60,890 | |
| | |
| 1,144,401 | | |
| 518,734 | |
| | |
| | | |
| | |
| Loss from operations | |
| (1,050,754 | ) | |
| (504,918 | ) |
| | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | |
| Interest income | |
| 120 | | |
| - | |
| Interest expense | |
| (11,011 | ) | |
| (12,281 | ) |
| Total other income (expense) | |
| (10,891 | ) | |
| (12,281 | ) |
| | |
| | | |
| | |
| Net loss | |
$ | (1,061,645 | ) | |
$ | (517,199 | ) |
| | |
| | | |
| | |
| Net loss per share, basic and diluted | |
$ | 0.00 | | |
$ | 0.00 | |
| | |
| | | |
| | |
| Weighted average shares outstanding, basic and diluted | |
| 279,195,053 | | |
| 230,424,912 | |
The accompanying notes are an integral part of these consolidated
financial statements.
Integrated Environmental Technologies, Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
| | |
| Three Months Ended
March 31,
| |
| | |
| 2015 | | |
| 2014 | |
| Cash flows from operating activities: | |
| | | |
| | |
| Net loss | |
$ | (1,061,645 | ) | |
$ | (517,199 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation | |
| 22,608 | | |
| 21,354 | |
| Stock-based compensation expense | |
| 375,088 | | |
| 30,437 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (59,441 | ) | |
| 4,478 | |
| Inventory | |
| (2,267 | ) | |
| (4,099 | ) |
| Prepaid expenses | |
| (7,967 | ) | |
| 19,039 | |
| Other receivable | |
| 111,200 | | |
| - | |
| Accounts payable | |
| 101,319 | | |
| 72,035 | |
| Accrued expenses | |
| (100,210 | ) | |
| (9,118 | ) |
| Net cash used in operating activities | |
| (621,315 | ) | |
| (383,073 | ) |
| Cash flows from investing activity: | |
| | | |
| | |
| Purchase of equipment | |
| (15,052 | ) | |
| - | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from sale of common stock, net of offering costs | |
| 1,913,950 | | |
| 25,200 | |
| Repayment of note payable | |
| (19,717 | ) | |
| (18,387 | ) |
| Net cash provided by financing activities | |
| 1,894,233 | | |
| 6,813 | |
| Increase (decrease) in cash | |
| 1,257,866 | | |
| (376,260 | ) |
| Cash - beginning of period | |
| 371,292 | | |
| 1,049,399 | |
| Cash - end of period | |
$ | 1,629,158 | | |
$ | 673,139 | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | |
| Cash paid for interest | |
$ | 6,909 | | |
$ | 2,139 | |
| Cash paid for income taxes | |
$ | 900 | | |
$ | 700 | |
| Non-cash operating activity: | |
| | | |
| | |
| Issuance of 206,250 shares of common stock, respectively, as payment of director fees | |
$ | - | | |
$ | 16,500 | |
| Noncash financing activities: | |
| | | |
| | |
| Issuance of 1,055,303 shares of common stock as payment of offering costs related to private placements | |
$ | 56,000 | | |
$ | - | |
| Issuance of warrants to purchase 1,450,303 shares of common stock as payment of offering costs related to private placements | |
$ | 47,100 | | |
$ | - | |
The accompanying notes are an integral part of these consolidated
financial statements.
Integrated
Environmental Technologies, Ltd.
Notes
to Consolidated Financial Statements
1. Basis
of Presentation
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
The Company has incurred significant recurring operating losses and negative cash flows from operations. The Company had working
capital of $752,400 and an accumulated deficit of $22,776,465 as of March 31, 2015. The Company also has no lending relationships
with commercial banks and is dependent on the completion of financings involving the private placement of its securities in order
to continue operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company does not anticipate establishing any lending relationships with commercial banks in the foreseeable future due to its
limited operations and assets. The Company continues to execute its primary strategy of selling its anolyte disinfecting solution
under the Excelyte® brand name to fund its operations and is focused on obtaining additional
capital through the private placement of its securities. The Company is pursuing potential equity and/or debt investors and, from
time to time, has engaged placement agents to assist it in this initiative. While the Company is pursuing the opportunities and
actions described above, there can be no assurance that it will be successful in its efforts. If the Company is unable to secure
additional capital, it will explore other strategic alternatives, including, but not limited to, the sale of the Company. Any
additional equity financing may result in substantial dilution to the Company’s stockholders.
2. Inventory
As
of March 31, 2015 and December 31, 2014, inventory consisted of parts and materials totaling $95,706 and $117,690, respectively.
3. Property
and Equipment
As
of March 31, 2015 and December 31, 2014, property and equipment, on a net basis, consisted of the following:
| | |
March
31, 2015 | | |
December 31, 2014 | |
| Leasehold improvements | |
$ | 328,977 | | |
$ | 328,977 | |
| Equipment | |
| 476,807 | | |
| 437,504 | |
| | |
| 805,784 | | |
| 766,481 | |
| Less: Accumulated depreciation | |
| (529,621 | ) | |
| (507,013 | ) |
| | |
$ | 276,163 | | |
$ | 259,468 | |
4. Accrued
Expenses
As
of March 31, 2015 and December 31, 2014, accrued expenses consisted of the following:
| | |
March
31, 2015 | | |
December 31, 2014 | |
| Accrued compensation | |
$ | 232,979 | | |
$ | 253,305 | |
| Accrued penalty | |
| - | | |
| 87,344 | |
| Accrued interest (see Note 5) | |
| 37,453 | | |
| 27,321 | |
| Accrued professional fees | |
| 2,750 | | |
| 22,000 | |
| Accrued consulting fees and other expenses | |
| 30,128 | | |
| 13,550 | |
| | |
$ | 303,310 | | |
$ | 403,520 | |
5. Convertible
Debentures
April
2007 Convertible Debenture
On
April 26, 2007, in a private placement, the Company issued a convertible debenture to an individual accredited investor in the
principal amount of $25,000. This convertible debenture matured on January 2, 2009 and remains unpaid. The convertible debenture
accrues interest at a rate of 12% per annum and is convertible at any time into shares of the Company’s common stock at
the option of the holder at a conversion price of $0.40 per share. An aggregate of 62,500 shares of the Company’s common
stock can be issued upon the conversion of the outstanding principal amount due on this convertible debenture at the current conversion
price of $0.40 per share.
During
each of the three months ended March 31, 2015 and 2014, the Company recorded a total of $740 of interest expense related to this
convertible debenture. As of March 31, 2015 and December 31, 2014, the outstanding principal on this convertible debenture was
$25,000, which was included as a component of current convertible debentures, and the accrued and unpaid interest was $14,181
and $13,441, respectively, which was included as a component of accrued expenses (see Note 4).
Zanett
Convertible Debentures
On
August 21, 2012, the Company issued to Zanett Opportunity Fund, Ltd. (“Zanett”) an 8% convertible debenture in the
amount of $476,125 (the “Zanett August 2012 Debenture”). In connection with this private placement, the Company refinanced
an 8% convertible debenture, in the principal amount of $376,125, issued to Zanett on July 7, 2011 (the “Zanett July 2011
Debenture”) and refinanced an 8% convertible secured promissory note, in the principal amount of $100,000, issued to Zanett
on September 23, 2011 (the “Zanett September 2011 Note”). As a result of the issuance of the Zanett August 2012 Debenture,
the Zanett July 2011 Debenture and the Zanett September 2011 Note were cancelled.
The
Zanett August 2012 Debenture has a three-year term maturing on August 21, 2015 and bears interest at a rate of 8% per annum. Interest
is payable in annual installments in cash or, at the option of the Company, in shares of the Company’s common stock. If
the Company elects to pay the interest in shares of its common stock, the number of shares issued as payment will be equal to
the quotient of the unpaid interest divided by the market price of the Company’s common stock, as defined in the Zanett
August 2012 Debenture.
The
entire principal amount of the Zanett August 2012 Debenture is convertible at any time into shares of the Company’s common
stock at the option of the holder at a conversion price of $0.10 per share. In addition, at the option of the Company, the entire
principal amount of the Zanett August 2012 Debenture is convertible into shares of the Company’s common stock at $0.10 per
share upon the occurrence of the merger or acquisition of the Company or if the average closing price of the Company’s common
stock for any period of ten consecutive trading days is greater than or equal to $0.15 per share. The quoted market price of the
Company’s common stock on August 21, 2012 was $0.05 per share. An aggregate of 4,761,250 shares of the Company’s common
stock can be issued upon the conversion of the outstanding principal amount due on the Zanett August 2012 Debenture at the current
conversion price of $0.10 per share.
During
each of the three months ended March 31, 2015 and 2014, the Company recorded $9,392 of interest expense related to the Zanett
August 2012 Debenture. As of March 31, 2015 and December 31, 2014, the outstanding principal on the Zanett August 2012 Debenture
was $476,125, which was included as a component of current convertible debentures, and the accrued and unpaid interest was $23,272
and $13,880, respectively, which was included as a component of accrued expenses (see Note 4).
6. Note
Payable
On
June 17, 2013, the Company and Benchmark Performance Group, Inc. (“Benchmark”) entered into an Asset Purchase Agreement
(the “Asset Purchase Agreement”), whereby the Company purchased nineteen EcaFlo™ machines owned by Benchmark
as well as the rights to the Excelyte® trademark and certain other intangible assets. The purchase price for the nineteen
EcaFlo™ machines, the Excelyte® trademark and other intangible assets was $190,000.
The
Company paid $38,000 in conjunction with the closing of the Asset Purchase Agreement and issued a promissory note with a principal
balance of $152,000 (the “Benchmark Note”). The Benchmark Note bears interest at a rate of 7% per annum and requires
the Company to make twenty-four monthly payments of $6,805 commencing August 1, 2013. The Benchmark Note is secured by the nineteen
EcaFlo™ machines.
For
the three months ended March 31, 2015 and 2014, the Company recorded $6,852 and $2,029, respectively, of interest expense related
to the Benchmark Note. As of March 31, 2015 and December 31, 2014, the outstanding principal on the Benchmark Note was $26,829
and $46,546, respectively.
7. Stockholders’
Equity (Deficiency)
Common
Stock
Sale
of Common Stock and Common Stock Units
On
February 9, 2015, the Company sold (a) an aggregate of 36,500,000 shares of common stock for an aggregate purchase price of $1,460,000,
or $0.04 per share, and (b) common stock units that in aggregate consisted of 7,575,758 shares of common stock and warrants to
purchase 3,787,880 shares of common stock for an aggregate purchase price of $500,000, or $0.066 per share.
The
warrants have a three-year term, are exercisable at $0.066 per share and were fully vested at the date of issuance. In addition,
the warrants are callable by the Company in the event that the closing price of its common stock for at least fifteen trading
days in any consecutive twenty-trading-day period is equal to or greater than $0.132, provided that at least six months have lapsed
from the issuance date of the warrants (see Warrants to Purchase Common Stock).
The
Company paid an aggregate of $46,050 of offering costs in cash, issued an aggregate of 1,055,303 shares of common stock as payment
of $56,000 of offering costs and issued warrants to purchase an aggregate of 1,450,303 shares of common stock (see Warrants to
Purchase Common Stock), to non-affiliated third parties, related to these sales of common stock and common stock units.
Issuance
of Common Stock to Executive Officers
On
March 25, 2015, the Company issued an aggregate of 5,683,000 shares of common stock as stock-based compensation to its executive
officers as follows: David R. LaVance, President and Chief Executive Officer – 3,613,250 shares; and Thomas S. Gifford,
Executive Vice President and Chief Financial Officer – 2,069,750 shares. The total stock-based compensation expense associated
with the issuance of these shares of common stock was $374,510.
Stock
Options
The
Company currently has two stock option/stock compensation plans in place: the 2010 Stock Incentive Plan and the 2012 Equity Incentive
Plan (collectively, the “Equity Incentive Plans”).
The
2010 Stock Incentive Plan was approved by the stockholders in September 2010. The Company had reserved for issuance an aggregate
of 10,000,000 shares of common stock under the 2010 Stock Incentive Plan. As of March 31, 2015, stock options to purchase 3,846,920
shares of the Company’s common stock were outstanding under the 2010 Stock Incentive Plan and 90,500 shares of the Company’s
common stock had been issued under the 2010 Stock Incentive Plan. As a result of the adoption of the Company’s 2012 Equity
Incentive Plan, no further awards are permitted under the 2010 Stock Incentive Plan.
The
2012 Equity Incentive Plan was approved by the stockholders in May 2012. The 2012 Equity Incentive Plan is designed to encourage
and enable employees and directors of the Company to acquire or increase their holdings of common stock and other proprietary
interests in the Company. The 2012 Equity Incentive Plan is intended to promote these individuals’ interests in the Company,
thereby enhancing the efficiency, soundness, profitability, growth and stockholder value of the Company. The 2012 Equity Incentive
Plan provides for grants and/or awards in the form of incentive and non-qualified stock option grants, stock appreciation rights,
restricted stock awards, performance share awards, phantom stock awards and dividend equivalent awards.
The
original aggregate number of shares of common stock which could be awarded under the 2012 Equity Incentive Plan was 14,000,000
shares, subject to adjustment as provided in the 2012 Equity Incentive Plan. Effective February 25, 2015, as permitted under the
2012 Equity Incentive Plan, the Company’s board of directors increased the number of shares of common stock that could be
awarded under the 2012 Equity Incentive Plan to 37,950,000 shares. As of March 31, 2015, options to purchase 450,000 shares of
the Company’s common stock were outstanding under the 2012 Equity Incentive Plan and up to 37,500,000 shares of the Company’s
common stock remain available for awards under the 2012 Equity Incentive Plan.
Common
stock grants and stock option awards under the Equity Incentive Plans were granted or issued at prices as determined by the Company’s
compensation committee, but such prices were not less than the fair market value of the Company’s common stock on the date
of grant or issuance. Stock options granted and outstanding to date consist of both incentive stock options and non-qualified
stock options.
A
summary of stock option transactions under the Equity Incentive Plans during the three months ended March 31, 2015 is set forth
below:
| | |
Stock
Option
Shares | | |
Weighted
Average
Exercise
Price Per
Common
Share | | |
|
Aggregate
Intrinsic
Value | |
| Outstanding at December 31, 2014 | |
| 4,846,920 | | |
$ | 0.15 | | |
$ | - | |
| Granted during the period | |
| 450,000 | | |
$ | 0.08 | | |
| - | |
| Exercised during the period | |
| - | | |
| - | | |
| - | |
| Terminated during the period | |
| (1,000,000 | ) | |
| - | | |
| - | |
| Outstanding at March 31, 2015 | |
| 4,296,920 | | |
$ | 0.16 | | |
$ | - | |
| Exercisable at March 31, 2015 | |
| 3,934,420 | | |
$ | 0.16 | | |
$ | - | |
| Exercisable at December 31, 2014 | |
| 3,846,920 | | |
$ | 0.16 | | |
$ | - | |
The
fair value of stock options granted during the three months ended March 31, 2015 was $21,613 and was calculated using the Black-Scholes
pricing model with the following weighted average assumptions:
| Exercise price | |
$ | 0.08 | |
| Grant date stock price | |
$ | 0.076 | |
| Expected volatility | |
| 137 | % |
| Risk-free interest rates | |
| 2.08 | % |
| Risk of forfeiture | |
| 35 | % |
| Expected life (in years) | |
| 10 | |
| Dividend yield | |
| 0.00 | % |
The
risk-free interest rate is based on a treasury instrument, the term of which is consistent with the expected life of the stock
options at the date of grant. In projecting expected stock price volatility, the Company used historical stock price volatility
of its common stock which the Company believes is representative of future volatility. The Company estimated the expected life
of stock options based on historical experience using employee exercise and option expiration data.
Information
with respect to stock options outstanding and stock options exercisable as of March 31, 2015 is as follows:
| | | |
Stock Options Outstanding | | |
Stock Options Exercisable | |
Exercise Price | | |
Number of Shares Available Under Outstanding Stock Options | | |
Weighted Average Exercise Price Per Common Share | | |
Weighted Average Remaining Contractual Life (Years) | | |
Number of Shares Available for Purchase Under Outstanding Stock Options | | |
Weighted Average Exercise Price Per Common Share | | |
Weighted Average Remaining Contractual Life (Years) | |
| $ | 0.08 | | |
| 450,000 | | |
$ | 0.08 | | |
| 9.9 | | |
| 87,500 | | |
$ | 0.08 | | |
| 9.9 | |
| $ | 0.10 | | |
| 2,180,253 | | |
$ | 0.10 | | |
| 3.9 | | |
| 2,180,253 | | |
$ | 0.10 | | |
| 3.9 | |
| $ | 0.20 | | |
| 833,333 | | |
$ | 0.20 | | |
| 7.0 | | |
| 833,333 | | |
$ | 0.20 | | |
| 7.0 | |
| $ | 0.30 | | |
| 833,334 | | |
$ | 0.30 | | |
| 7.0 | | |
| 833,334 | | |
$ | 0.30 | | |
| 7.0 | |
| | | | |
| 4,296,920 | | |
$ | 0.16 | | |
| 5.7 | | |
| 3,934,420 | | |
$ | 0.16 | | |
| 5.4 | |
A
summary of the non-vested shares subject to stock options granted under the Equity Incentive Plans as of March 31, 2015 is as
follows:
| | |
Stock
Option
Shares | | |
Weighted
Average
Grant Date
Fair Value Per Share | |
| Non-vested at December 31, 2014 | |
| 1,000,000 | | |
$ | 0.09 | |
| Granted during the period | |
| 450,000 | | |
$ | 0.08 | |
| Vested during the period | |
| (87,500 | ) | |
$ | 0.08 | |
| Terminated during the period | |
| (1,000,000 | ) | |
$ | 0.09 | |
| Non-vested at March 31, 2015 | |
| 362,500 | | |
$ | 0.08 | |
As
of March 31, 2015, there was $21,035 of total unrecognized compensation cost related to non-vested, stock-based compensation arrangements
granted under the Equity Incentive Plans. That cost is expected to be recognized over a weighted average period of thirty-eight
months.
Warrants
to Purchase Common Stock
A
summary of warrant transactions during the three months ended March 31, 2015 is as follows:
| | |
Warrant
Shares | | |
Weighted
Average
Exercise
Price Per
Common
Share | | |
Aggregate Intrinsic
Value | |
| Outstanding at December 31, 2014 | |
| 28,908,878 | | |
$ | 0.12 | | |
$ | 42,006 | |
| Issued during the period | |
| 5,238,183 | | |
$ | 0.065 | | |
| - | |
| Exercised during the period | |
| - | | |
| - | | |
| - | |
| Terminated during the period | |
| (10,675,000 | ) | |
$ | 0.12 | | |
| - | |
| Outstanding at March 31, 2015 | |
| 23,472,061 | | |
$ | 0.10 | | |
$ | 79,974 | |
| Exercisable at March 31, 2015 | |
| 23,472,061 | | |
$ | 0.10 | | |
$ | 79,974 | |
| Exercisable at December 31, 2014 | |
| 28,908,878 | | |
$ | 0.12 | | |
$ | 42,006 | |
Warrants
issued by the Company contain exercise prices that were approved by the Company’s board of directors. Such exercise prices
are generally not less than the quoted market price of the Company’s common stock on the date of issuance. Warrants currently
issued either vested immediately or over a period of up to three years and have a maximum term of ten years from the date of issuance.
The
fair value of the warrants issued during the three months ended March 31, 2015 was $168,813 and was calculated using the Black-Scholes
pricing model with the following weighted average assumptions:
| Exercise price | |
| $0.06 - $0.066 | |
| Grant date stock price | |
$ | 0.067 | |
| Expected volatility | |
| 128 | % |
| Risk-free interest rates | |
| 0.87 | % |
| Risk of forfeiture | |
| 35 | % |
| Expected life (in years) | |
| 3 | |
| Dividend yield | |
| 0.00 | % |
Information
with respect to warrants outstanding and warrants exercisable at March 31, 2015 is as follows:
| | | |
Warrants Outstanding | | |
Warrants Exercisable | |
Range of Exercise Prices | | |
Number of Shares Available Under Outstanding Warrants | | |
Weighted Average Remaining Contractual Life (Years) | | |
Weighted Average Exercise Price Per Common Share | | |
Number of Shares Available for Purchase Under Outstanding Warrants | | |
Weighted Average Remaining Contractual Life (Years) | | |
Weighted Average Exercise Price Per Common Share | |
| $ | 0.03 - 0.04 | | |
| 1,151,567 | | |
| 1.8 | | |
$ | 0.04 | | |
| 1,151,567 | | |
| 1.8 | | |
$ | 0.04 | |
| $ | 0.06 - 0.07 | | |
| 10,344,244 | | |
| 4.2 | | |
$ | 0.07 | | |
| 10,344,244 | | |
| 4.2 | | |
$ | 0.07 | |
| $ | 0.08 - 0.09 | | |
| 6,320,000 | | |
| 6.1 | | |
$ | 0.09 | | |
| 6,320,000 | | |
| 6.1 | | |
$ | 0.09 | |
| $ | 0.20 | | |
| 5,656,250 | | |
| 0.5 | | |
$ | 0.20 | | |
| 5,656,250 | | |
| 0.5 | | |
$ | 0.20 | |
| | | | |
| 23,472,061 | | |
| 3.7 | | |
$ | 0.10 | | |
| 23,472,061 | | |
| 3.7 | | |
$ | 0.10 | |
As
of March 31, 2015, there were no non-vested shares subject to warrants and no unrecognized compensation cost related to warrants.
8. Stock-Based
Compensation
During
the three months ended March 31, 2015 and 2014, the Company recorded stock-based compensation expense as follows:
| | |
Three Months Ended March 31, | |
| | |
2015 | | |
2014 | |
| General and administrative | |
$ | 187,357 | | |
$ | 26,837 | |
| Sales and marketing | |
| 131,554 | | |
| 2,520 | |
| Research and development | |
| 56,177 | | |
| 1,080 | |
| Total | |
$ | 375,088 | | |
$ | 30,437 | |
For
the three months ended March 31, 2015 and 2014, the Company recorded stock-based compensation expense related to common stock
and stock options granted to employees and directors of $375,088 and $10,437, respectively. For the three months ended March 31,
2015 and 2014, the Company recorded stock-based compensation expense related to common stock and warrants granted to non-employees
of $0 and $20,000, respectively.
9. Net
Loss Per Common Share
Basic
net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the
impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed
to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.
For
the three months ended March 31, 2015, diluted net loss per share did not include the effect of 4,296,920 shares of common stock
issuable upon the exercise of outstanding stock options, 23,472,061 shares of common stock issuable upon the exercise of outstanding
warrants and 4,823,750 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.
For
the three months ended March 31, 2014, diluted net loss per share did not include the effect of 4,980,254 shares of common stock
issuable upon the exercise of outstanding stock options, 36,844,565 shares of common stock issuable upon the exercise of outstanding
warrants and 4,823,750 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.
10. Commitments
and Contingencies
Litigation
with Former Executive Vice President – Operations
On
June 17, 2014, a civil complaint was filed against the Company and one of its directors, E. Wayne Kinsey, III, in the Court of
Common Pleas, County of Horry, State of South Carolina, by Marion Sofield, the Company’s former Executive Vice President
- Operations. In her complaint, Ms. Sofield alleges breach of contract and fraud/fraudulent inducement by the Company against
her with regard to her employment agreement and the termination of her employment. Ms. Sofield also alleges the Company and Mr.
Kinsey engaged in a civil conspiracy and unfair trade practices and that Mr. Kinsey engaged in tortious interference. Ms. Sofield
claims that she is owed additional compensation under her terminated employment agreement, and is seeking the recovery of such
compensation as well as attorney’s fees and punitive damages.
On
July 18, 2014, the Company filed a motion to dismiss this state court action due to the binding arbitration clause contained in
Ms. Sofield’s employment agreement that applies to a majority of the allegations in the complaint. On December 8, 2014,
the court entered a consent order that: (a) granted the Company’s request to compel binding arbitration of the breach of
contract and fraud claims; and (b) stayed the remaining causes of action in the South Carolina state court until the aforementioned
binding arbitration process is complete. The Company does not believe there is any merit to Ms. Sofield’s allegations and
will continue to vigorously defend this action.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
General
IET
was originally incorporated in Delaware on February 2, 1999 and is now a Nevada corporation. IET is headquartered in Little River,
South Carolina and operates through its wholly-owned subsidiary, I.E.T., Inc., a Nevada corporation incorporated on January 11,
2002.
IET
markets its products and equipment under the umbrella brand name, EcoTreatments™. IET produces a hypochlorous acid solution
(“Anolyte”) as well as an anti-oxidizing, mildly alkaline solution (“Catholyte”), that provide an environmentally
friendly and effective alternative for cleaning, sanitizing and disinfecting as compared to the hazardous chemicals traditionally
prevalent in commercial use. IET markets and sells Anolyte under the brand name, Excelyte® and markets Catholyte under the
brand name, Catholyte Zero™, although the majority of IET’s sales and marketing efforts are focused on Excelyte®.
IET manufactures proprietary equipment, which it markets under the brand name EcaFlo™, to produce Anolyte and Catholyte
for distribution by IET and, under certain circumstances, such equipment is leased by IET to customers for use at their facilities.
Products
We
produce Anolyte that is effective as a disinfectant without leaving a harmful residue. The naturally occurring properties and
less-corrosive nature of Anolyte make it an excellent replacement for quaternary ammonia, sodium hypochlorite (bleach) and other
hazardous chemicals currently being used as disinfectants and sanitizers. Anolyte contains an active killing agent that is produced
with a pH of 6.5 and contains a ratio of free available chlorine of approximately 92% hypochlorous acid to 8% hypochlorite. Anolyte
is used in the oil and gas market as a hydrogen sulfide scavenger/eliminator and biocide. Anolyte kills various pathogens including,
but not limited to, Mycobacterium bovis (Tuberculosis), Salmonella enterica, Pseudomonas aeruginosa, Staphylococcus
aureus, methicillin-resistant Staphylococcus aureus (MRSA) and H1NI influenza virus (swine flu). Anolyte also kills
hospital-acquired pathogens such as Clostridium difficile spores (C. diff) and vancomycin-resistant enterococci
(VRE) as well as a carbapenem-resistant enterobacteriaceae (CRE) known as Klebsiella pneumoniae (NDM-1). Further, the high-risk
blood-borne pathogen human immunodeficiency virus (HIV) and the food-borne pathogens Listeria monocytogenes and Escherichia
coli (E. coli) are killed by Anolyte. We also produce Catholyte, an anti-oxidizing and mild alkaline solution that
is effective as a degreaser and cleaner.
Anolyte
is registered with the U.S. Environmental Protection Agency (the “EPA”) as a tuberculocidal hospital-level surface
disinfectant (EPA Registration No. 82341-1). In addition, Anolyte is registered with the EPA (EPA Registration No. 82341-4) as
a disinfectant to prevent Canine distemper virus, Canine parvovirus and Bordetella bronchiseptica. We intend to market
the canine product, in conjunction with a third-party partner, as Excelyte® VET.
IET
will also lease EcaFlo™ equipment to a customer in certain situations if the customer’s business model and required
volume of Anolyte or Catholyte warrants such an arrangement. Under this type of arrangement, we lease our EcaFlo™ equipment
and provide service support for a fixed monthly amount plus royalty payments for the Anolyte and Catholyte produced by the customer.
We also license to certain customers the right to utilize our intellectual property pursuant to which the customer is required
to pay us a monthly fee based on the number of gallons of Anolyte and Catholyte produced by our EcaFlo™ equipment. We currently
have no active lease arrangements and have one active license agreement.
Business
Strategy
We
seek long-term relationships and commitments directly with our targeted customers and distributors. Our business model is focused
on selling Anolyte and Catholyte directly to customers. In certain situations, a customer’s business model and required
volume of Anolyte and Catholyte may necessitate that we place the EcaFlo™ equipment at the customer’s facility. In
these situations, we would lease the EcaFlo™ equipment to the customer, maintaining ownership of the EcaFlo™ equipment.
We
are primarily focused on selling Excelyte® in the oil and gas production market. While our emphasis on the oil and gas market
has required the dedication of a majority of our resources, we are also interested in the healthcare facilities and food production
markets, where we plan to collaborate with other parties who can assist us in the development, marketing and distribution of Excelyte®.
Critical
Accounting Policies and Estimates
The
discussion and analysis of the Company’s financial condition and results of operations are based upon the interim consolidated
financial statements contained elsewhere herein, which have been prepared in accordance with U.S. GAAP. The preparation of these
consolidated financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to bad debts, income taxes, contingencies and litigation. We based our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or conditions.
The
critical accounting estimates that we believe affect the more significant judgments and estimates used in preparation of the consolidated
financial statements contained elsewhere herein are described in the Management’s Discussion and Analysis of Financial Condition
and Results of Operations and in the Notes to the Consolidated Financial Statements included in the Company’s annual report
on Form 10-K for the year ended December 31, 2014. There have been no material changes to the critical accounting policies.
Results
of Operations
Revenue.
Total revenue for the three months ended March 31, 2015 was $150,077, as compared to $18,061 for the three months ended March
31, 2014. The $132,016, or 731%, increase in revenue for the three months ended March 31, 2015 was primarily due to a $118,513
increase in Excelyte® sales primarily to oil and gas customers in the Uinta and Permian Basins as we continue our expansion
into oil and gas market and a $10,223 increase in sales of EcaFlo™ equipment parts and related supplies.
Cost
of Sales. Cost of sales for the three months ended March 31, 2015 was $56,430, as compared to $4,245 for the three months
ended March 31, 2014. The $52,185 increase in cost of sales for the three months ended March 31, 2015 was primarily attributable
to the increase in sales of EcaFlo™ equipment parts with higher costs and the increase in Excelyte® sales to oil and
gas customers which are incurring a higher amount of cost of sales due to initial operating costs associated with producing Excelyte®
at our production facilities.
Gross
Profit. For the three months ended March 31, 2015 and 2014, gross profit margins were 62% and 76%, respectively.
General
and Administrative Expenses. For the three months ended March 31, 2015, general and administrative expenses were $587,709,
as compared to $297,477 for the three months ended March 31, 2014. The $290,232, or 98%, increase in general and administrative
expenses for the three months ended March 31, 2015 was primarily the result of a $183,757 increase in stock-based compensation
expense for employees, a $56,325 increase in consulting fees related to investor and public relations, a $24,895 increase in travel
expense related to fundraising and business development activities, a $12,229 increase in legal fees related to corporate activities
and a $10,500 increase in director compensation, offset by a $20,000 decrease in stock-based compensation expense for consultants.
Sales
and Marketing Expenses. For the three months ended March 31, 2015, sales and marketing expenses were $422,682, as compared
to $160,367 for the three months ended March 31, 2014. The $262,315, or 164%, increase in sales and marketing expenses for the
three months ended March 31, 2015 was primarily the result of a $129,034 increase in stock-based compensation expense for employees,
a $63,387 increase in employee payroll and associated benefit costs related to new employees, a $59,687 increase in sales and
well testing supplies and a $24,895 increase in travel expense related to sales activities, offset by a $51,618 decrease in marketing
expense primarily related to the Company’s web site and product branding initiatives.
Research
and Development Expenses. For the three months ended March 31, 2015, research and development expenses were $134,010, as compared
to $60,890 for the three months ended March 31, 2014. The $73,120, or 120%, increase in research and development expenses for
the three months ended March 31, 2015 was primarily the result of a $55,097 increase in stock-based compensation expense for employees
and a $16,685 increase in laboratory testing fees.
Loss
from Operations. For the three months ended March 31, 2015, the loss from operations was $1,057,954, as compared to
$504,918 for the three months ended March 31, 2014. The $545,836, or 108%, increase in the loss from operations for the three
months ended March 31, 2015 was attributable to a $290,232 increase in general and administrative expenses, a $262,315 increase
in sales and marketing expenses and a $73,120 increase in research and development expenses. These increases were primarily due
to the $344,651 increase in stock-based compensation to employees.
Interest
Expense. For the three months ended March 31, 2015, interest expense was $11,011, as compared to $12,281 for the three
months ended March 31, 2014. The $1,270, or 10%, decrease in interest expense for the three months ended March 31, 2015 was primarily
attributable to the decrease in interest expense related to a note payable for an equipment purchase.
Net
Loss. For the three months ended March 31, 2015, the Company’s net loss was $1,061,645, as compared to $517,199 for
the three months ended March 31, 2014. The $544,446, or 105%, increase in the net loss for the three months ended March 31, 2015
was primarily attributable to a $290,232 increase in general and administrative expenses, a $262,315 increase in sales and marketing
expenses and a $73,120 increase in research and development expenses. These increases were primarily due to the $344,651 increase
in stock-based compensation to employees.
Liquidity
and Capital Resources
As
of March 31, 2015, IET had working capital of $752,400 and cash on hand of $1,629,158. The $1,257,866 increase in cash on hand
from December 31, 2014 was primarily due to the receipt of $1,913,950 of net proceeds from the sale of our common stock and common
stock units, offset by $19,717 of payments on a note payable and our continuing operating expenses.
During
the past several years, IET has generally sustained recurring losses and negative cash flows from operations. We currently do
not generate sufficient revenue from the sale of our products to fund our operations and have funded this shortfall through the
sale of our common stock.
As
of May 8, 2015, our cash position was approximately $1,274,000. If we are not able to generate profitable operations from the
sale of our products or we are not able to obtain additional financing, we will only be able to continue our operations for approximately
eight months from the filing date of this quarterly report on Form 10-Q. We have no lending relationships with commercial banks
and are dependent on our ability to attain profitable operations and raise additional capital through one or more equity and/or
debt financings in order to continue operations. While we are working toward attaining profitability for our continuing operations
and pursuing potential equity and/or debt investors, there can be no assurance that we will be successful in our efforts. From
time to time, we engage placement agents to assist us in our financing initiatives. Any additional equity financing may result
in substantial dilution to our stockholders. If we are unable to attain profitable operations or secure additional capital, we
will explore strategic alternatives, including, but not limited to, the possible sale of IET. Our independent registered public
accounting firm included an emphasis of a matter paragraph in its report included in our annual report on Form 10-K for the year
ended December 31, 2014, which expressed substantial doubt about our ability to continue as a going concern. Our consolidated
financial statements included herein do not include any adjustments related to this uncertainty.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
IET
is a smaller reporting company and is therefore not required to provide this information.
Item
4. Controls and Procedures
Evaluation
of disclosure controls and procedures
As
required by Rule 13a-15 under the Exchange Act, as of the end of the Company’s last fiscal quarter, the Company carried
out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.
This evaluation was carried out under the supervision and with the participation of the Company’s current management, including
the Company’s President and Chief Executive Officer and the Company’s Executive Vice President, Chief Financial Officer
and Secretary (Principal Financial and Accounting Officer), who concluded that the Company’s disclosure controls and procedures
are effective.
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed
in the Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company’s President and Chief Executive Officer and the Company’s
Executive Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer), as appropriate,
to allow timely decisions regarding required disclosure.
Changes
in internal control over financial reporting.
Management
reviews the Company’s system of internal control over financial reporting and makes changes to the Company’s processes
and systems to improve controls and increase efficiency, while ensuring that the Company maintains an effective internal control
environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities and migrating
processes.
During
the Company’s last fiscal quarter, there was no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
None.
Item
1A. Risk Factors
IET
is a smaller reporting company and is therefore not required to provide this information.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
There
were no sales of unregistered securities during the three months ended March 31, 2015, other than those set forth below or otherwise
reported on Forms 8-K filed by IET during the three months ended March 31, 2015.
On
March 25, 2015, the Company issued an aggregate of 5,683,000 shares of common stock as stock-based compensation to its executive
officers as follows: David R. LaVance, President and Chief Executive Officer – 3,613,250 shares; and Thomas S. Gifford,
Executive Vice President and Chief Financial Officer – 2,069,750 shares.
In
connection with the issuances of the Company’s common stock described above, the Company relied on the exemption from registration
for a private transaction not involving a public distribution provided by Section 4(a)(2) of the Securities Act.
Item
3. Defaults Upon Senior Securities
On
April 26, 2007, in a private placement, the Company issued a convertible debenture to an individual accredited investor in the
principal amount of $25,000. This convertible debenture matured on January 2, 2009 and remains unpaid. The convertible debenture
accrues interest at a rate of 12% per annum and is convertible at any time into shares of the Company’s common stock, at
the option of the holder, at a conversion price of $0.40 per share. An aggregate of 62,500 shares of the Company’s common
stock can be issued upon the conversion of the outstanding principal amount due on this convertible debenture. As of March 31,
2015, the accrued and unpaid interest on this convertible debenture was $14,181.
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None.
Item
6. Exhibits
See Index
of Exhibits Commencing on Page E-1.
SIGNATURES
In accordance
with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| |
INTEGRATED
ENVIRONMENTAL TECHNOLOGIES, LTD. |
| |
|
|
| May
12, 2015 |
By: |
/s/
David R. LaVance |
| |
|
David R. LaVance |
| |
|
President and
Chief Executive Officer |
| May
12, 2015 |
By: |
/s/
Thomas S. Gifford |
| |
|
Thomas
S. Gifford |
| |
|
Executive
Vice President, |
| |
|
Chief
Financial Officer and Secretary |
INDEX
OF EXHIBITS
| Exhibit
No. |
|
Description |
| |
|
|
| 3.1 |
|
Amended
and Restated Articles of Incorporation of Integrated Environmental Technologies, Ltd. (the “Company”) (incorporated
by reference to Exhibit 3.1 to the Company’s current report on Form 8-K that was filed with the Securities and Exchange
Commission (the “SEC”) on May 22, 2012). |
| |
|
|
| 3.2 |
|
Amended
and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s current report on Form
8-K that was filed with the SEC on May 22, 2012). |
| |
|
|
| 4.1 |
|
Convertible
Debenture Unit Purchase Agreement between the Company and L.J. Tichacek dated April 26, 2007 (incorporated by reference to
Exhibit 4.1 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with the
SEC on August 22, 2011). |
| |
|
|
| 4.2 |
|
10%
Convertible Debenture in the principal amount of $25,000 issued to L.J. Tichacek dated April 26, 2007 (incorporated by reference
to Exhibit 4.2 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with
the SEC on August 22, 2011). |
| |
|
|
| 4.3 |
|
8%
Convertible Debenture, dated as of August 21, 2012, issued to Zanett Opportunity Fund, Ltd. Agreement (incorporated by reference
to Exhibit 4.1 to the Company’s current report on Form 8-K that was filed with the SEC on August 23, 2012). |
| |
|
|
| 4.4 |
|
7%
Secured Promissory Note in the principal amount of $152,000 issued by I.E.T., Inc. to Benchmark Performance Group, Inc. dated
June 17, 2013 (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K that was filed with
the SEC on June 19, 2013). |
| |
|
|
| 10.1 |
|
Amended
and Restated Registration Rights Agreement between the Company and E. Wayne Kinsey, III and Zanett dated September 23, 2011
(incorporated by reference to Exhibit 10.4 to the Company’s annual report on Form 10-K for the year ended December 31,
2011 that was filed with the SEC on March 30, 2012). |
| |
|
|
| 10.2 |
|
2010
Stock Incentive Plan of the Company (incorporated by reference to Exhibit 10.5 to the Company’s quarterly report on
Form 10-Q for the quarter ended June 30, 2011 that was filed with the SEC on August 22, 2011). |
| |
|
|
| 10.3 |
|
2012
Equity Incentive Plan of the Company (incorporated by reference to Exhibit 10.3 to the Company’s quarterly report on
Form 10-Q for the quarter ended March 31, 2013 that was filed with the SEC on May 15, 2013). |
| |
|
|
| 10.4 |
|
Form
of Warrant, dated April 21, 2011, issued by the Company to each of David R. LaVance (for the purchase of 1,818,182 shares
of the Company’s common stock), Raymond C. Kubacki (for the purchase of 1,818,182 shares of the Company’s common
stock) and Valgene L. Dunham (for the purchase of 969,697 shares of the Company’s common stock) (incorporated by reference
to Exhibit 10.12 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 that was filed with
the SEC on August 22, 2011). |
| Exhibit
No. |
|
Description |
| |
|
|
| 10.5 |
|
Form
of Warrant, dated May 23, 2011, issued by the Company to each of David R. LaVance (for the purchase of 3,100,000 shares of
the Company’s common stock) and Thomas S. Gifford (for the purchase of 3,100,000 shares of the Company’s common
stock) (incorporated by reference to Exhibit 10.13 to the Company’s quarterly report on Form 10-Q for the quarter ended
June 30, 2011 that was filed with the SEC on August 22, 2011). |
| |
|
|
| 10.6 |
|
Building
Lease Agreement, dated September 15, 2014, by and between I.E.T., Inc. and Reece Gibson (incorporated by reference to Exhibit
10.6 to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2014 that was filed with the
SEC on November 7, 2014). |
| |
|
|
| 10.7 |
|
Building
Lease Agreement, dated November 1, 2014, by and between I.E.T., Inc. and Culy Hawkins (incorporated by reference to Exhibit
10.7 to the Company’s annual report on Form 10-K for the year ended December 31, 2014 that was filed with the SEC on
March 27, 2015). |
| |
|
|
| 10.8 |
|
Building
Lease Agreement, dated November 14, 2014, by and between I.E.T., Inc. and Duchesne Crossing, LLC (incorporated by reference
to Exhibit 10.8 to the Company’s annual report on Form 10-K for the year ended December 31, 2014 that was filed with
the SEC on March 27, 2015). |
| |
|
|
| 10.9 |
|
Form
of Incentive Stock Option Agreement, dated March 27, 2012, issued by the Company to each of David R. LaVance (for the purchase
of 3,000,000 shares of the Company’s common stock) and Thomas S. Gifford (for the purchase of 2,000,000 shares of the
Company’s common stock) (incorporated by reference to Exhibit 10.14 to the Company’s quarterly report on Form
10-Q for the quarter ended March 31, 2012 that was filed with the SEC on May 15, 2012). |
| |
|
|
| 10.10 |
|
Form
of Non-Qualified Stock Option Agreement, dated March 27, 2012, issued by the Company to each of: Raymond C. Kubacki (for the
purchase of 541,860 shares of the Company’s common stock); David N. Harry (for the purchase of 309,640 shares of the
Company’s common stock); Valgene L. Dunham (for the purchase of 340,600 shares of the Company’s common stock);
and E. Wayne Kinsey, III (for the purchase of 154,820 shares of the Company’s common stock) (incorporated by reference
to Exhibit 10.15 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 that was filed
with the SEC on May 15, 2012). |
| |
|
|
| 10.11 |
|
Asset
Purchase Agreement, dated as of June 17, 2013, by and between I.E.T., Inc. and Benchmark Performance Group, Inc. (incorporated
by reference to Exhibit 10.1 to the Company’s current report on Form 8-K that was filed with the SEC on June 19, 2013). |
| |
|
|
| 31.1 |
|
Section
302 Certification of Principal Executive Officer. |
| |
|
|
| 31.2 |
|
Section
302 Certification of Principal Financial Officer. |
| |
|
|
| 32.1 |
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. |
| |
|
|
| 32.2 |
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. |
| |
|
|
| 101* |
|
The
following materials from the Company’s quarterly report on Form 10-Q for the period ended March 31, 2015, formatted
in Extensible Business Reporting Language (XBRL): (i) consolidated balance sheets; (ii) consolidated statements of operations;
(iii) consolidated statements of cash flows; and (iv) notes to the consolidated financial statements. |
*
Pursuant to Rule 406T of Regulation S-T, the interactive data files included as Exhibit 101 hereto are deemed not filed or part
of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed
not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability
under those sections.
EXHIBIT
31.1
CERTIFICATION
I,
David R. LaVance, certify that:
1.
I have reviewed this report on Form 10-Q of Integrated Environmental Technologies, Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
| Date:
May 12, 2015 |
By: |
/s/
David R. LaVance |
| |
|
David
R. LaVance |
| |
|
President
and Chief Executive Officer |
EXHIBIT
31.2
CERTIFICATION
I,
Thomas S. Gifford, certify that:
1. I
have reviewed this report on Form 10-Q of Integrated Environmental Technologies, Ltd.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, 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;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date:
May 12, 2015 |
By: |
/s/
Thomas S. Gifford |
| |
|
Thomas
S. Gifford |
| |
|
Executive
Vice President, |
| |
|
Chief
Financial Officer and Secretary |
EXHIBIT
32.1
CERTIFICATION
OF CHIEF EXECUTIVE OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Integrated Environmental Technologies, Ltd. (the “Company”) on Form 10-Q for
the period ended March 31 2015, as filed with the Securities and Exchange Commission (the “Report”), I, David R. LaVance,
President and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant
to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the
Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, 15 U.S.C.
§78m or 78o(d), and,
(2) the
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
| Date:
May 12, 2015 |
By: |
/s/ David R.
LaVance |
| |
|
David
R. LaVance |
| |
|
President
and Chief Executive Officer |
EXHIBIT
32.2
CERTIFICATION
OF CHIEF FINANCIAL OFFICER
PURSUANT
TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Integrated Environmental Technologies, Ltd. (the “Company”) on Form 10-Q for
the period ended March 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas S.
Gifford, Executive Vice President, Chief Financial Officer and Secretary of the Company, do hereby certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the
Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, 15 U.S.C.
§78m or 78o(d), and,
(2) the
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
| Date:
May 12, 2015 |
By: |
/s/ Thomas
S. Gifford |
| |
|
Thomas
S. Gifford |
| |
|
Executive
Vice President, |
| |
|
Chief
Financial Officer and Secretary |