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 September 30, 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 November
12, 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 condensed balance sheet as of September 30, 2015 and the related consolidated condensed statements of operations
for the three and nine months ended September 30, 2015 and 2014 and cash flows for the nine months ended September 30, 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 condensed financial statements pursuant to the rules and regulations of the SEC. The
consolidated condensed 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 condensed 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 and nine months ended September 30, 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
Condensed Balance Sheets
(Unaudited)
| | |
September
30, 2015 | | |
December
31, 2014 | |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 499,812 | | |
$ | 371,292 | |
| Accounts receivable | |
| 69,128 | | |
| 37,098 | |
| Prepaid expenses and
other | |
| 24,316 | | |
| 11,780 | |
| Inventory | |
| 119,199 | | |
| 117,690 | |
| Other
receivable | |
| — | | |
| 111,200 | |
| Total current assets | |
| 712,455 | | |
| 649,060 | |
| | |
| | | |
| | |
| Property and equipment,
net | |
| 269,339 | | |
| 259,468 | |
| Total assets | |
$ | 981,794 | | |
$ | 908,528 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’
Deficiency | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 437,661 | | |
$ | 154,167 | |
| Accrued expenses | |
| 210,417 | | |
| 403,520 | |
| Customer deposits | |
| 2,000 | | |
| 2,000 | |
| Convertible debentures | |
| 501,125 | | |
| 501,125 | |
| Note
payable | |
| — | | |
| 46,546 | |
| Total
current liabilities | |
| 1,151,203 | | |
| 1,107,358 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| Stockholders’ deficiency: | |
| | | |
| | |
| Common stock, $.001
par value; 600,000,000 shares authorized; 304,164,263 and 253,178,774 shares issued and outstanding, respectively | |
| 304,164 | | |
| 253,179 | |
| Additional paid-in
capital | |
| 23,592,319 | | |
| 21,262,811 | |
| Accumulated
deficit | |
| (24,065,892 | ) | |
| (21,714,820 | ) |
| Total
stockholders’ deficiency | |
| (169,409 | ) | |
| (198,830 | ) |
| Total
liabilities and stockholders’ deficiency | |
$ | 981,794 | | |
$ | 908,528 | |
The
accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
Integrated
Environmental Technologies, Ltd.
Consolidated
Condensed Statements of Operations
(Unaudited)
| | |
Three
Months Ended September
30, | | |
Nine
Months Ended September
30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
| | |
| | |
| | |
| |
| Revenues: | |
| | | |
| | | |
| | | |
| | |
| Sales | |
$ | 135,665 | | |
$ | 39,545 | | |
$ | 431,287 | | |
$ | 93,988 | |
| Leasing and licensing
fees | |
| 6,000 | | |
| 11,000 | | |
| 18,000 | | |
| 23,000 | |
| | |
| 141,665 | | |
| 50,545 | | |
| 449,287 | | |
| 116,988 | |
| Cost of sales | |
| 53,719 | | |
| 10,424 | | |
| 162,559 | | |
| 42,155 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 87,946 | | |
| 40,121 | | |
| 286,728 | | |
| 74,833 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| General and administrative | |
| 368,332 | | |
| 310,590 | | |
| 1,402,327 | | |
| 887,649 | |
| Sales and marketing | |
| 299,516 | | |
| 162,018 | | |
| 972,035 | | |
| 444,240 | |
| Research and development | |
| 37,200 | | |
| 52,187 | | |
| 230,379 | | |
| 164,078 | |
| | |
| 705,048 | | |
| 524,795 | | |
| 2,604,741 | | |
| 1,495,967 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from operations | |
| (617,102 | ) | |
| (484,674 | ) | |
| (2,318,013 | ) | |
| (1,421,134 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| 136 | | |
| — | | |
| 526 | | |
| — | |
| Interest
expense | |
| (11,451 | ) | |
| (11,844 | ) | |
| (33,585 | ) | |
| (36,860 | ) |
| Total
other income (expense) | |
| (11,315 | ) | |
| (11,844 | ) | |
| (33,059 | ) | |
| (36,860 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
$ | (628,417 | ) | |
$ | (496,518 | ) | |
$ | (2,351,072 | ) | |
$ | (1,457,994 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss per share,
basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding, basic and diluted | |
| 304,164,263 | | |
| 239,470,030 | | |
| 295,931,399 | | |
| 233,590,838 | |
The
accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
Integrated
Environmental Technologies, Ltd.
Consolidated
Condensed Statements of Cash Flows
(Unaudited)
| | |
Nine
Months Ended September 30, | |
| | |
2015 | | |
2014 | |
| Cash flows from operating activities: | |
| | | |
| | |
| Net loss | |
$ | (2,351,072 | ) | |
$ | (1,457,994 | ) |
| Adjustments to reconcile
net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 67,932 | | |
| 64,062 | |
| Stock-based compensation
expense | |
| 454,543 | | |
| 66,778 | |
| Changes in operating
assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (32,030 | ) | |
| (18,098 | ) |
| Inventory | |
| (57,460 | ) | |
| 3,305 | |
| Prepaid expenses and
other | |
| (12,536 | ) | |
| 13,377 | |
| Other receivable | |
| 111,200 | | |
| -- | |
| Accounts payable | |
| 295,494 | | |
| 127,638 | |
| Accrued
expenses | |
| (193,103 | ) | |
| 17,615 | |
| Net
cash used in operating activities | |
| (1,717,032 | ) | |
| (1,183,317 | ) |
| Cash flows used in investing activity: | |
| | | |
| | |
| Purchase of equipment | |
| (21,852 | ) | |
| -- | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from sale
of common stock, net of offering costs | |
| 1,913,950 | | |
| 723,625 | |
| Repayment
of note payable | |
| (46,546 | ) | |
| (56,139 | ) |
| Net
cash provided by financing activities | |
| 1,867,404 | | |
| 667,486 | |
| Increase (decrease) in cash | |
| 128,520 | | |
| (515,831 | ) |
| Cash - beginning of period | |
| 371,292 | | |
| 1,049,399 | |
| Cash - end of period | |
$ | 499,812 | | |
$ | 533,568 | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | |
| Cash
paid for interest | |
$ | 2,593 | | |
$ | 6,117 | |
| Cash
paid for income taxes | |
$ | 900 | | |
$ | 700 | |
| Non-cash operating activity: | |
| | | |
| | |
| Issuance
of 171,428 and 492,614 shares of common stock, respectively, as payment of director fees | |
$ | 12,000 | | |
$ | 32,250 | |
| Non-cash investing
activity: | |
| | | |
| | |
| Parts
and materials inventory used in production equipment | |
$ | 55,951 | | |
$ | -- | |
| Non-cash 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 unaudited consolidated condensed financial statements.
Integrated
Environmental Technologies, Ltd.
Notes
to Unaudited Consolidated Condensed Financial Statements
1.
Basis of Presentation
The
accompanying consolidated condensed 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 a working capital deficiency of $438,748 and an accumulated deficit of $24,065,892 as of September 30, 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 condensed 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 September 30, 2015 and December 31, 2014, inventory consisted of parts and materials totaling $119,199 and $117,690, respectively.
3.
Property and Equipment
As
of September 30, 2015 and December 31, 2014, property and equipment, on a net basis, consisted of the following:
| | |
September
30, 2015 | | |
December
31, 2014 | |
| Leasehold improvements | |
$ | 328,977 | | |
$ | 328,977 | |
| Equipment | |
| 515,307 | | |
| 437,504 | |
| | |
| 844,284 | | |
| 766,481 | |
| Less: Accumulated
depreciation | |
| (574,945 | ) | |
| (507,013 | ) |
| | |
$ | 269,339 | | |
$ | 259,468 | |
4.
Accrued Expenses
As
of September 30, 2015 and December 31, 2014, accrued expenses consisted of the following:
| | |
September
30, 2015 | | |
December
31, 2014 | |
| Accrued compensation | |
$ | 116,455 | | |
$ | 253,305 | |
| Accrued penalty | |
| — | | |
| 87,344 | |
| Accrued interest (see Note 5) | |
| 58,054 | | |
| 27,321 | |
| Accrued professional fees | |
| 5,500 | | |
| 22,000 | |
| Accrued consulting
fees and other expenses | |
| 30,408 | | |
| 13,550 | |
| | |
$ | 210,417 | | |
$ | 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 and nine months ended September 30, 2015 and 2014, the Company recorded a total of $756 and $2,244, respectively,
of interest expense related to this convertible debenture. As of September 30, 2015 and December 31, 2014, the outstanding principal
on this convertible debenture was $25,000, which was included as a component of convertible debentures, and the accrued and unpaid
interest was $15,685 and $13,441, respectively, which was included as a component of accrued expenses (see Note 4).
Zanett
Convertible Debenture
On
August 21, 2012, the Company issued to Zanett Opportunity Fund, Ltd. an 8% convertible debenture in the amount of $476,125 (the
“Zanett August 2012 Debenture”). 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. 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. The Company has not made payment
on the outstanding balance due on the Zanett August 2012 Debenture and, as a result, such obligation can be placed in default
by the holder.
During
each of the three and nine months ended September 30, 2015 and 2014, the Company recorded $9,601 and $28,489, respectively, of
interest expense related to the Zanett August 2012 Debenture. As of September 30, 2015 and December 31, 2014, the outstanding
principal on the Zanett August 2012 Debenture was $476,125, which was included as a component of convertible debentures, and the
accrued and unpaid interest was $42,369 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 issued a promissory note with a principal balance of $152,000 to Benchmark Performance Group, Inc.
related to the purchase of nineteen EcaFlo® machines owned by Benchmark as well as the rights to the Excelyte®
trademark and certain other intangible assets. The Benchmark Note incurred interest at a rate of 7% per annum and required
the Company to make twenty-four monthly payments of $6,805 commencing August 1, 2013. As of September 30, 2015, the entire principal
balance due on the Benchmark Note was paid in full by the Company.
For
the three and nine months ended September 30, 2015, the Company recorded $39 and $1,092, respectively, of interest expense related
to the Benchmark Note. For the three and nine months ended September 30, 2014, the Company recorded $1,376 and $5,111, respectively,
of interest expense related to the Benchmark Note. As of September 30, 2015 and December 31, 2014, the outstanding principal on
the Benchmark Note was $0 and $46,546, respectively.
7.
Stockholders’ Deficiency
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 September 30, 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 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 September 30, 2015, options to purchase 4,518,150 shares of the Company’s common stock were outstanding under
the 2012 Equity Incentive Plan and up to 33,431,850 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 nine months ended September 30, 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 | |
| 4,518,150 | | |
$ | 0.06 | | |
| — | |
| Exercised during the period | |
| — | | |
| — | | |
| — | |
| Terminated during
the period | |
| (1,000,000 | ) | |
$ | 0.09 | | |
| — | |
| Outstanding at September 30, 2015 | |
| 8,365,070 | | |
$ | 0.11 | | |
$ | — | |
| Exercisable at September 30, 2015 | |
| 5,482,534 | | |
$ | 0.14 | | |
$ | — | |
| Exercisable at December 31, 2014 | |
| 3,846,920 | | |
$ | 0.16 | | |
$ | — | |
The
fair value of stock options granted during the nine months ended September 30, 2015 was $152,439 and was calculated using the
Black-Scholes pricing model with the following weighted average assumptions:
| Exercise price | |
| $0.04
- $0.08 | |
| Grant date stock price | |
| $0.04
- $0.076 | |
| Expected volatility | |
| 128%
- 138% | |
| Risk-free interest rates | |
| 1.26%
- 2.36% | |
| Risk of forfeiture | |
| 35 | % |
| Expected life (in years) | |
| 5
- 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 September 30, 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) |
|
| $ |
0.04 |
|
|
|
2,000,000 |
|
|
$ |
0.04 |
|
|
|
9.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| $ |
0.07 |
|
|
|
2,068,150 |
|
|
$ |
0.07 |
|
|
|
4.5 |
|
|
|
1,548,114 |
|
|
$ |
0.07 |
|
|
|
4.5 |
|
| $ |
0.08 |
|
|
|
450,000 |
|
|
$ |
0.08 |
|
|
|
9.4 |
|
|
|
87,500 |
|
|
$ |
0.08 |
|
|
|
9.4 |
|
| $ |
0.10 |
|
|
|
2,180,253 |
|
|
$ |
0.10 |
|
|
|
3.4 |
|
|
|
2,180,253 |
|
|
$ |
0.10 |
|
|
|
3.4 |
|
| $ |
0.20 |
|
|
|
833,333 |
|
|
$ |
0.20 |
|
|
|
6.5 |
|
|
|
833,333 |
|
|
$ |
0.20 |
|
|
|
6.5 |
|
| $ |
0.30 |
|
|
|
833,334 |
|
|
$ |
0.30 |
|
|
|
6.5 |
|
|
|
833,334 |
|
|
$ |
0.30 |
|
|
|
6.5 |
|
| |
|
|
|
|
8,365,070 |
|
|
$ |
0.11 |
|
|
|
6.2 |
|
|
|
5,482,534 |
|
|
$ |
0.14 |
|
|
|
4.8 |
|
A
summary of the non-vested shares subject to stock options granted under the Equity Incentive Plans as of September 30, 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 | |
| 4,518,150 | | |
$ | 0.06 | |
| Vested during the period | |
| (1,635,614 | ) | |
$ | 0.07 | |
| Terminated during
the period | |
| (1,000,000 | ) | |
$ | 0.09 | |
| Non-vested at September 30, 2015 | |
| 2,882,536 | | |
$ | 0.05 | |
As
of September 30, 2015, there was $72,405 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-nine months.
Warrants
to Purchase Common Stock
A
summary of warrant transactions during the nine months ended September 30, 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 | |
| (14,831,250 | ) | |
$ | 0.14 | | |
| — | |
| Outstanding at September 30, 2015 | |
| 19,315,811 | | |
$ | 0.08 | | |
$ | 3,459 | |
| Exercisable at September 30, 2015 | |
| 19,315,811 | | |
$ | 0.08 | | |
$ | 3,459 | |
| 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 nine months ended September 30, 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 September 30, 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 | | |
| 1.3 | | |
$ | 0.04 | | |
| 1,151,567 | | |
| 1.3 | | |
$ | 0.04 | |
| $ | 0.06
- 0.07 | | |
| 10,344,244 | | |
| 3.7 | | |
$ | 0.07 | | |
| 10,344,244 | | |
| 3.7 | | |
$ | 0.07 | |
| $ | 0.08
- 0.09 | | |
| 6,320,000 | | |
| 5.6 | | |
$ | 0.09 | | |
| 6,320,000 | | |
| 5.6 | | |
$ | 0.09 | |
| $ | 0.20 | | |
| 1,500,000 | | |
| 0.2 | | |
$ | 0.20 | | |
| 1,500,000 | | |
| 0.2 | | |
$ | 0.20 | |
| | | | |
| 19,315,811 | | |
| 3.9 | | |
$ | 0.08 | | |
| 19,315,811 | | |
| 3.9 | | |
$ | 0.08 | |
As
of September 30, 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 and nine months ended September 30, 2015 and 2014, the Company recorded stock-based compensation expense as follows:
| | |
Three
Months Ended September 30, | | |
Nine
Months Ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| General and administrative | |
$ | 7,080 | | |
$ | 12,230 | | |
$ | 261,331 | | |
$ | 54,178 | |
| Sales and marketing | |
| 4,084 | | |
| 4,256 | | |
| 137,036 | | |
| 9,324 | |
| Research and development | |
| — | | |
| 1,104 | | |
| 56,176 | | |
| 3,276 | |
| | |
$ | 11,164 | | |
$ | 17,590 | | |
$ | 454,543 | | |
$ | 66,778 | |
For
the three and nine months ended September 30, 2015, the Company recorded stock-based compensation expense related to common stock
and stock options granted to employees and directors of $11,164 and $454,543, respectively. For the three and nine months ended
September 30, 2015, the Company did not record any stock-based compensation expense for non-employees.
For
the three and nine months ended September 30, 2014, the Company recorded stock-based compensation expense related to stock options
granted to employees and directors of $9,040 and $26,757, respectively. For the three and nine months ended September 30, 2014,
the Company recorded stock-based compensation expense related to common stock and warrants granted to non-employees of $8,550
and $40,021, 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 and nine months ended September 30, 2015, diluted net loss per share did not include the effect of 8,365,070 shares
of common stock issuable upon the exercise of outstanding stock options, 19,315,811 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 and nine months ended September 30, 2014, diluted net loss per share did not include the effect of 5,680,254 shares
of common stock issuable upon the exercise of outstanding stock options, 30,844,565 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 alleged 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 alleged the Company and Mr.
Kinsey engaged in a civil conspiracy and unfair trade practices and that Mr. Kinsey engaged in tortious interference. Ms. Sofield
claimed that she was owed additional compensation under her terminated employment agreement, and was 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 applied 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.
On
August 14, 2015, the Company, Mr. Kinsey and Ms. Sofield entered into a Settlement and Release Agreement with respect to this
action pursuant to which the Company, Mr. Kinsey and Ms. Sofield agreed to unconditional mutual releases regarding, among other
things, all of the claims made by Ms. Sofield in the civil complaint. The Company made no payment in connection with this settlement.
11.
Subsequent Events
Issuance
of Convertible Debentures
On
November 11, 2015, the Company issued a 12% convertible debenture to an institutional investor (the “November 2015 Debenture”)
in the principal amount of $275,000. In connection with the issuance of the November 2015 Debenture, the Company issued a warrant
(the “November 2015 Debenture Warrant”) to purchase 1,964,286 shares of its common stock. The gross proceeds received
in connection with this private placement were $247,500, which will be used for working capital purposes.
The
November 2015 Debenture has a two-year term maturing on November 11, 2017, bears interest at a rate of 12% per annum and contains
an original issue discount of 10%. 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 November 2015 Debenture.
The
entire principal amount of the November 2015 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 $0.07 per share. In addition, at the option of the Company, the entire principal
amount of the November 2015 Debenture is convertible into shares of the Company’s common stock at $0.07 per share upon the
occurrence of a change of control, as defined in the November 2015 Debenture, or if the average closing price of the Company’s
common stock for any period of twenty consecutive trading days is greater than or equal to $0.30 per share. Finally, the entire
principal amount of the November 2015 Debenture automatically converts into shares of the Company’s common stock upon the
Company completing a Qualified Financing (as defined in the November 2015 Debenture), at a conversion price per share equal to
the lesser of: (i) 80% of the per share price paid by the purchasers of the Company’s common stock in the Qualified Financing;
or (ii) $0.07. The quoted market price of the Company’s common stock on November 11, 2015 was $0.064 per share. An aggregate
of 3,928,572 shares of the Company’s common stock can be issued pursuant to the November 2015 Debenture at the current conversion
price of $0.07 per share.
The
November 2015 Debenture Warrant has a three-year term and provides the holder the right to purchase 1,964,286 shares of the Company’s
common stock at $0.10 per share. All of the shares of the Company’s common stock underlying the November 2015 Debenture
Warrant are fully vested. The exercise price of the November 2015 Debenture Warrant will be subject to adjustment for stock dividends,
stock splits, or similar events.
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™. 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 H1N1 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.
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 the placement of our 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 September 30, 2015 was $141,665, as compared to $50,545 for the three months ended
September 30, 2014. The $91,120, or 180%, increase in revenue for the three months ended September 30, 2015 was mainly due to
a $103,515 increase in Excelyte® sales primarily to oil and gas customers in the Uinta and Permian Basins as we
continue our expansion into the oil and gas market, offset by a $7,157 decrease in sales of EcaFlo® equipment parts
and related supplies and a $5,000 decrease in EcaFlo® equipment lease revenue.
Total
revenue for the nine months ended September 30, 2015 was $449,287, as compared to $116,988 for the nine months ended September
30, 2014. The $332,299, or 284%, increase in revenue for the nine months ended September 30, 2015 was mainly due to a $352,503
increase in Excelyte® sales primarily to oil and gas customers in the Uinta and Permian Basins as we continue our
expansion into the oil and gas market, offset by a $17,738 decrease in sales of EcaFlo® equipment parts and related
supplies and a $5,000 decrease in EcaFlo® equipment lease revenue.
Cost
of Sales. Cost of sales for the three months ended September 30, 2015 was $53,719, as compared to $10,424 for the three months
ended September 30, 2014. The $43,295, or 415%, increase in cost of sales for the three months ended September 30, 2015 was primarily
attributable to the increase in Excelyte® sales to oil and gas customers.
Cost
of sales for the nine months ended September 30, 2015 was $162,559, as compared to $42,155 for the nine months ended September
30, 2014. The $120,404, or 286%, increase in cost of sales for the nine months ended September 30, 2015 was primarily attributable
to the increase in Excelyte® sales to oil and gas customers.
Gross
Profit. For the three months ended September 30, 2015 and 2014, gross profit margins were 62% and 79%, respectively. For each
of the nine months ended September 30, 2015 and 2014, gross profit margins were 64%.
General
and Administrative Expenses. For the three months ended September 30, 2015, general and administrative expenses were $368,332,
as compared to $310,590 for the three months ended September 30, 2014. The $57,742, or 19%, increase in general and administrative
expenses for the three months ended September 30, 2015 was mainly the result of a $23,264 increase in employee payroll and associated
benefit costs, a $15,973 increase in travel and conference expenses primarily related to fundraising and business development
activities, a $13,230 increase in director compensation primarily related to an increase in the number of directors, a $9,467
increase in depreciation expense primarily related to equipment for Excelyte® production facilities and a $9,300
increase in office-related maintenance and other costs, offset by a $17,150 decrease in legal fees primarily related to general
corporate activities.
For
the nine months ended September 30, 2015, general and administrative expenses were $1,402,327, as compared to $887,649 for the
nine months ended September 30, 2014. The $514,678, or 58%, increase in general and administrative expenses for the nine months
ended September 30, 2015 was mainly the result of a $207,153 increase in stock-based compensation expense primarily related to
employees and directors, a $78,042 increase in travel and conference expenses primarily related to fundraising and business development
activities, a $59,956 increase in director compensation primarily related to an increase in the number of directors, a $36,755
increase in consulting fees primarily related to investor and public relations, a $32,432 increase in depreciation expense primarily
related to equipment for Excelyte® production facilities, a $29,125 increase in employee payroll and associated
benefit costs and a $26,857 increase in expenses related to the annual meeting of stockholders.
Sales
and Marketing Expenses. For the three months ended September 30, 2015, sales and marketing expenses were $299,516, as compared
to $162,018 for the three months ended September 30, 2014. The $137,498, or 85%, increase in sales and marketing expenses for
the three months ended September 30, 2015 was mainly the result of a $66,373 increase in employee payroll and associated benefit
costs primarily related to new employees, a $27,790 increase in rent and maintenance expenses related to additional facilities,
a $24,628 increase in sales and well testing supplies and a $15,973 increase in travel and conference expenses related to sales
activities.
For
the nine months ended September 30, 2015, sales and marketing expenses were $972,035, as compared to $444,240 for the nine months
ended September 30, 2014. The $527,795, or 119%, increase in sales and marketing expenses for the nine months ended September
30, 2015 was mainly the result of a $182,163 increase in employee payroll and associated benefit costs primarily related to new
employees, a $127,712 increase in stock-based compensation expense for employees, a $98,518 increase in sales and well testing
supplies, a $73,379 increase in travel and conference expenses related to sales activities and a $49,470 increase in rent expense
and maintenance expenses related to additional facilities, offset by a $33,997 decrease in consulting expenses primarily related
to the Company’s web site and product branding initiatives.
Research
and Development Expenses. For the three months ended September 30, 2015, research and development expenses were $37,200, as
compared to $52,187 for the three months ended September 30, 2014. The $14,987, or 29%, decrease in research and development expenses
for the three months ended September 30, 2015 was primarily the result of a $13,650 decrease in employee payroll and associated
benefit costs.
For
the nine months ended September 30, 2015, research and development expenses were $230,379, as compared to $164,078 for the nine
months ended September 30, 2014. The $66,301, or 40%, increase in research and development expenses for the nine months ended
September 30, 2015 was primarily the result of a $52,901 increase in stock-based compensation expense for employees and a $22,866
increase in laboratory testing fees, offset by a $19,371 decrease in employee payroll and associated benefit costs.
Loss
from Operations. For the three months ended September 30, 2015, the loss from operations was $617,102 as compared to
$484,674 for the three months ended September 30, 2014. The $132,428, or 27%, increase in the loss from operations for the three
months ended September 30, 2015 was attributable to a $57,742 increase in general and administrative expenses and a $137,498 increase
in sales and marketing expenses, offset by a $47,825 increase in gross profit on sales and a $14,987 decrease in research and
development expenses.
For
the nine months ended September 30, 2015, the loss from operations was $2,318,013, as compared to $1,421,134 for the nine months
ended September 30, 2014. The $896,879, or 63%, increase in the loss from operations for the nine months ended September 30, 2015
was attributable to a $514,678 increase in general and administrative expenses, a $527,795 increase in sales and marketing expenses
and a $66,302 increase in research and development expenses, offset by a $211,895 increase in gross profit on sales.
Interest
Expense. For the three months ended September 30, 2015, interest expense was $11,451, as compared to $11,844 for the
three months ended September 30, 2014. The $393, or 3%, decrease in interest expense for the three months ended September 30,
2015 was primarily attributable to the decrease in interest expense related to a note payable for an equipment purchase.
For
the nine months ended September 30, 2015, interest expense was $33,585, as compared to $36,860 for the nine months ended September
30, 2014. The $3,275, or 9%, decrease in interest expense for the three months ended September 30, 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 September 30, 2015, the Company’s net loss was $628,417, as compared to $496,518 for
the three months ended September 30, 2014. The $131,899, or 27%, increase in the net loss for the three months ended September
30, 2015 was primarily attributable to a $57,742 increase in general and administrative expenses and a $137,498 increase in sales
and marketing expenses, offset by a $47,825 increase in gross profit on sales and a $14,987 decrease in research and development
expenses.
For
the nine months ended September 30, 2015, the Company’s net loss was $2,351,072, as compared to $1,457,994 for the nine
months ended September 30, 2014. The $893,078, or 61%, increase in the net loss for the nine months ended September 30, 2015 was
primarily attributable to a $514,678 increase in general and administrative expenses, a $527,795 increase in sales and marketing
expenses and a $66,302 increase in research and development expenses, offset by a $211,895 increase in gross profit on sales.
Liquidity
and Capital Resources
As
of September 30, 2015, IET had a working capital deficiency of $438,748 and cash on hand of $499,812. The $128,520 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 $46,546 of payments on a note payable, the purchase of $21,852 of equipment 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.
On
November 11, 2015, we issued a 12% convertible debenture to an institutional investor. The gross proceeds received in connection
with this private placement were $247,500.
As
of November 12, 2015, our cash position was approximately $625,000. 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 four 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
condensed 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 September 30, 2015.
Item
3. Defaults Upon Senior Securities
On
April 26, 2007 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 September 30, 2015, the accrued and
unpaid interest on this convertible debenture was $15,685.
On
August 21, 2012, the Company issued the Zanett August 2012 Debenture which matured on August 21, 2015 and remains unpaid. The
Zanett August 2012 Debenture accrues interest at a rate of 8% 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 $0.10 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 Zanett August 2012 Debenture. As of
September 30, 2015, the accrued and unpaid interest on Zanett August 2012 Debenture was $42,369.
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. |
| |
|
|
| November
13, 2015 |
By: |
/s/
David R. LaVance |
| |
|
David
R. LaVance |
| |
|
|
| November
13, 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 29, 2015). |
| |
|
|
| 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). |
| |
|
|
| 4.5 |
|
Form
of 12% Convertible Debenture issued on November 11, 2015 in the principal amount of $275,000. |
| |
|
|
| 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). |
| Exhibit
No. |
|
Description |
| |
|
|
| 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). |
| |
|
|
| 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 |
|
Building
Lease Agreement, dated August 31, 2015, by and between I.E.T., Inc. and Wally Moon. |
| |
|
|
| 10.10 |
|
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). |
| |
|
|
| 10.11 |
|
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). |
| |
|
|
| 10.12 |
|
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 September 30, 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
4.5
this
12% convertible DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF haVE not been registered under the securities act
of 1933, as amended (the “SECURITIES act”), nor under any state securities law, and may not be pledged, sold, assigned,
hypothecated or otherwise transferred until (1) a Registration Statement with respect thereto is effective under the SECURITIES
act and any applicable state securities law or (2) the company receives an opinion of counsel, EITHER FROM COUNSEL TO the company
or counsel to the holder HEREOF WHO IS reasonably satisfactory to the company, that such 12% CONVERTIBLE DEBENTURE or COMMON STOCK
may be pledged, sold, assigned, hypothecated or transferred without an effective Registration Statement under the SECURITIES act
or applicable state securities laws.
INTEGRATED
ENVIRONMENTAL TECHNOLOGIES, LTD.
12%
Convertible Debenture
Due
November __, 2017
$_______
As
of November __, 2015
INTEGRATED
ENVIRONMENTAL TECHNOLOGIES, LTD., a corporation incorporated under the laws of the state of Nevada (the “Company”),
for value received, hereby promises to pay to ___________________, or his, hers or its registered assigns (the “Holder”),
with an address at _____________________, upon due presentation and surrender of this 12% Convertible Debenture (this “Debenture”
and collectively with the other 12% Convertible Debentures issued by the Company in the offering in which this Debenture was purchased,
the “Debentures”) on or after November __, 2017 (the “Maturity Date”), the principal amount of _________
Dollars ($_________) and accrued interest thereon as hereinafter provided.
This
Debenture was issued by the Company as of November __, 2015 (the “Issuance Date”).
ARTICLE
I
PAYMENT OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT
1.1.
Payment of Principal and Interest. Payment of the principal and accrued interest on this Debenture shall be due on the Maturity
Date. Interest (computed on the basis of a 365-day year for the number of days elapsed) on the unpaid portion of said principal
amount from time to time outstanding shall be paid by the Company at the rate of twelve percent (12%) per annum. Principal and
interest shall be paid: (a) in the lawful currency of the United States of America by check or wire transfer; or (b) pursuant
to Section 2.1, Section 2.2 or Section 2.3, in shares of the Company’s common stock, par value $0.001 per share (“Common
Stock”). Interest shall accrue from the Issuance Date and shall be payable to the Holder in annual installments on each
November __ during the term of this Debenture (an “Interest Payment Date”), with the first Interest Payment Date hereunder
scheduled to be November __, 2016 and the last Interest Payment Date to be on the Maturity Date. Both principal hereof and interest
thereon are payable at the Holder’s address above or such other address as the Holder shall designate from time to time
by written notice to the Company, without any requirement for the presentation of this Debenture or making any notation thereon,
except that the Holder hereof agrees that payment of the final amount due shall be made only upon surrender of this Debenture
to the Company for cancellation.
Prior
to any sale or other disposition of this instrument, the Holder hereof agrees to endorse hereon the amount of principal paid hereon
and the last date to which interest has been paid hereon and to notify the Company of the name and address of the transferee in
accordance with the terms of Section 2.6 of this Debenture.
1.2.
Extension of Payment Date. If this Debenture or any installment hereof becomes due and payable on a Saturday, Sunday or other
day on which banks in the state of New Jersey are authorized to remain closed, the due date hereof shall be extended to the next
succeeding full Business Day. “Business Day” means any day that is not a Saturday, a Sunday or a day on which banks
are required or permitted to be closed in the state of New Jersey.
1.3.
All payments received by the Holder shall be applied first to the payment of all accrued interest payable hereunder.
ARTICLE
II
CONVERSION AND OTHER RIGHTS
2.1.
Conversion of Principal into Common Stock at Option of Holder. At any time from the Issuance Date until the Maturity Date, this
Debenture is convertible in whole or in part at the Holder’s option into shares of Common Stock, upon surrender of this
Debenture, at the office of the Company, accompanied by a written notice of conversion in the form of Attachment I hereto, or
otherwise in form reasonably satisfactory to the Company, duly executed by the registered Holder or his, her or its duly authorized
attorney. The aggregate principal amount of this Debenture shall be convertible into shares of Common Stock at a price per share
equal to $0.07 (“Conversion Price”), subject to the adjustments as provided for in Section 2.8(a). The number of shares
issued as payment shall be equal to the quotient of the aggregate outstanding principal on the date of conversion divided by the
Conversion Price. Interest shall accrue to and include the day prior to the date of conversion and shall be paid by check or in
shares of Common Stock, pursuant to Section 2.4, on the last day of the month in which conversion rights hereunder are exercised.
2.2.
Conversion of Principal into Common Stock at Option of Company. In the event that: (a) there shall be a Change of Control (as
hereinafter defined); or (b) the closing price of Common Stock on all domestic securities markets on which the Common Stock may
at the time be listed averaged over a period of twenty (20) consecutive trading days is equal to or greater than $0.30 per share,
at the option of the Company, the principal of this Debenture, in whole or in part, shall be converted into shares of Common Stock
at the Conversion Price, subject to the adjustments provided in Section 2.8(a). The number of shares issued as payment shall be
equal to the quotient of the aggregate outstanding principal on the date of conversion divided by the Conversion Price. Interest
shall accrue to and include the day prior to the date of conversion and shall be paid by check or in shares of Common Stock, pursuant
to Section 2.4, on the last day of the month in which conversion rights hereunder are exercised.
A
“Change of Control” means any consolidation, merger, sale of all or substantially all of the Company’s assets
to another Person (as hereinafter defined) and any transaction which is effected in such a way that the stockholders of the Company
immediately prior to such consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction
own less than fifty percent (50%) of the Company’s voting power immediately after such consolidation, merger, sale of all
or substantially all of the Company’s assets or other transaction, by vote or value, on a fully diluted basis. A “Person”
means an individual, partnership, corporation, trust, unincorporated organization, joint venture, government or agency, political
subdivision thereof, or any other entity of any kind.
2.3.
Conversion of Principal into Common Stock Due to a Qualified Financing. Upon the closing of a Qualified Financing (as hereinafter
defined), the principal of this Debenture shall be converted into shares of Common Stock at a price per share equal to the lesser
of: (a) eighty percent (80%) of the per share price paid by the purchasers of Common Stock in the Qualified Financing; or (b)
the Conversion Price, subject to the adjustments provided in Section 2.8(a) (the “Qualified Financing Conversion Price”).
The number of shares issued as payment shall be equal to the quotient of the aggregate outstanding principal on the closing date
of the Qualified Financing divided by the Qualified Financing Conversion Price. Interest shall accrue to and include the day prior
to the date of conversion and shall be paid by check or in shares of Common Stock, pursuant to Section 2.4, on or before the last
day of the month in which conversion rights hereunder are exercised.
A
“Qualified Financing” shall occur if at any time following the Issuance Date through the Maturity Date the Company,
in any transaction or a series of transactions, completes one or more offerings of Common Stock resulting in aggregate gross proceeds
to the Company of at least five million dollars ($5,000,000).
2.4.
Payment of Interest in Shares of Common Stock at Option of Company. Interest due under this Debenture may be paid to the Holder,
at the option of the Company, in shares of Common Stock. If the Company elects to pay the interest due on a particular Interest
Payment Date in shares of Common Stock, the number of shares issued as payment of the accrued interest shall be equal to the quotient
of the aggregate accrued and unpaid interest divided by the closing price of Common Stock on all domestic securities markets on
which the Common Stock may at the time be listed averaged over a period of ten (10) consecutive trading days immediately preceding
the Interest Payment Date.
2.5.
No Fractional Shares. Any fractional share resulting from any conversion of the principal or accrued and unpaid interest of this
Debenture shall be rounded up to one whole share.
2.6.
Transfer of Debenture; Conversion Procedure. This Debenture is not divisible. This Debenture and all rights hereunder may be sold,
transferred or otherwise assigned to any person in accordance with and subject to the provisions of the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations promulgated thereunder. Upon the transfer of this
Debenture through the use of the assignment form attached hereto as Attachment I, and in accordance with applicable law or regulation,
and the payment by the Holder of funds sufficient to pay any transfer tax, the Company shall issue and register this Debenture
in the name of the new Holder.
In
the event the Holder seeks to convert this Debenture in accordance with Section 2.1, the Company shall convert this Debenture
upon surrender thereof for conversion properly endorsed and accompanied by a completed and executed Conversion Notice attached
hereto as Attachment II and any documentation deemed necessary by the Company showing the availability of an exemption under applicable
state and federal securities laws. Subject to the terms of this Debenture, upon surrender of this Debenture, the Company shall
issue and deliver with all reasonable dispatch to or upon the written order of the Holder of this Debenture and in such name or
names as such Holder may designate, a certificate or certificates for the number of full shares of Common Stock due to such Holder
upon the conversion of this Debenture. The Person or Persons to whom such certificate or certificates are issued by the Company
shall be deemed to have become the holder of record of such shares of Common Stock as of the date of the surrender of this Debenture.
Upon conversion, the Holder will be required to execute and deliver any documentation deemed necessary by the Company showing
the availability of an exemption under applicable state and federal securities laws.
2.7.
Issuance of Shares of Common Stock.
(a)
Issuance Upon Conversion. The Company covenants that it will at all times reserve and keep available, free from preemptive rights,
out of its authorized Common Stock, solely for the purpose of issuance upon conversion of this Debenture, such number of shares
of Common Stock as shall equal the aggregate number of shares of Common Stock that would be issued under this Debenture if fully
converted. The Company also covenants that all of the shares of Common Stock that shall be issuable upon conversion of this Debenture
shall, at the time of delivery, be duly and validly issued, fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issue thereof (other than those which the Company shall promptly pay or discharge).
(b)
Restrictive Legend. Each certificate evidencing shares of Common Stock issued to the Holder following the conversion of this Debenture,
if any, shall bear the following restrictive legend or a similar legend until such time as the transfer of such security is not
restricted under the federal securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
2.8.
Adjustment of Conversion Price and Number of Underlying Shares. The number of shares of Common Stock issuable upon the conversion
of this Debenture and the Conversion Price shall be subject to adjustment from time to time as follows:
(a)
Adjustment for Stock Splits and Combinations. If the Company at any time or from time to time after the date of this Debenture
effects a subdivision of the outstanding Common Stock or combines the outstanding shares of Common Stock, then, in each such case,
the Conversion Price in effect immediately prior to such event shall be adjusted so that each Holder of conversion rights under
this Debenture shall have the right to convert his, her or its interests into the number of shares of Common Stock which he, she
or it would have owned after the event had such shares of Common Stock been converted immediately prior to the occurrence of such
event. Any adjustment under this Section 2.8(a) shall become effective as of the date and time such subdivision or combination
becomes effective.
(b)
No Impairment. The Company will not, through any reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company.
(c)
Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (i) to receive a dividend
or other distribution payable in Common Stock, or in any rights, options or warrants to subscribe for or to purchase Common Stock
(such rights or options or warrants being herein called “Options”) or in any stock or other securities convertible
into or exchangeable for Common Stock (such convertible or exchangeable stock or securities being herein called “Convertible
Securities”) or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription
or purchase, as the case may be.
(d)
Actions to Maintain Conversion Price Above Par Value. Before taking any action which would cause an adjustment in the Maturity
Date Conversion Price such that, upon conversion of this Debenture, shares of Common Stock with par value, if any, would be deemed
to be issued below the then par value of the Common Stock, the Company will take any corporate action which may, in the opinion
of its counsel, be reasonable necessary in order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock at the Maturity Date Conversion Price as so adjusted.
(e)
Certificate of Adjustment. In any case of an adjustment of the number of shares of Common Stock or other securities issuable upon
conversion of this Debenture, the Chief Financial Officer or the President of the Company shall compute such adjustment in accordance
with the provisions hereof and prepare and sign a certificate showing such adjustment, and shall mail such certificate, by first
class mail, postage prepaid, to the Holder of this Debenture at the Holder’s address as shown in the Company’s books.
The certificate shall set forth such adjustment, showing in detail the facts upon which such adjustment is based, including a
statement of the number of shares of Common Stock and the type and amount, if any, of other property which at the time would be
received upon conversion of this Debenture.
(f)
Closing of Books. The Company will at no time close its transfer books against the transfer of any shares of Common Stock issued
or issuable upon the conversion of this Debenture in any manner which interferes with the timely conversion of this Debenture
into shares of Common Stock.
ARTICLE
III
COVENANTS
3.1.
Prior to the conversion or payment of the last outstanding Debenture, any of the following actions by the Company is subject to
the prior written consent of holders of more than fifty percent (50%) of the aggregate principal amount of the then outstanding
Debentures.
(a)
any material related party transaction entered into by the Company that is not approved by the Company’s board of directors
or a committee thereof;
(b)
the purchase, redemption, retirement or acquisition for value by the Company of any of the Company’s capital stock or other
securities now or hereafter outstanding, except for the acquisition of the Company’s capital stock or other securities in
connection with the settlement of any legal proceedings or pursuant to any outstanding agreement or instrument;
(c)
the return by the Company of any capital to its stockholders;
(d)
the distribution by the Company of any of its assets to its stockholders;
(e)
the payment or declaration by the Company of any dividend on any of its capital stock or other securities; or
(f)
the filing for bankruptcy, dissolution or liquidation or a general assignment for the benefit of creditors by the Company.
ARTICLE
IV
EVENTS OF DEFAULT
4.1.
If one or more of the following described events (each of which being an “Event of Default” hereunder) shall occur
and shall be continuing, holders of more than fifty percent (50%) of the aggregate principal amount of the then outstanding Debentures
may declare immediate payment of all of the Debentures (including the accrued and unpaid interest thereon).
(a)
failure to pay when due any principal of, or interest on, the Debentures;
(b)
failure of the Company to observe or perform any covenants or agreements of the Debentures or any other related documents, and
such failure continues for a period of thirty (30) calendar days after receipt of written notice by the Company from holders of
more than fifty percent (50%) of the aggregate principal amount of the outstanding Debentures of such failure;
(c)
any representation, warranty, certification or statement made by the Company to the purchasers of the Debentures shall prove to
have been incorrect in any material respect when made (or deemed made);
(d)
a judgment or order for the payment of money in excess of two hundred fifty thousand dollars ($250,000) shall be rendered against
the Company and such judgment or order shall continue unsatisfied and un-stayed for a period of ten (10) calendar days;
(e)
the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or
(f)
an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain undismissed for a period of sixty (60) calendar days; or an order for
relief shall be entered against the Company under the federal bankruptcy laws as now or hereafter in effect.
ARTICLE
V
MISCELLANEOUS
5.1.
Prepayment. The principal amount of this Debenture and any accrued and unpaid interest thereon may be prepaid, in whole or in
part, at any time without penalty or premium, at the discretion of the Company, subject to first offering the Holder the option
to convert this Debenture into Common Stock at the Maturity Date Conversion Price. The Company must provide written notice to
the Holder of its intention to prepay this Debenture and allow the Holder ten (10) calendar days after receipt of such notice
to convert.
5.2.
Rights Cumulative. The rights, powers and remedies given to the Holder under this Debenture shall be in addition to all rights,
powers and remedies given to him, her or it by virtue of any document or instrument executed in connection therewith, or any statute
or rule of law.
5.3.
No Waivers. Any forbearance, failure or delay by the Holder in exercising any right, power or remedy under this Debenture, any
documents or instruments executed in connection herewith or otherwise available to the Holder shall not be deemed to be a waiver
of such right, power or remedy, nor shall any single or partial exercise of any right, power or remedy preclude the further exercise
thereof.
5.4.
Amendments in Writing. No modification or waiver of any provision of this Debenture, or any documents or instruments executed
in connection herewith shall be effective unless it shall be in writing and signed by the Holder, and any such modification or
waiver shall apply only in the specific instance for which given.
5.5.
Governing Law. This Debenture, the rights and obligations of the parties hereto and any dispute arising out of or relating to
this Debenture, shall be adjudicated in, governed by, construed in and interpreted in accordance with the laws of the state of
New Jersey, without regard to its conflict of law principles. Each of the parties hereto consents to submit itself to the personal
jurisdiction of the state courts of the state of New Jersey in the event any dispute arises out of this Debenture and agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.
5.6.
Successors. The term “Holder” as used herein shall be deemed to include the Holder and its successors, endorsees and
assigns.
5.7.
Stamp or Transfer Tax. The Company will pay any documentary stamp or transfer taxes attributable to the initial issuance of the
Common Stock issuable upon the conversion of this Debenture; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for
the Common Stock in a name other than that of the Holder in respect of which such Common Stock is issued, and in such case the
Company shall not be required to issue or deliver any certificate for the Common Stock until the person requesting the same has
paid to the Company the amount of such tax or has established to the Company’s satisfaction that such tax has been paid.
5.8.
Mutilated, Lost, Stolen or Destroyed Debenture. In case this Debenture shall be mutilated, lost, stolen or destroyed, the Company
shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Debenture, or in lieu of and substitution
for the Debenture, mutilated, lost, stolen or destroyed, a new Debenture of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and an indemnity,
if requested, also reasonably satisfactory to it.
5.9.
No Rights as Stockholder. Prior to the conversion of the Debenture, the Holder shall not be entitled to any of the rights of a
stockholder of the Company, including, without limitation, the right to vote or to receive dividends or other distributions, but
shall be entitled to receive notice of:
(a)
any stockholder meeting;
(b)
a Change of Control event;
(c)
issuance of Common Stock or any other equity securities convertible or exchangeable into Common Stock; except for those issuances
made under options, warrants and other rights approved by the Company’s board of directors or a committee thereof;
(d)
a judgment or order for the payment of money rendered against the Company in excess of $50,000;
(e)
involuntary case or other proceeding commenced against the Company seeking liquidation, bankruptcy or dissolution; or
(f)
order for relief entered against the Company under the federal bankruptcy laws.
5.10.
Notices. Any notice required to be given pursuant to this Debenture shall be in writing and shall be deemed given upon delivery
if delivered personally or by a recognized commercial courier with receipt acknowledged, or upon the expiration of seventy-two
(72) hours after the same has been deposited in the United States mail, by certified or registered mail, return receipt requested,
postage prepaid, and addressed to the Holder at his, her or its address appearing on the books of the Company.
5.11.
No Registration or Registration Rights. Neither the Debenture nor the securities receivable upon the conversion of the Debenture
have been registered by the Company under the Securities Act or the securities law of any state or other jurisdiction, and the
Company shall be under no obligation to register such securities.
IN
WITNESS WHEREOF, Integrated Environmental Technologies, Ltd. has caused this Debenture to be duly executed and delivered as of
the date first above written.
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INTEGRATED
ENVIRONMENTAL TECHNOLOGIES, LTD. |
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By: |
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Name: |
Thomas
S. Gifford |
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Title: |
Executive Vice
President and Chief Financial Officer |
ATTACHMENT
I
Assignment
For
value received, the undersigned hereby assigns to _____________, $___________ principal amount of 12% Convertible Debenture due
November __, 2017 evidenced hereby and hereby irrevocably appoints __________________ attorney to transfer the Debenture on the
books of the within named corporation with full power of substitution in the premises.
Dated:
In
the presence of:
ATTACHMENT
II
CONVERSION
NOTICE
TO:
INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.
The
undersigned holder of this Debenture hereby irrevocably exercises the option to convert $________ principal amount of such Debenture
(which may be less than the stated principal amount thereof) into shares of Common Stock of Integrated Environmental Technologies,
Ltd., in accordance with the terms of such Debenture, and directs that the shares of Common Stock issuable and deliverable upon
such conversion, be issued and delivered to the undersigned unless a different name has been indicated below. If shares of Common
Stock are to be issued in the name of a person other than the undersigned holder of such Debenture, the undersigned will pay all
transfer taxes payable with respect thereto.
| Address of Holder |
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Print Name of Holder |
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Signature of Holder |
Principal
amount of Debenture to be converted $________
If
shares are to be issued otherwise then to the holder:
| Address of Transferee |
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Issuance
Date of Debenture: November __, 2015
EXHIBIT
10.9
COMMERCIAL
LEASE
This
lease (this “Lease”) is made between Wally Moon with an address at 1744 South Buckley, Pecos, Texas 79772, herein
called “Lessor”, and I.E.T., Inc., with an address at 4235 Commerce Street, Little River, South Carolina 29566, herein
called “Lessee”. Lessee hereby offers to lease from Lessor the premises situated in the City of Pecos, County
of Pecos, and State of Texas, described as:
Warehouse/Office
Space
1744
South Bickley
Pecos,
Texas 79722
(the
“Premises”)
Upon
the following TERMS and CONDITIONS:
1.
Terms and Rent. Lessor demises the above Premises (approximately 4,890 gross rentable square feet) for a term of thirty-six
(36) months, commencing on September 1, 2015, and terminating on the anniversary date thirty-six (36) months thereafter (the “Term”).
Monthly
rent is $4,000, due on or before the 10th of each month. All payments shall be made to Lessor, at the address specified above.
2.
Use. Lessee shall use and occupy the Premises for commercial purposes only.
3.
Care and Maintenance of Premises. Lessor represents and warrants to Lessee that the Premises are in good order and repair,
unless otherwise indicated herein. Lessee shall, at its own expense and at all times, maintain the Premises in good and safe condition,
and shall surrender the same, at termination hereof, in as good condition as received, normal wear and tear excepted. Lessee shall
be responsible for all maintenance and repairs required on the interior of the Premises. Lessor shall be responsible for the HVAC,
roof, exterior walls, and structural foundations. Lessor shall also maintain in good condition the common areas of the building
housing the Premises and the outside of the Premises, including, without limitations, the sidewalks, lawns and shrubbery.
4.
Alterations. Lessee shall not, without first obtaining the written consent of Lessor, make any material alterations, additions,
or improvements, in, to or about the Premises.
5.
Ordinances and Statutes. Lessee shall comply with all statutes, ordinances and requirements of all municipal, state and federal
authorities now enforce, or which may hereafter be in force, pertaining to the Premises, occasioned by or affecting the use thereof
by Lessee.
6.
Assignment and Subletting. Lessee shall not assign this Lease or sublet any portion of the Premises without prior written
consent of the Lessor, which shall not be unreasonably withheld. Any such assignment or subletting without consent shall be void
and, at the option of the Lessor, may terminate this Lease.
7.
Utilities &Taxes. Electric and gas for the Premises shall be paid by Lessee. Landlord shall be responsible for all property
taxes with respect to the Premises.
8.
Entry and Inspection. Lessee shall permit Lessor or Lessor’s agents to enter upon the Premises at reasonable notice,
for the purpose of inspecting the same, and will permit Lessor at any time within sixty (60) days prior to the expiration of this
Lease, to place upon the Premises any usual “To Let” or “For Lease” signs, and permit persons desiring
to lease the same to inspect the Premises thereafter.
9.
Possession. Lessor shall deliver possession of the Premises to Lessee at commencement of this Lease.
10.
Quiet Enjoyment. Lessor covenants that if, and so long as, Lessee pays the rent as required under this Lease, and performs
Lessee’s other covenants under this Lease, Lessor will do nothing to affect Lessee’s right to peaceably and quietly
have, hold and enjoy the Premises for the Term.
11.
Indemnification of Lessor. Lessor shall not be liable for any damage or injury to Lessee, or any other person, or to the property,
occurring on the demised Premises or any part thereof, unless due to Lessor, or Lessor’s agents, contractors, or employees
negligent acts or omissions for which Lessor shall be liable.
12.
Insurance. Lessee, at its own expense, shall maintain during the Term insurance on its own contents. In addition, during the
Term, Lessee shall maintain commercial liability insurance in the amount of not less than $1,000,000, which will cover bodily
injury and property damage and name the Lessor as an additional insured. Lessee shall provide Lessor with a Certificate of Insurance
showing Lessor as an additional insured. The Certificate of Insurance shall provide for a 30-day written notice to Lessor in the
event of cancellation or material change of coverage. To the maximum extent permitted by the insurance policies which may be owned
by Lessor or Lessee, Lessee and Lessor, for the benefit each other, waive any and all rights of subrogation, which might otherwise
exist.
13.
Eminent Domain. If the Premises or any part thereof or any estate therein, or any other part of the building materially affecting
Lessee’s use of the Premises, shall be taken by eminent domain, this Lease shall terminate on the date when title vests
pursuant to such taking. The rent and any additional rent, shall be apportioned as of the termination date, and any rent paid
for any period beyond that date shall be repaid to Lessee. Lessee shall not be entitled to any part of the award for such taking
or any payment in lieu thereof, but Lessee may file a claim for any taking of fixtures and improvements owned by Lessee, and for
moving expenses.
14.
Destruction of Premises. In the event of a partial destruction of the Premises during the Term, from any cause, Lessor shall
forthwith repair the same, provided that such repairs can be made within sixty (60) days under existing governmental laws and
regulations, but such partial destruction shall not terminate this Lease, except the Lessee shall be entitled to a proportionate
reduction of rent while such repairs are being made, based upon the extent to which the making of such repairs shall interfere
with the business of Lessee on the Premises. If such repairs cannot be made within sixty (60) days, Lessor, at its option, may
make the same within a reasonable time, this Lease continuing in effect with the rent proportionately abated as aforesaid; provided,
however, that if such repairs cannot be made within sixty (60) days, Lessee may, in its sole discretion, elect to terminate this
Lease. In the event that Lessor shall not elect to make such repairs which cannot be made within sixty (60) days, this Lease may
be terminated at the option of either party. In the event that the building in which the demised Premises may be situated is destroyed
to an extent of not less than one-third of the replacement cost thereof, Lessor may elect to terminate this Lease whether the
demised Premises be injured or not. Total destruction of the building in which the Premises may be situated shall terminate this
Lease.
15.
Lessor’s Remedies on Default. If Lessee defaults in the payment of rent, or any additional rent, or defaults in the
performance of any of the other covenants or conditions hereof, Lessor shall give Lessee written notice of such default and if
Lessee does not cure any such default within fifteen (15) days following receipt of said notice (or if such other default is of
such nature that it cannot be completely cured within such period, if Lessee does not commence such curing within such fifteen
(15) days and thereafter proceed with reasonable diligence and in good faith to cure such default), then Lessor may terminate
this Lease on not less than ten (10) days’ written notice to Lessee. On the date specified in such termination notice the
term of this Lease shall terminate, and Lessee shall then quit and surrender the Premises to Lessor, without extinguishing Lessee’s
liability. If this Lease shall have been so terminated by Lessor, Lessor may at any time thereafter resume possession of the Premises
by any lawful means and remove Lessee or other occupants and their property.
16.
Attorney’s Fees. In case suit should be brought for recovery of the Premises or for any sum due hereunder, or because
of any act which may arise out of the possession of the Premises, by either party, the prevailing party shall be entitled to all
costs incurred in connection with such action, including a reasonable attorney’s fee.
17.
Waiver. No failure by Lessor or Lessee to enforce any term hereof shall be deemed to be a waiver.
18.
Notices. Any notice by either party to the other shall be in writing and shall be deemed to have been duly given only if (a)
delivered personally or (b) sent by registered mail or certified mail return receipt requested in a postage paid envelope or (c)
sent by nationally recognized overnight delivery service. Notices shall be sent to the addresses provided on the signature page
hereof or to such other addresses as the Lessee or the Lessor, respectively, may designate in writing. Notice shall be deemed
to have been duly given, if delivered personally, on delivery thereof, if mailed, upon the seventh (7th) day after
the mailing thereof or if sent by overnight delivery service, the next business day.
19.
Heirs, Assigns, Successors. This Lease is binding upon and inures to the benefit of the heirs, assigns and successors in interest
to the parties.
20.
Option to Renew. Provided that Lessee is not in default in the performance of this Lease, Lessee shall have the option to
renew the lease for two additional terms of three (3) years, commencing at the expiration of the initial Term and subsequent extended
terms. All of the terms and conditions of the Lease shall apply during the renewal term. The monthly rent payment shall equal
the last month’s rent, subject to 2% increase each additional term thereafter commencing on the anniversary date of the
commencement of this Lease. The option shall automatically take effect unless Lessee gives Lessor written notice of Lessee’s
decision not to extend the Term of this Lease at least thirty (30) days prior to the commencement date of the extension period.
21.
Subordination. This Lease is and shall be subordinate to all existing and future liens and encumbrances against the property
provided that Lessee’s right of possession shall not be disturbed so long as Lessee is not in default following applicable
notice and cure periods under this Lease.
22.
Entire Agreement. The foregoing constitutes the entire agreement between the parties and may be modified only by a writing
signed by both parties.
23.
Governing Law. This Lease will be governed by the laws of the State of Texas, without giving effect to its conflict of law
principles.
24.
Broker. Lessee and Lessor represent and warrant to the each other that no broker brought about this transaction, and each
agrees to indemnify and hold the other harmless from any and all claims of any broker(s) arising out of or in connection with
the negotiations of or entering into of this Lease by Lessee and Lessor.
25.
Severability. If any of the provisions of this Lease, or the application of such provisions, will be invalid or unenforceable,
the remainder of this Lease will not be affected, and this Lease will be valid and enforceable to the fullest extent permitted
by law.
26.
Counterparts. This Lease may be executed in multiple counterparts, each of which, when assembled to include an original signature
for each party contemplated to sign this Lease, will constitute a complete and fully executed original. All such fully executed
counterparts will collectively constitute a single agreement. The parties expressly agree that if the signature of Lessor and/or
Lessee on this Lease is not an original, but is a digital, mechanical or electronic reproduction (such as, but not limited to,
a photocopy, fax, e-mail, PDF, Adobe image, JPEG, telegram, telex or telecopy), then such digital, mechanical or electronic reproduction
shall be as enforceable, valid and binding as, and the legal equivalent to, an authentic and traditional ink-on-paper original
wet signature penned manually by its signatory.
Signed
this 31st day of August, 2015
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LESSOR |
LESSEE |
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Wally Moon |
I.E.T., Inc. |
| By: |
/s/
Wally Moon |
|
By: |
/s/
Thomas S. Gifford |
| Name: |
Wally Moon |
|
Name: |
Thomas S. Gifford |
| |
|
|
Title: |
Executive Vice President and Chief Financial Officer |
| |
1744
South Bickley |
|
| |
Pecos, Texas 79722 |
4235 Commerce
Street |
| |
|
Little River,
SC 29566 |
| |
o: (432) 447-0498 |
|
| |
f: (432)
447-0535 |
o: (732) 282-1055 |
| |
e:
bestmoon@windstream.net |
e:
tgifford@ietltd.net |
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:
November 13, 2015 |
By: |
/s/
David R. LaVance |
| |
|
David
R. LaVance |
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|
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:
November 13, 2015 |
By: |
/s/
Thomas S. Gifford |
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|
Thomas
S. Gifford |
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|
Executive
Vice President, |
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|
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 September 30, 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:
November 13, 2015 |
By: |
/s/
David R. LaVance |
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|
David
R. LaVance |
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|
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 September 30, 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:
November 13, 2015 |
By: |
/s/
Thomas S. Gifford |
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|
Thomas
S. Gifford |
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|
Executive
Vice President, |
| |
|
Chief
Financial Officer and Secretary |