- Securities Registration (section 12(g)) (10-12G)

As filed with the Securities and Exchange Commission on January 20, 2012

Registration No. _______

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

COIL TUBING TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	76-0625217
(State or jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

19511 Wied Rd. Suite E

Spring, Texas 77388

281-651-0200

(Address and telephone number of principal executive offices

and principal place of business or intended principal place of business)

Securities to be registered pursuant to Section 12(b) of the Act:

None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company ý

TABLE OF CONTENTS

	Page


Explanatory Note	1

Forward-Looking Statements	1

Item 1. Business	2

Item 1A. Risk Factors	16

Item 2. Financial Information	27

Item 3. Properties	37

Item 4. Security Ownership of Certain Beneficial Owners and Management	37

Item 5. Directors and Executive Officers	39

Item 6. Executive Compensation	44

Item 7. Certain Relationships and Related Transactions, and Director Independence	48

Item 8. Legal Proceedings	52

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters	52

Item 10. Recent Sale of Unregistered Securities	53

Item 11. Description of Registrant’s Securities to be Registered	56

Item 12. Indemnification of Officers and Directors	58

Item 13. Financial Statements and Supplementary Data	59

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59

Item 15. Financial Statements and Exhibits	59

Index to Financial Statements	F-1

EXPLANATORY NOTE

We are filing this General Form for Registration of Securities on Form 10 to register our common stock, par value $0.001 per share (the “Common Stock”), pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

This registration statement will become effective automatically by lapse of time 60 days from the date of the original filing pursuant to Section 12(g)(1) of the Exchange Act or within such shorter period as the United States Securities and Exchange Commission (the “SEC”) may direct. As of the effective date we will be subject to the requirements of Regulation 13(a) under the Exchange Act and will be required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

The market data and other statistical information contained in this registration statement are based on independent industry publications, government publications, reports by market research firms and other published independent sources. Some data is also based on our good faith estimates, which are derived from other relevant statistical information, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information.

We currently have one wholly-owned subsidiary; Coil Tubing Technology Holdings, Inc. which in turn has three wholly-owned subsidiaries, Precision Machining Resources, Inc. (“PMR”) and Coil Tubing Technology, Inc. (“CTT Texas”) Texas corporations and Coil Tubing Technology Canada Inc., an Alberta, Canada corporation (“CTT Canada”).

Unless otherwise noted, references in this registration statement to "we," "us," "our," "Company," or “Coil Tubing” refer to Coil Tubing Technology, Inc., a Nevada corporation and its subsidiaries. Our principal executive offices are located at 19511 Wied Rd. Suite E, Spring, Texas 77388, and our telephone number is (281) 651-0200. Our website address is www.coiltubingtechnology.com. The information on, or that may be accessed through, our website is not incorporated by reference into this registration statement and should not be considered a part of this registration statement.

FORWARD-LOOKING STATEMENTS

This registration statement may contain forward-looking statements. These statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. These forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to the following:

	•	the need for additional funding;
	•	our status as a former “shell company”;
	•	our lack of a significant operating history;
	•	our preferred stock and related rights;
	•	the fact that our majority shareholder has control over our voting stock;
	•	the loss of key personnel or failure to attract, integrate and retain additional personnel;
	•	corporate governance risks;
	•	the cost of the production of our products;
	•	economic downturns;
	•	our ability to innovate;
	•	the level of competition in our industry and our ability to compete;
	•	our ability to respond to changes in our industry;
	•	our ability to protect our intellectual property and not infringe on others’ intellectual property;
	•	our ability to scale our business;
	•	our ability to maintain supplier relationships;

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	•	our ability to obtain and retain customers;
	•	our ability to produce our products at competitive rates;
	•	our ability to execute our business strategy in a very competitive environment;
	•	trends in and the market for and the price of oil and gas and alternative energy sources;
	•	lack of insurance policies;
	•	dependence on a small number of customers;
	•	changes in laws and regulations;
	•	volatility and/or declines in oil and gas prices;
	•	the volatile market for our common stock;
	•	our ability to effectively manage our growth;
	•	dilution to existing shareholders;
	•	costs and expenses associated with being a public company;
	•	economic downturns both in the United States and globally;
	•	risk of increased regulation of our operations and products; and
	•	other risk factors included under “Risk Factors” below.

You can often identify these and other forward-looking statements by the use of words such as “may,” “could,” “should,” “expects,” “plans,” “anticipates,” “estimates,” “intends,” “potential,” “projected,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.

These statements are based on current expectations and assumptions regarding future events and business performance and involve known and unknown risks, uncertainties and other factors that may cause industry trends or our actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this registration statement. For a more detailed discussion of the principal factors that could cause actual results to be materially different, you should read our risk factors included below under “Item 1A. Risk Factors.”

Although we believe that expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We will assume no obligation to update any of the forward-looking statements after the effective date of this registration statement to conform these statements to actual results or changes in our expectations, except as required by law. You should not place undue reliance on these forward-looking statements, which apply only as of the effective date of this registration statement.

Except as required by applicable law, including the securities laws of the United States and/or if the existing disclosure fundamentally or materially changes, we do not undertake any obligation to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this registration statement or to reflect unanticipated events that may occur.

ITEM 1. BUSINESS

Operations

We specialize in the design and production of proprietary tools for the coil tubing industry. We concentrate on three categories of coil tubing applications: tubing fishing, tubing work over and coil tubing drilling, which categories of applications are described in greater detail below. We currently outsource 95% of our tools and components to be manufactured by outside manufacturers and purchase the remaining 5% of our products off the shelf.

We focus on the development, marketing and rental of advanced tools and related technical solutions for use with coil tubing and jointed pipe in the bottom hole assembly (“BHA”) for the exploration and production of hydrocarbons (“E&P”). Although various companies in the E&P services industry have realized the importance of coiled tubing, we have focused entirely on the development of dedicated, patented, proprietary downhole tools and related marketing strategies.

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Organizational History

The Company was formed as a result of a series of transactions in November and December 2005 that resulted in a reverse merger, change in domicile and name change. In November 2005, IPMC Holdings Corp., a Florida corporation (which was a delinquent filer with the Commission), we and Grifco International, Inc. [GFCI.PK] (“Grifco”) entered into an Agreement For Exchange of Common Stock (the “Exchange Agreement”), whereby IPMC Holdings Corp. agreed to exchange 250,000 newly issued shares of its common stock (representing approximately 89% of IPMC Holdings Corp.’s then outstanding stock, based on 47,336 shares of IPMC Holdings Corp.’s outstanding common stock prior to the exchange) to Grifco for 20,000,000 shares of Coil Tubing Technology Holdings, Inc. (“Holdings”)(our current wholly-owned subsidiary) common stock, representing 100% of Holdings’ then outstanding shares. As a result of the Exchange Agreement, Holdings became a wholly-owned subsidiary of IPMC Holdings Corp. and IPMC Holdings Corp. became a majority owned subsidiary of Grifco (which held 250,000 shares of IPMC Holdings Corp. as a result of the Exchange Agreement).

Grifco had acquired 100% of the outstanding shares of Holdings (which was originally formed as a Texas corporation and converted to a Nevada corporation in May 2007) pursuant to a Definitive Acquisition Purchase Agreement (the “Purchase Agreement”), which was entered into on March 20, 2005, between the then sole shareholder of Holdings, Jerry Swinford, who is currently our Executive Vice President and Chairman, and Grifco, pursuant to which Mr. Swinford sold 100% of Holdings’ outstanding common stock, to Grifco for an aggregate price of $510,000, payable as $50,000 in cash and $460,000 worth of Grifco common stock (totaling 1,482,871 shares of common stock, based on the trading price of Grifco’s common stock on the Pink Sheets trading market on the day of the closing of the Purchase Agreement), of which $200,000 in stock (645,161 shares) was paid to settle an $800,000 debt owed by Holdings to a third party, HyCoTec Investments, B.V., a Netherlands limited liability company (“HyCoTec”), and $260,000 in stock (837,710 shares) was paid directly to Mr. Swinford. The 837,710 shares of Grifco common stock which Mr. Swinford received represented less than 5% of Grifco’s common stock. As such, Mr. Swinford did not have any control over the operations of Grifco prior to or following the parties’ entry into the March 2005 Purchase Agreement. Further, Mr. Swinford has not ever served as an officer or director of Grifco. Grifco held Holdings’ common shares in its own name and as such, Holdings was a wholly-owned subsidiary of Grifco following the Purchase Agreement and prior to the Exchange Agreement, described above.

HyCoTec had been an investor in Holdings prior to the date of the exchange and previously converted its equity interest in Holdings into debt secured by Holdings’ assets. Neither Mr. Swinford nor Holdings had any relationship with HyCoTec other than in relation to the debt owed to HyCoTec by Holdings.

In connection with the reverse merger and to convert the state of incorporation and change our name, on November 30, 2005, Coil Tubing Technologies, Inc. was formed in Nevada. On December 8, 2005, IPMC Holdings Corp. entered into a Plan and Agreement of Merger and Reorganization (the “Merger”) with Coil Tubing Technologies, Inc., pursuant to which each outstanding share of IPMC Holdings Corp. was exchanged for one share of Coil Tubing Technologies, Inc. As a result of the Merger, we became the sole surviving corporate entity of the merger between IPMC Holdings Corp. and Coil Tubing Technologies, Inc. (taking the name “Coil Tubing Technology, Inc.” in connection with the Merger), and Holdings became our wholly-owned subsidiary.

Coil Tubing Technologies, Inc. had no business or operations prior to the Merger with IPMC Holdings Corp. Coil Tubing Technologies, Inc. had only 100 outstanding shares at the time of its formation and prior to the Merger with IPMC Holdings Corp., which shares were held by Grifco’s then President, James Dial.

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IPMC Holdings Corp. had approximately 310 shareholders of record prior to the Exchange Agreement. The Company is not aware of the operations of IPMC Holdings Corp. immediately prior to the acquisition of IPMC Holdings Corp. by Grifco pursuant to the Exchange Agreement. Furthermore, Mr. Swinford does not and did not have any detailed knowledge of Grifco’s operations or the size and scope of its revenues or profit. Mr. Swinford is however, aware that Grifco had some coil tubing related business prior to the Exchange Agreement, but that such coil tubing products were not its main product line. At the time of the Exchange Agreement, it is believed that the vast majority of Grifco’s coil tubing business was conducted through Holdings, which became our wholly-owned subsidiary as a result of the Merger.

The acquisition by Grifco of IPMC Holdings Corp. was handled entirely by Grifco’s management and presumably, its counsel. Neither the current management of the Company, nor Holdings were involved in negotiating, drafting or finalizing the transaction or the terms of the transaction, nor was their input on the transaction sought. Grifco was the ultimate purchaser of IPMC Holdings Corp., controlled the management of, and the officers and Directors of IPMC Holdings Corp. Later, after the management of the Company was taken over by Jerry Swinford, our current Executive Vice President and Chairman in approximately January 2006, it became clear that there were numerous issues with the Grifco/IPMC Holdings Corp. merger, including the fact that IPMC Holdings Corp. was a deficient filer with the Commission, that IPMC Holdings Corp. may have had liabilities which were unknown to Grifco at the time of the transaction, and that IPMC Holdings Corp.’s financial statements were not in a position to be easily audited. As a result, the Company obtained separate counsel to assist them with the issues created by the transaction. Mr. Swinford has no control and has never had any control over Grifco, and has historically only had limited contact with Grifco.

IPMC Holdings Corp. had 47,336 outstanding shares held by approximately 310 shareholders prior to entering into the Exchange Agreement. Of the 47,336 outstanding shares, 21,111 shares, representing 44.6% of the outstanding stock were held by Ramsy Holding Corp., 11,338 shares, representing 23.9% of the outstanding stock were held by Mercatus and Partners Ltd., and 7,411 shares, representing 15.7% of the outstanding stock were held by The Myrtle Heim Declaration Trust. No other shareholders accounted for more than 5% of the outstanding common stock other than the shareholders described above, and the Company has no knowledge of the beneficial owners of the shares described above.

The Company is the result of Grifco’s acquisition of IPMC Holdings Corp. and related “reverse merger.” The Company’s current Executive Vice President and Chairman, Jerry Swinford, was not involved in negotiating or effecting the transaction. Thus, he was not aware of the Company’s reporting obligations pursuant to the Securities Act of 1934, as amended (the “Exchange Act”), until sometime well after the 2005 merger. As a result, Mr. Swinford did not consider the Company a reporting company until he was informed of such reporting obligations by the Company’s legal and accounting advisors, which was subsequent to the date of the Exchange Agreement. In February 2008, the Company filed a Form 15 with the Securities and Exchange Commission (the “Commission”) and ceased its reporting obligations under the Exchange Act. The filing of this registration statement and effectiveness of thereof will once again cause the Company to be subject to reporting obligations under the Exchange Act.

Subsequent to the Exchange Agreement, Grifco continued to provide financial assistance to the Company in the form of cash contributions to the wholly-owned subsidiary of Holdings, Coil Tubing Technology, Inc., a Texas corporation (“CTT Texas”), for the benefit of the Company. Such cash contributions made between November 2005 and March 2007, totaled approximately $556,000, plus advances in 2007 totaling $75,000. The advances were repaid in full in the second quarter of 2007. No additional contributions have been made by Grifco since March 2007. The contributions provided by Grifco were used by us for working capital and to pay certain expenses including legal and accounting expenses and to rebuild the Company’s machine shop, and to repair and replace certain coil tubing machinery, including the Company’s computer numerical control (“CNC”) equipment, which was damaged while under the control of Grifco.

In May 2007, we entered into an 1) Agreement and Release and 2) a Novation of Agreement For Exchange of Common Stock (collectively the “Release and Restatement”) with Holdings, Grifco, our Executive Vice President, Jerry Swinford and James Dial, the then Chief Executive Officer of Grifco. Pursuant to the Release and Restatement, the parties agreed that Grifco would distribute the 250,000 shares of our common stock which it held (which shares were received in connection with the Exchange Agreement, described above) to its shareholders and we would issue Grifco 1,000,000 shares of Series B Preferred Stock (described in greater detail below). The Release and Restatement agreements also provided that Jerry Swinford cancel 250,000 shares of the Company which he then held, which shares were subsequently cancelled.

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The Release and Restatement also provided that Grifco on behalf of itself, its shareholders, directors, officers, attorneys, agents, employees, heirs, predecessors, successors, affiliates, and assigns, and Mr. Dial release, acquit and forever discharge us, Holdings and Mr. Swinford along with their shareholders, directors, officers, attorneys, agents, employees, heirs, predecessors, successors, affiliates, from any and all claims, demands and causes of action of any nature whatsoever, whether arising under any contract or in tort, or arising under any state or regulation or under common law, which were or which could have been asserted in, or which arise from or in any way relate to the various activities by the parties, or which arise from or relate to any of the events giving rise thereto, and including all damage and other events arising therefrom. However, neither we nor Holdings released Grifco from any claims or causes of action.

Pursuant to the Release and Restatement, the parties also agreed to amend certain inconsistent terms of the Exchange Agreement, and that Grifco and Mr. Dial agreed to release and discharge Holdings, us and Mr. Swinford from any and all liability, claims or demands whatsoever in connection with the Exchange Agreement.

In or around May 2007, our management determined that it was in our best interests to spin-off the 20,000,000 shares of Holdings’ common stock which we held to our shareholders, take Holdings public as a separate stand alone company, and eventually seek quotation of Holdings’ common stock on the Over-The-Counter Bulletin Board. Holdings filed a registration statement with the Commission in July 2007 to register the distribution of the 20,000,000 shares of Holdings which we planned to spin-off to shareholders and achieved effectiveness of such registration statement in February 2008. However; subsequent to the effectiveness of the registration statement we determined that the previously contemplated spin-off would be too expensive when taking into account the need to register the spin-off and blue sky the distribution of Holdings’ shares in each state in which shares would need to be distributed. As a result, in March 2010, we determined it was in our best interests to abandon the previously contemplated spin-off of Holdings’ shares and subsequently filed a Form 15 with the Commission to cease Holdings’ filing obligations with the Commission. We subsequently determined it was in our best interest to file this registration statement instead for the Company to become a reporting company under the Exchange Act.

In March 2010, the Company filed a Motion for Fairness Hearing to Issue Securities Pursuant to Section 3(a)(10) of the Securities Act of 1933, as Amended (the “Motion”) in order to issue shares of common stock to certain prior shareholders of the Company, Grifco, and the Company’s largest shareholder, Herbert C. Pohlmann in order to settle an ongoing lawsuit. The court subsequently held a fairness hearing and approved the issuance of 760,456 shares of the Company’s common stock, plus additional shares issuable due to rounding without restrictive legend pursuant to an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended, which shares were issued in May through August 2011 and which lawsuit was subsequently dismissed.

Amendments to Certificate of Incorporation

In May 2007, we designated 1,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the "Series A Preferred Stock"). The Series A Preferred Stock have no dividend rights, no liquidation preference, no redemption rights and no conversion rights. Shortly after being designated, we granted all 1,000,000 shares of such Series A Preferred Stock to our former Chief Executive Officer, current Executive Vice President and Chairman, Jerry Swinford, who held such shares until his entry into the Executive Employment Agreement in November 2010, described below under “Employment Agreements” pursuant to which Series A Preferred Stock were cancelled. The Series A Preferred Stock have the right, voting in aggregate, to vote on all shareholder matters equal to fifty-one percent (51%) of the total vote (the “Super Majority Voting Rights”). Additionally, we are not allowed to adopt any amendments to our Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least 66-2/3% of the outstanding shares of the Series A Preferred Stock. However, we may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock.

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In June 2007, Mr. Swinford, as the sole Director of Holdings approved the designation of 1,000,000 shares of Holdings’ Series A Preferred Stock (with identical terms and conditions, including the Super Majority Voting Rights, as the Company’s Series A Preferred Stock) and the issuance of 1,000,000 shares of Holdings Series A Preferred Stock to Mr. Swinford. Unless otherwise stated or the context would suggest otherwise, all references to the Series A Preferred Stock contained in this registration statement refer to the Series A Preferred Stock of the Company, and not of Holdings.

The shares of Series A Preferred Stock in the Company, with the Super Majority Voting Rights, and the Series A Preferred Stock of Holdings, were issued to Mr. Swinford so that he could control the previously planned and now abandoned distribution of Holdings’ common stock to our shareholders and to approve various agreements and documents which would need to be entered into in connection with the distribution regardless of the number of outstanding shares of the Company and Holdings, and without having to expend additional resources in obtaining shareholder consents. Finally, because Mr. Swinford previously controlled the intellectual property right which the Company uses to generate the majority of its revenues, the Company and Holdings determined it was reasonable for Mr. Swinford to have voting control over such companies and therefore dictate the use and exploitation of such intellectual property. Subsequently, in November 2010, Mr. Swinford entered into the IP Purchase Agreement and sold all of his intellectual property rights to the Company and Mr. Swinford and the Company entered into an Executive Employment Agreement pursuant to which he agreed to cancel the shares of Series A Preferred Stock which he held of the Company (which shares have been cancelled to date)(both of which agreements are described below under “Certain Relationships and Related Transactions, and Director Independence”).

In June 2007, we designated 1,000,000 shares of Series B Preferred Stock and subsequently issued such Series B Preferred Stock to Grifco. The Series B Preferred Stock have no voting rights, but are convertible into 66,667 shares of our common stock (0.0667 of one share for each share of Series B Preferred Stock outstanding), if Grifco exercises its option to purchase the Series A Preferred Stock of the Company for aggregate consideration of $100, which option is exercisable for two (2) years from the date that Mr. Swinford no longer desired to hold such Series A Preferred Stock (which date was November 30, 2010 and which option expires on November 30, 2012). We believe that Grifco is no longer an operating entity and we further believe that the likelihood of Grifco exercising its rights under the Series B Preferred Stock is minimal at this time.

In February 2010, the Company’s then sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 750,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in February 2010.

In September 2010, the Company’s then sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 1,990,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in September 2010.

In May 2011, the Company’s then sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 4,990,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in May 2011.

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In September 2011, the Company’s then sole Director and majority shareholder approved an amendment to the Company’s Articles of Incorporation to affect a 1:300 reverse stock split of the Company’s outstanding shares of common stock and to authorize 205,000,000 shares of capital stock, including 200,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share, which amendment was effective with the Secretary of State of Nevada on October 21, 2011. Unless otherwise stated the effects of the 1:300 reverse stock split have been retroactively reflected throughout this registration statement.

DESCRIPTION OF BUSINESS OPERATIONS:

What is Coil Tubing Technology?

Coiled tubing refers to using a long, thin, continuous string of hollow pipe that is mounted on a truck to workover oil and gas wells. Crews lower this tubing into the well under the careful control of an operator and once in place this pipe allows the usage of specialized tools, and the pumping of fluids such as nitrogen into the well. The tool string at the bottom of the coil is often called the bottom hole assembly (“BHA”). The BHA can range from something as simple as a jetting nozzle, for jobs involving pumping chemicals or cement through the coil, to a larger string of logging tools, depending on the operations. Coiled tubing is used for a wide range of oil field services, including but not limited to drilling, logging, fracturing, cementing, fishing, completion and production.

Due to the natural characteristics of the hydrocarbon reservoir, a production reservoir needs maintenance to keep up production levels. Traditionally, workovers were performed using traditional rigs and jointed pipes. However, improvements in the material used to manufacture coiled tubing as well as quality of the tools used in the bottom hole assembly have boosted demand for coiled tubing compared to traditional jointed drill pipes.

Compared to a coiled tubing unit, a traditional rig using jointed tubes, is complex, immobile and requires a large surface to operate. Moreover, coiled tubing allows for workovers leaving the production tubes in the well as the coiled tubing can be fed through the production tubes instead of having to pull these tubes out replacing them with jointed pipes. The consequential saving in time and related cost has proven to be significant.

Furthermore, drilling with coiled tubing allows the operator to virtually steer the bottom hole assembly in any desired direction to optimize production of the reservoir with relative ease at limited cost, creating for example multi-lateral wells. If need be, the operator can maintain a continuous under-balanced condition throughout the whole drilling operation, whereas a conventional rig and jointed pipe may require re-establishment of under-balanced conditions every 30 feet drilled. Expanding an existing well to increase production levels using coiled tubing re-entry drilling, thereby extending the life of the existing facilities has created an enormous potential for the oil companies to reduce the cost per barrel produced.

Circulation

The most popular use for coiled tubing is circulation. A hydrostatic head (a column of fluid in the well bore) may be inhibiting flow of formation fluids due to its weight (the well is said to have been killed). The safest solution to this problem is to attempt to circulate out the fluid using a gas, frequently nitrogen. By running in coiled tubing to the bottom of the hole and pumping in the gas, the kill fluid can be forced out to production.

Pumping

Pumping through coiled tubing can also be used for disbursing fluids to a specific location in the well such as for cementing perforations or performing chemical washes of downhole components such as sandscreens. In the former case, coiled tubing is particularly advantageous compared to simply pumping the cement from surface, as allowing it to flow through the entire downhole pipe could potentially damage important components.

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Drilling

A relatively modern drilling technique involves using coiled tubing instead of conventional drill pipe. This has the advantage of requiring less effort to get in and out of the well (the coil can simply be run in and pulled out while drill string must be assembled and dismantled joint by joint). Instead of rotating the drill bit by using a rotary table or top drive at the surface, it is turned by a downhole motor, powered by the motion of drilling fluid pumped from surface.

Logging and perforating

Well logging usually refers to downhole measurements made via instrumentation that is lowered into the well at the end of a wireline cable (the simplest way to lower equipment in and out of the well, usually just a long strand of very thin wire). These tasks are by default the realm of wireline because coiled tubing is rigid; it can be pushed into the well from the surface. This is an advantage over wireline, which is gravity dependent and depends on the weight of the toolstring to be lowered into the well. For highly deviated and horizontal wells, gravity may be insufficient.

Fishing

Fishing refers to the application of tools, equipment and techniques for the removal of junk, debris or fish (anything left in a wellbore) from a wellbore.

By not having to connect individual pieces of pipe, coiled tubing crews greatly increase the speed of putting pipe into the well and saves time and costs for the well owner, whether dealing with circulation, pumping, drilling, logging and perforating and/or fishing operations.

TOOLS AND SERVICES

We offer (1) proprietary downhole tools, and (2) the ability for our customers to rent only a single item from our inventory. Our various products and tools are described in greater detail below:

Coiled Tubing Drilling

Although coiled tubing drilling has always provided an alternative to traditional vertical drilling, more sophisticated applications like horizontal, underbalanced, and re-entry drilling have elevated the success of coiled tubing in drilling applications in recent years. We cause to be manufactured and rent several products to be used in drilling applications, including the following:

The “Jet Motor” -	The Jet Motor is a tool that produces rotation and horsepower by pumping fluid or gas through the components of the tool. The power generated by the tool is then used to drill subterranean objects in an oil well or to deepen an existing well.

The “Pulsator” -	The Pulsator is a tool much like an automobile shock absorber. The tool absorbs spike loads induced by the drilling application, which are often created by a Jet Motor or other similar tool.

The “Hevi Hitter” -	The Hevi Hitter jar enables energy to be stored like a spring placed in tension. When released the energy accelerates and is released to an internal hammer and anvil creating impact force to strike an object in a well.

The CTT “Amplidyne” Accelerator -	The CTT Amplidyne is used to store the energy released by the Hevi Hitter through a fluid spring. Upon release of the energy the Amplidyne allows acceleration of energy and magnifies the impact of the Hevi Hitter.

The CTT Oscillator	The CTT Oscillator distributes fluid and pressure through coil tubing, up to a volume required by a customer’s hydraulic specifications inducing vibration of the pipe.

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Thru Tubing Well Maintenance

One of the biggest advantages of using coiled tubing technology is the ability to perform live-well workovers instead of killing the well first with fluids and deploying a conventional workover rig to the well. Our tools allow the well tubing to be cleared instead of replaced. We believe that the time and cost savings and ultimate effect on the cost per barrel produced using our technology are considerable.

Our thru tubing well maintenance products include:

The “Jet Hammer” -

The Jet Hammer is a tool that creates rotational horsepower and axial impact energy to remove objects from a wellbore. The tool works under the same principal as a jackhammer cycling to 2000 impacts per minute. The tool is used for the removal of scale, sand cement, barium and paraffin from production tubing and the tool is also effective in shattering glass and ceramic discs placed in the well. The tool can be powered by water, light drilling fluids, air, nitrogen or other acid media. The tool is easy to operate and can withstand temperatures of up to 500 degrees Fahrenheit. Bits for the Jet Hammer are designed to maximize the penetration rate of the tool by taking advantage of the tool’s unique combination of rotational and percussive impact forces.

The “Jet Motor” -	The Jet Motor is a very compact (19 inch overall length) downhole motor. The tool has a unique jetting system to maximize torque. It has no rubber thereby allowing the use of acids, nitrogen or fluid at high operating temperatures. The tool is ideal for use in wells up to 500 degrees Fahrenheit.

The Jet Nozzle -	The Jet Nozzle incorporates a unique nozzle system developed for removal of downhole media deposits that impede efficient well productivity.

The “5 1/8” Rotorjet” -	The 5 1/8” RotorJet is a tool developed in liaison with Hammelmann Corporation and is used to clean production tubing of sediments deposited during the production of oil and gas. We do not currently actively market the 5 1/8” RotorJet at this time.

Coiled Tubing Fishing

Fishing in the oilfield is generally known as the process of removing debris from a well. The process is used when a well production is affected and the debris must be removed.

The “Rotating Tool” -	The Rotating Tool has been designed and developed specifically for use in our coiled tubing operations. Its purpose is to mechanically provide rotation to assist in connecting to a fish. The Rotating Tool can be also be used with Hevi Hitters in combination with an Amplidyne to remove a fish that remains stuck. The Rotating Tool currently generates more revenue for us than any other tool.

The “Hevi Hitter” -	The Hevi Hitter as described in the drilling application above, can also be used in the fishing operations.

The CTT “Amplidyne” Accelerator -	The CTT Amplidyne Accelerator, also discussed above, can also be used for fishing operations.

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We mainly focus on the development, marketing and rental of advanced tools and related innovative technical solutions to be used with coil tubing in the bottom hole assembly (“BHA”) for the exploration and production of hydrocarbons (“E&P”). Although various companies in the E&P services business have realized the importance of coiled tubing, we have focused entirely on the development of dedicated, patented, proprietary downhole tools and the related marketing strategies.

We believe that we have identified a market for an aggressive, innovative and independent, full line, tool company and have pursued that business strategy. We offer a turnkey tool package containing a full line of standard tools and proprietary downhole tools or a single item tool rental.

Since the United States domestic market is currently by far the largest market for coiled tubing, we are currently focusing primarily on the domestic market, as well as expanding our presence in Canada. However, moving forward, we anticipate expanding our marketing efforts into the North Sea and Middle Eastern markets, Latin America and Europe. We believe that the possibility to extend the life of platforms makes it extremely attractive to use coiled tubing offshore.

Coiled Tubing Industry

The coiled tubing industry is made up of three operational segments:

	·	Oil Companies;
	·	Coiled Tubing Operators; and
	·	Service Companies.

Oil companies typically outsource most of their coil tubing work to the E&P service industry in general and the coiled tubing industry in particular. The oil companies’ engineers rely on coiled tubing operators and downhole service companies to provide operational recommendations and applications to accomplish a specific task on their well. They are constantly seeking new tools for their operations, which often allow proprietary tool companies, such as us, an advantage on their wells. The trend to outsource services is expected to continue, as the oil companies are not interested in owning and paying for the upkeep of high cost coil tubing equipment and tools. As a result, service companies are responsible for the operation of the majority of drilling and fishing procedures using coil tubing technology. The service companies use mostly proprietary tools and large service companies, with whom we compete, like National Oilwell Varco, Thru Tubing Solutions, Baker-Hughes, Weatherford, and Smith International, which are focusing more and more on drilling. These companies are attempting to create a one-stop-shop concept with turnkey solutions for oil companies, especially abroad, as the United States domestic market is regarded as highly competitive in this respect.

The Market for Coiled Tubing

We believe that the United States domestic market and Canada, which we are actively trying to expand our presence in is by far the largest and the most competitive market for coil tubing technology, due to the older age of wells and the difficulty in keeping them profitable. Moreover, the United States is considered to be the breeding ground for new technology with a consequential large build-up of coiled tubing units and related companies keeping the rates competitive and therefore coiled tubing workovers more viable. We are currently focusing our efforts primarily in the United States and Canada; however we are also working to expand our distribution markets to include the North Sea and Middle Eastern markets.

Business Strategy

We have based our business strategy on the leasing and rental of our product lines to three distinct markets:

	·	Oil Companies;
	·	Coiled Tubing Operators; and
	·	Well Servicing Companies.

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There are five components to our strategic vision:

	·	Build profitable year over year sales of existing proprietary products;
	·	Accelerate development of new proprietary products for the oil and gas industry;
	·	Accelerate growth of new distribution stockpoints worldwide;
	·	Expand into other areas of drilling, such as conventional drilling tools; and
	·	Accelerate growth through acquisitions.

We believe increasing our proprietary product lines availability to our customers is critical to our profitability. Therefore, we will focus on initiatives to drive year over year sales growth for our existing products, funding permitting, emphasizing:

	·	Enhanced customer focus through a concerted sales and marketing effort in the future;
	·	Increased investment in product lines; and
	·	Accelerated growth of new product lines.

Material Agreements:

Hammelmann Distributor Contracts

On or about January 1, 2007, Coil Tubing Technology, Inc., our wholly owned subsidiary (“CTT Texas”) entered into two Statement of Understandings with Hammelmann Corp. (“Hammelmann” and the “Statement of Understandings”). The Statement of Understandings provide for Hammelmann to provide CTT Texas the coil tubing nozzles known as the “5 1/8” RotorJet” and “TurboJet” and the surface cleaner known as the “Coil Tubing Cleaner” to market, field test and to report the performance of to Hammelmann, which any revenues generated on such products to be split 50/50 between CTT Texas and Hammelmann. The Statements of Understandings remain in effect until terminated with sixty (60) days prior written notice to the non-terminating party.

Letter of Intent with Intelligent Solutions

In July 2011, the Company entered into a Letter of Intent with Intelligent Solutions Columbia S.A.S. (“Intelligent Solutions”). Pursuant to the Letter of Intent, the Company and Intelligent Solutions agreed to consider in good faith, the formation of a special purpose entity in Columbia which would commercialize the Company’s technology and patents in Columbia. The parties agreed to pay their own costs in connection with the Letter of Intent, but that such costs may be recovered from the special purpose entity. The Letter of Intent contemplates the Company owning 51% and Intelligent Solutions owning 49% of the special purpose entity and the Company providing the special purpose entity a license to use its technology in Columbia. The Letter of Intent has expired to date; however, the parties are currently working to finalize a formal agreement, which the Company anticipates entering into subsequent to the date of this filing.

Distribution Agreement

The Company has a Distribution Agreement in place with Supreme Oilfield Services (“Supreme”) pursuant to which Supreme has agreed to distribute the Company’s products in the area south and west of Corpus Christi, Texas. The agreement was effective May 5, 2010, and renewable for successive one year terms thereafter until terminated by any party for any reason with 90 days prior written notice. The Distribution Agreement, similar to other distribution agreements the Company has entered into in the past and which the Company may enter into in the future provides for the Company to train the employees of the distributor, provide product literature, expense reimbursements, and engineering and field support and that the parties will work together to jointly promote the products subject to such Distribution Agreement, with the Company receiving a percentage of the rental revenue received in connection with the rental of the products subject to the Distribution Agreement.

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Sales Agreement with Revenue Participation & Purchase Option

In January 2010, the Company entered into a Sales Agreement with Revenue Participation & Purchase Option (the “Sales and Revenue Agreement”) with Dark Light, LLC (“Dark Light”). Pursuant to the Sales and Revenue Agreement, we agreed to sell Dark Light certain products for use in international markets, from time to time, at a markup to our cost of production. The agreement was non-exclusive, except to Saudi Arabia, in which market Dark Light had the exclusive right to sell our products. The Sales and Revenue Agreement had a term of 18 months, automatically renewable thereafter for additional one year terms until either party provides the other notice of their intent not to renew such agreement, which must be received no less than 60 days before the end of the then current term. We were also provided the right pursuant to the Sales and Revenue Agreement to participate with Dark Light in an amount up to 50% of the total value of any products ordered by Dark Light, in the revenues received by Dark Light for the sale of our products. We terminated the Sales and Revenue Agreement in January 2012.

Subsidiaries

We currently have one wholly-owned subsidiary, Coil Tubing Technology Holdings, Inc., which in turn has three wholly-owned subsidiaries, Precision Machining Resources, Inc. (“PMR”) and Coil Tubing Technology, Inc. (“CTT Texas”) Texas corporations and Coil Tubing Technology Canada Inc., an Alberta, Canada corporation (“CTT Canada”). The majority of our tool rental operations are run through CTT Texas. PMR owns certain manufacturing equipment formerly used to produce tools used in the workover segment of the Company’s rental business, which generally require smaller tools than other coil tubing operations. PMR also stocks coil tubing tool parts which it sells directly to other service companies, making PMR a supply and sales arm for non-proprietary tools and equipment of the Company. We recently formed CTT Canada and have opened a sales and service center in Alberta, Canada, and became operational in January 2012. We hope to expand our operations in Canada during fiscal 2012 and see Canada as one of the largest markets for coil tubing products and technology.

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Corporate Organization

Employees

We currently have twenty-five (25) full-time employees, including our, Executive Vice President Jerry Swinford and our, Chief Executive Officer, Jason Swinford, Jerry Swinford’s son.

Suppliers

We obtain materials which we use to produce our coil tubing technology from the following suppliers, provided that we do not have any agreements in place with such suppliers:

	·	Aztec Machine;
	·	Industrial Bearing Services (IBS);
	·	H.E. Halford Welding;
	·	Houston Plating & Coating;
	·	JCI Inspection; and
	·	Precision Machining Specialties.

Dependence on One or a Few Major Customers

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As a result, the majority of our revenues have historically been due to only a small number of repeat customers, and we anticipate this trend continuing moving forward. Additionally, as a result, if we lose any of our major customers and are unable to replace such client with a similarly sized customer, it would likely have a materially adverse effect on our results of operations and could force us to curtail or abandon our current business operations. We do not currently have any material agreements in place with any of our customers (except as set forth above under “Material Agreements”), but instead, we bill our customers based on purchase orders (“PO’s”), which contain standard provisions, and allow such customers 30 days from such PO date to pay us for their tool rentals.

Billing Process

We bill our clients based on PO’s received from such clients after the use by such clients of our tools. For instance, assuming a client rents a tool out for five days, we usually receive a PO from such client at the expiration of such five day period, and/or at the expiration of such client’s project in the event that any client is using multiple tools over a prolonged period for a particular job. We receive rental fees based on the use of rented tools by our customers and whether such tools are on particular jobsites. If a tool is on a jobsite but not being used for a downhole application we receive a standby fee for and if any tool is used downhole on any particular day we receive a much larger day rate for such tools.

We also bill our clients for the full cost of any tools which are lost and/or damaged in use and recognize the full cost of the tool as revenue after subtracting the carrying cost of such tool (the value of such tool minus any depreciation).

Patents, Trademarks and Licenses

Below is a summary of the Company’s trademark and patents, pending patents and related rights as of the filing of this registration statement, which Patents were acquired from Jerry Swinford, the Company’s Executive Vice President and Chairman pursuant to the November 2010 IP Purchase Agreement and January 2012 IP Assignment Agreement (both described in greater detail below under “Certain Relationships and Related Transactions, and Director Independence”), provided that Mr. Swinford has a first priority security interest over the Patents until such time as the $700,000 promissory note he was provided in connection with the IP Purchase Agreement is satisfied in full:

Type of Intellectual Property	Registered Number (or Provisional Number)	Expiration Date

Trademark - Registered Mark	Serial No. 3,355,177	The Trademark will continue as long as it is used in marketplace

Patent - Letters Patent Issued Subterranean Rotating Device & Method	No. 5584342	Expires June 6, 2015 (assuming payment of maintenance fees)

Patent - Jet Motor For Providing Rotation In a Downhole Tool	US - No. 7,686,102 Singapore – No. 146369	March 29, 2027 (assuming payment of maintenance fees)

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	Canada-Application No. 2,646,326	National Entry September 23, 2008 (registration has not been finalized as of the date of this filing)

Patent– Rotation Tool	US - No. 7,946,348 Canada-Application No. 2,734,285 Indonesia-Application No. W00201001371	December 4, 2029 (assuming payment of maintenance fees) National Entry February 15, 2011 [registration has not been finalized as of the date of this filing] National Entry April 28, 2010 [registration has not been finalized as of the date of this filing]

Patent Application Filed – Drilling Jar	US - No. 12/437,525 Canada-Application No. 2,723,420 Indonesia-Application No. W00201004067	Filed May 7, 2009 [registration has not been finalized as ofthe date of this filing] National Entry November 2, 2010 [registration has not been finalized as of the date of this filing] National Entry November 26, 2010 [registration has not been finalized as of the date of this filing]

Patent Application Filed – Jet Hammer	US - No. 12/480,680	Filed June 8, 2009 [registration has not been finalized as of the date of this filing]

Patent Application Filed – Method and Apparatus for Washing Downhole Tubulars and Equipment	US - No. 13/046,662	Filed March 11, 2011 [registration has not been finalized as of the date of this filing]

Provisional Patent Application Filed-Downhole Oscillator	US - No. 61/468,637	Filed March 29, 2011 [The Company has until March 29, 2012 to file non-provisional patent application claiming priority]

PCT – Patent Application Filed – Method and Apparatus for Washing Downhole Tubulars and Equipment	PCT/US2011/028241	Filed March 11, 2011 [This filing forms the basis for subsequent foreign filings]

The issued patents and the PCT, provisional and non-provisional patent applications, which are described above (collectively the “Patents”) make up the core of our business and we believe provide us with a competitive advantage over other coil tubing companies. The vast majority of our revenues are derived from the Patents, through the manufacture and rental of our proprietary tools based on the Patents. There are risks associated with our loss of the use of the Patents, which are described in greater detail below under “If We Are Unable To Adequately Protect Our Intellectual Property Rights Our Business Is Likely To Be Adversely Affected” and “Jerry Swinford, Our Executive Vice President And Chairman Has A First Priority Security Interest Over Our Patents.”

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Effect of Government Regulation

Research and Development

Over the past two years we have spent approximately 5% of the revenues we generated on research and development activities. Moving forward we anticipate spending a greater percentage of our working capital on research and development activities in an effort to advance the technology of our coil tubing technologies and workover product lines.

ITEM 1A. RISK FACTORS

We May Require Additional Financing To Implement Our Business Plan And Continue Developing And Marketing Our Environmental Compliance Systems.

The revenues we have generated since our incorporation have not been sufficient to support our operations, which have principally been funded through sales of common stock to date. We currently believe that we will be able to continue our business operations for approximately the next twelve months with our current cash on hand, the amount committed by our majority shareholder, and from our expected revenues. Historically we have received funds from our largest shareholder, Herbert C. Pohlmann, through private placements of our common stock, which we have used to fund our operations; and Mr. Pohlmann is obligated to continue to fund us moving forward pursuant to the terms of subscription agreements that were entered into in December 2011. Beyond the commitment of Mr. Pohlmann and a commitment from a third party investor, additional available capital may not be available on favorable terms, if at all. We anticipate the need for approximately $3,000,000 in additional funding to support our operations and plans for expansion of our operations over the next approximately 12 months. We may choose to raise additional funds in the future through sales of debt and/or equity securities to support our ongoing operations and for expansion.

Even if we are successful in raising capital in the future, we will likely need to raise additional capital to continue and/or expand our operations and repay our outstanding liabilities. If we do not raise the additional capital, it is likely that we may need to scale back or curtail implementing our business plan.

We May Have Difficulty Obtaining Future Funding Sources, If Needed, And We May Have To Accept Terms That Would Adversely Affect Shareholders

We will need to raise funds from additional financing. We have no commitments for any financing and any financing commitments may result in dilution to our existing stockholders. We may have difficulty obtaining additional funding, and we may have to accept terms that would adversely affect our stockholders. For example, the terms of any future financings may impose restrictions on our right to declare dividends or on the manner in which we conduct our business. Additionally, we may raise funding by issuing convertible notes, which if converted into shares of our common stock would dilute our then shareholders interests. Lending institutions or private investors may impose restrictions on a future decision by us to make capital expenditures, acquisitions or significant asset sales. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business plan.

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Our Ability To Grow And Compete In The Future Will Be Adversely Affected If Adequate Capital Is Not Available.

The ability of our business to grow and compete depends on the availability of adequate capital, which in turn depends in large part on our cash flow from operations and the availability of equity and debt financing. Our cash flow from operations may not be sufficient or we may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy. As a result, adequate capital may not be available to finance our current growth plans, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Shareholders Who Hold Unregistered Shares Of Our Common Stock Will Be Subject To Resale Restrictions Pursuant To Rule 144, Due To The Fact That We Are Deemed To Be A Former “Shell Company.”

Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. While we do not believe that we are currently a “shell company”, we were previously a “shell company” and as such are deemed to be a former “shell company” pursuant to Rule 144, and as such, sales of our securities pursuant to Rule 144 may not be able to be made until we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date “Form 10 information” has been filed with the Commission reflecting the Company’s status as a non-“shell company.” Because we are deemed to be a former “shell company”, none of our non-registered securities will be eligible to be sold pursuant to Rule 144, until at least a year after this registration statement is filed with the Commission (assuming we continue to file the reports required under the Exchange Act), any non-registered securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until a year after we have complied with the requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a former “shell company” could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned).

We Lack A Significant Operating History Focusing On Our Current Business Strategy Which You Can Use To Evaluate Us, Making Share Ownership In Our Company Risky

Our Company lacks a long standing operating history focusing on our current business strategy which investors can use to evaluate our Company’s previous earnings. Therefore, ownership in our Company is risky because we have no significant business history and it is hard to predict what the outcome of our business operations will be in the future.

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We Have Established Preferred Stock Which Can Be Designated By The Company's Board Of Directors Without Shareholder Approval And The Board Established Series A Preferred Stock, Which Gives The Holders Majority Voting Power Over The Company.

The Company has 5,000,000 shares of preferred stock authorized. The shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the Board of Directors of the Company ("Board of Directors") prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. In May 2007, we designated 1,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the "Series A Preferred Stock"). The Series A Preferred Stock have no dividend rights, no liquidation preference, no redemption rights and no conversion rights. Shortly after being designated, we granted all 1,000,000 shares of such Series A Preferred Stock to our Executive Vice President and Chairman, Jerry Swinford, who held such shares until his entry into the Executive Employment Agreement in November 2010, described below under “Employment Agreements” pursuant to which Series A Preferred Stock were cancelled. The Series A Preferred Stock have the right, voting in aggregate, to vote on all shareholder matters equal to fifty-one percent (51%) of the total vote (the “Super Majority Voting Rights”). In June 2007, we designated 1,000,000 shares of Series B Preferred Stock and subsequently issued such Series B Preferred Stock to Grifco. The Series B Preferred Stock have no voting rights, but are convertible into 66,667 shares of our common stock (0.0667 of one share for each share of Series B Preferred Stock outstanding), if Grifco exercises its option to purchase the Series A Preferred Stock of the Company for aggregate consideration of $100, which option is exercisable for two (2) years from the that Mr. Swinford no longer desired to hold such Series A Preferred Stock (which date was November 30, 2010 and which option expires on November 30, 2012). We believe that Grifco is no longer an operating entity and we further believe that the likelihood of Grifco exercising its rights under the Series B Preferred Stock is minimal at this time.

Because the Board of Directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company's shareholders, shareholders of the Company will have no control over what designations and preferences the Company's preferred stock will have. The holders of the shares of Series A Preferred Stock will exercise voting control over the Company. As a result of this, the Company's shareholders will have no control over the designations and preferences of the preferred stock and as a result the operations of the Company.

Herbert C. Pohlmann, Our Majority Shareholder, Can Vote A Majority Of Our Common Stock And Can Exercise Control Over Corporate Decisions.

Herbert C. Pohlmann, our majority shareholder beneficially owns 16,000,219 shares of our common stock, representing 92.7% of our outstanding common stock giving him the right to exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Pohlmann may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders. Additionally, as described below under “Certain Relationships and Related Transactions, and Director Independence” Mr. Pohlmann has made an approximate $3.75 million provision for our Executive Vice President and Chairman, Jerry Swinford in the event Mr. Pohlmann dies, which could cause conflicts of interest between Mr. Pohlmann, Mr. Swinford as our Executive Vice President and Chairman, and our minority shareholders.

Jerry Swinford, Our Executive Vice President and Chairman, Can Vote A Majority Of The Outstanding Voting Shares Of Our Wholly-Owned Subsidiary Coil Tubing Technology Holdings, Inc.

Jerry Swinford, our Executive Vice President and Chairman, holds 1,000,000 shares of the Series A Preferred Stock of Holdings, which owns and controls substantially all of our assets and operations, which preferred stock gives him the right to vote in aggregate, 51% of the outstanding voting shares of Holdings on all shareholder matters. Accordingly, Mr. Swinford will exercise control in determining the outcome of all corporate transactions or other matters concerning Holdings, including the election of directors, mergers, consolidations, the sale of all or substantially all of Holdings’ assets, and also the power to prevent or cause a change in control. The interests of Mr. Swinford may differ from the interests of the Company and the Company’s other stockholders and thus result in corporate decisions relating to Holdings that are adverse to the Company or other shareholders.

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We Rely On Our Executive Vice President And Chairman, Jerry Swinford, And If He Were To Leave Our Company Our Business Plan Could Be Adversely Effected

We rely on Jerry Swinford, our Executive Vice President and Chairman for the success of our Company. Mr. Swinford has an employment agreement with us, currently effective until November 2015, which employment agreement is described in greater detail below under “Executive Compensation”. Mr. Swinford’s experience and input creates the foundation for our business and he is responsible for the direction and control over the Company’s development activities. Moving forward, should he be lost for any reason, the Company will incur costs associated with recruiting a replacement and any potential delays in operations which this may cause. If we are unable to replace Mr. Swinford with another individual suitably trained in coil tubing technology we may be forced to scale back or curtail our business plan.

We Will Owe Substantial Consideration To Our Officers In The Event They Are Able to Terminate Their Employment Agreements With Us For “Good Reason”, Including Their Death Or Disability.

We entered into five year Executive Employment Agreements with Jerry Swinford to serve as our Chief Executive Officer and Jason Swinford to serve as our Chief Operating Officer in November 2010. In December 2011, the agreements were amended, Jerry Swinford resigned as Chief Executive Officer of the Company (provided that he still serves as the Treasurer, Chief Financial Officer and Secretary of the Company) and was appointed as Executive Vice President of the Company and Jason Swinford was appointed as the Chief Executive Officer of the Company (the Amendments to the Employment Agreements have been reflected in the discussion below). Both agreements are renewable for additional one-year terms as provided in the agreements. Pursuant to Jerry Swinford’s amended employment agreement he is currently due $108,000 per year for services to the Company. Pursuant to Jason Swinford’s amended employment agreement he is currently due $200,000 per year for services to the Company. Additionally, each are due Options and a Bonus (as described below under “Employment Agreements”) pursuant to the agreements. If either individual’s employment is terminated by the Company for “cause” as defined in their agreements, the Company is required to pay such individual the compensation earned by him through the date of termination, including any Bonus which is due (which is calculated pro rata through the end of the last full calendar quarter), within 10 days of such termination date. In the event the Company terminates either individual’s employment for no reason or such individual terminates the agreement for “good reason” as provided for in the agreements, including his death, the Company materially diminishing his responsibilities, his disablement, the Company breaching any term of the employment agreement, or a constructive termination (including such individual being demoted, having his salary decreased or being forced to re-locate), the Company is required pay such individual his salary for the remaining amount of the term of the agreement (at such times as the consideration would be due as if he was still employed by the Company), along with an additional $100,000 lump sum payment, due within 10 days of the termination date of the agreement. As such, in the event that either Jerry or Jason Swinford’s employment agreements are terminated by them for “good reason”, including, but not limited to their death or disablement, we will be forced to continue to pay their salaries, grant them (or their estate) Options and pay them (or their estate) the Bonuses they would have been due as if they were still employed by the Company, as well as paying them a $100,000 lump sum payment. The requirement for the Company to continue to pay the salaries and other compensation to Jerry and Jason Swinford after they are no longer employed by the Company could prevent us from having sufficient available cash to engage new officers or Directors, materially adversely effect our ability to pay our expenses as they become due, negatively affect our results of operations, and/or prevent a change of control of the Company.

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We Face Corporate Governance Risks And Negative Perceptions Of Investors Associated With The Fact That We Currently Have Only Two Directors Each of Whom Are Related to Each Other.

Currently, our sole officers and Directors are Jerry Swinford and Jason Swinford, his son. As such, Jerry and Jason Swinford have significant control over our business direction. Additionally, there are no other members of the Board of Directors available to second and/or approve related party transactions involving Jerry or Jason Swinford, including the compensation either is paid and the employment agreements we enter into with such individuals. Therefore, investors may perceive that because no other Directors are approving related party transactions involving Jerry or Jason Swinford that such transactions are not fair to the Company. The price of our common stock may be adversely affected and/or devalued compared to similarly sized companies with multiple unrelated officers and Directors due to the investing public’s perception of limitations facing our company due to the above.

We Have Arrangements In Place With Various Manufacturers To Build And Produce Our Products, And If The Demand For Those Manufacturers’ Skills Increases, The Cost Of Producing Our Products May Increase, Causing Our Profits (If Any) To Decrease.

We currently have a number of arrangements with various manufacturing shops which manufacture our Coil Tubing Technology tools and equipment. In the event that the demand for those manufacturers’ time and unique skills increase, we may be forced to pay more money to have our products manufactured. If this were to happen, we may be forced to charge more for our products, which may cause the demand for our products and consequently our sales to decrease, which would likely cause any securities which you hold to decrease as well. Additionally, if the materials which our products are made from, including steel, increase in cost, it could similarly cause increases in the cost of manufacturing our products, which could force us to increase the prices we charge for our products, which could cause the demand for such products to decline.

Our Future Success And Profitability May Be Adversely Affected If We Fail To Develop And Introduce New And Innovative Products That Appeal To Our Customers.

The oil and gas drilling industry is characterized by continual technological developments that have resulted in, and likely will continue to result in, substantial improvements in the scope and quality of oilfield chemicals, drilling and artificial lift products and services and product function and performance. As a result, our future success depends, in part, upon our continued ability to develop and introduce new and innovative products in order to address the increasingly sophisticated needs of our customers and anticipate and respond to technological and industry advances in the oil and gas drilling industry in a timely manner. If we fail to successfully develop and introduce new and innovative products and services that appeal to our customers, or if new companies or our competitors offer such products, our revenue and profitability may suffer.

If We Are Unable To Adequately Protect Our Intellectual Property Rights Our Business Is Likely To Be Adversely Affected.

We rely on a combination of patents, trademarks, non-disclosure agreements and other security measures to establish and protect our proprietary rights. The measures we have taken or may take in the future may not prevent misappropriation of our proprietary information or prevent others from independently developing similar products or services, designing around our proprietary or patented technology or duplicating our products or services. Furthermore, some of our intellectual property rights are only protected by patent applications and we may choose to not move forward with those patent applications in the future. Finally, our patent applications may not be granted in the future. In the event that we do not move forward with the patent applications and/or do not obtain registration of those patents, we will have a diminished ability to protect our proprietary technology, which could cause us to spend substantial funds in connection with litigation and/or may force us to curtail or abandon our business activities.

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Jerry Swinford, Our Executive Vice President And Chairman Has A First Priority Security Interest Over Our Patents.

The Patents (defined below under “Patents, Trademarks and Licenses”) which we acquired from Jerry Swinford, our Executive Vice President and Chairman, are significant to our operations and are required for us to operate our business and protect our intellectual property rights. Mr. Swinford currently holds a first priority security interest over the Patents in order to secure the repayment of a note in the amount of $700,000 which is due September 15, 2015, and is payable in monthly installments of the lesser of $12,963 or the amount outstanding under such note per month, which note was provided to Mr. Swinford by the Company in connection with the IP Purchase Agreement described in greater detail below under “Certain Relationships and Related Transactions and Director Independence”). In the event we default in the repayment of such note and Mr. Swinford enforces his security interest over the Patents we may be forced to curtail or abandon our business operations.

A Significant Amount Of Our Revenues Are Due To Only A Small Number Of Customers, And If We Were To Lose Any Of Those Customers, Our Results Of Operations Would Be Adversely Affected.

The Company had gross sales of $3,524,611 and $1,444,757 during the nine months ended September 30, 2011 and 2010, respectively. The Company did not have any customers representing 10% or more of gross sales during the nine months ended September 30, 2011. The Company had three customers representing approximately 23%, 14% and 14% of gross sales during the nine months ended September 30, 2010. The Company had gross sales of $1,751,850 and $767,782 for the years ended December 31, 2010 and 2009, respectively. The Company had three customers that represented approximately 18%, 14%, and 11% of gross sales for the year ended December 31, 2010. The Company had five customers that represented approximately 23%, 11%, 11%, 11% and 11% of gross sales for the year ended December 31, 2009. As a result, the majority of our revenues are due to only a small number of customers, and we anticipate this trend continuing moving forward. Additionally, we do not have any contracts in place with the majority of our customers (except as described above under “Material Agreements”) and instead operate purchase order to purchase order with such customers. As a result, a termination in relationship or a reduction in orders from these customers could have a materially adverse effect on our results of operations and could force us to curtail or abandon our current business operations.

A Significant Amount Of Our Revenues Come From Entities Which Are Also Our Competitors, And If We Were To Lose Any Of Those Customers, Or They Were To Create Products To Directly Compete With Ours, Our Results Of Operations Would Be Adversely Affected.

For the year ended December 31, 2010, a significant portion of our revenues, approximately 23%, came from Weatherford International and Thru Tubing Solutions, a Division of Rollins Corporation, which are also competitors of us. While such companies do not currently compete directly for our products, they offer similar products. If either of those entities, or any other entity which is a customer of ours, creates products in the future which directly compete with ours, such entities will likely cease using our services and our revenues could be adversely affected. Similarly, we could lose additional customers to such directly competing competitors, which would further cause a decrease in our results of operations.

Our Revenues Are Subject To Seasonal Rules And Regulations, Such As The Frost Laws Enacted By Several States And Canada, Which Could Cause Our Operations To Be Subject To Wide Seasonal Variations.

Certain states which experience below freezing temperatures during the winter months, and Canada have enacted Frost Laws, which put maximum weight limits on certain public roads during the coldest months of the years, to help prevent damage to the roads caused by frost heaves. As a result, our revenues may be limited in such cold weather states (and Canada) by such Frost Laws and our results of operations for those winter months may be substantially less than our results of operations during the summer months. We currently rent tools throughout the United States and Canada and for use on the North Sea in Norway. We are also working to expand our operations in the North Sea and Middle Eastern markets, Latin America, Indonesia and Europe. As a result, our results of operations for one quarterly period may not give an accurate projection of our results of operations for the entire fiscal year and/or may vary significantly from one quarter to the other.

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We May Not Be Able To Successfully Manage Our Growth, Which Could Lead To Our Inability To Implement Our Business Plan.

Our growth is expected to place a significant strain on our managerial, operational and financial resources, especially considering that we currently only have two executive officers and Directors. Further, as we enter into additional contracts, we will be required to manage multiple relationships with various consultants, businesses and other third parties. These requirements will be exacerbated in the event of our further growth or in the event that the number of our drilling and/or extraction operations increases. Our systems, procedures and/or controls may not be adequate to support our operations or that our management will be able to achieve the rapid execution necessary to successfully implement our business plan. If we are unable to manage our growth effectively, our business, results of operations and financial condition will be adversely affected, which could lead to us being forced to abandon or curtail our business plan and operations.

If We Make Any Acquisitions, They May Disrupt Or Have A Negative Impact On Our Business.

If we make acquisitions in the future, funding permitting, of which there can be no assurance, we could have difficulty integrating the acquired companies' personnel and operations with our own. We do not anticipate that any acquisitions or mergers we may enter into in the future would result in a change of control of the Company. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:

·	the difficulty of integrating acquired products, services or operations;
·	the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;
·	difficulties in maintaining uniform standards, controls, procedures and policies;

·	the potential impairment of relationships with employees and customers as a result of any integration of new management personnel;
·	the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers;

·	the effect of any government regulations which relate to the business acquired;
·	potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition;

·	difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities; and
·	potential expenses under the labor, environmental and other laws of various jurisdictions.

Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations. Further, the commencement of business in other countries may be subject to significant risks in areas which we are not able to prepare for in advance.

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RISKS RELATED TO OUR INDUSTRY

Volatility Or Decline In Oil And Natural Gas Prices May Result In Reduced Demand For Our Products And Services Which May Adversely Affect Our Business, Financial Condition And Results Of Operation .

The markets for oil and natural gas have historically been extremely volatile. We anticipate that these markets will continue to be volatile in the future. Although oil and gas prices have increased significantly in recent years, there can be no guarantees that these prices will remain at current levels. Such volatility in oil and gas prices, or the perception by our customers of unpredictability in oil and natural gas prices, affects the spending patterns in our industry. The demand for our products and services is, in large part, driven by current and anticipated oil and gas prices and the related general levels of production spending and drilling activity. In particular, volatility or a decline in oil and gas prices may cause a decline in exploration and drilling activities. This, in turn, could result in lower demand for our products and services and may cause lower prices for our products and services. As a result, volatility or a prolonged decline in oil or natural gas prices may adversely affect our business, financial condition and results of operations.

Competition From New And Existing Competitors Within Our Industry Could Have An Adverse Effect On Our Results Of Operations.

The oil and gas industry is highly competitive and fragmented. Our principal competitors include numerous small coil tubing companies capable of competing effectively in our markets on a local basis as well as a number of large coil tubing companies that possess substantially greater financial and other resources than we do. Furthermore, we face competition from companies working to develop advanced oil and gas technology which would compete with us and other coil tubing companies. Additionally, our larger competitors may be able to devote greater resources to developing, promoting and selling or renting their products and services. We may also face increased competition due to the entry of new competitors including current suppliers that decide to sell or rent their coil tubing products and services directly. As a result of this competition, we may experience lower sales if our prices are undercut or advanced technology is brought to market which accomplishes greater results on average than our technology, which would likely have an adverse effect on our results of operations and force us to curtail or abandon our current business plan.

A Reduction In Spending Due To The Economic Downturn Could Result In A Decrease In Demand For Our Products.

If spending on capital expenditures for oil and gas related products such as our Coil Tubing Technology decreases, the demand for products like those provided by us would likely decline. This decrease could reduce our opportunity for growth, increase our marketing and sales costs, and reduce the prices we can charge for products, which could reduce our revenue and operating results.

Our Results Of Operations May Be Negatively Affected By Sustained Downturns Or Sluggishness In The Economy, Including Reductions In Demand Or Low Levels In The Market Prices Of Commodities, All Of Which Are Beyond Our Control.

Sustained downturns in the economy generally affect the markets in which we operate and negatively influence our operations. Declines in demand for oil and gas as a result of economic downturns may reduce our cash flows, especially if our customers reduce exploration and production activities and, therefore, use of our products.

Lower demand for oil and gas and lower prices for oil and gas result from multiple factors that affect the markets which consume our products and services:

•

supply of and demand for energy commodities, including any decreases in the production of oil and gas which could negatively affect the demand for oil and gas in general, and as a result the need for our coil tubing technology;

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	•	general economic conditions, including downturns in the United States, Canada or other economies which affect energy consumption particularly in which sales to industrial or large commercial customers which could negatively affect the demand for oil and gas in general, and as a result the need for our coil tubing technology; and

	•	federal, state and foreign energy and environmental regulations and legislation, which could make oil and gas exploration more costly, which could in turn drive down demand for oil and gas, and which could in turn reduce the demand for our technology and cause our revenues to decrease.

The Long-Term Financial Condition Of Our Businesses Is Dependent On The Continued Availability Of Oil And Gas Reserves.

Our businesses are dependent upon the continued availability of oil production and reserves. Low prices for oil and gas, regulatory limitations, or the lack of available capital for these projects could adversely affect the development of additional reserves and production, and, therefore, demand for our products and services.

Our Business Is Subject To Extensive Regulation That Affects Our Operations And Costs.

Our assets and operations are subject to regulation by federal, state and local authorities, including regulation by the Federal Energy Regulatory Commission (FERC) and regulation by various authorities under federal, state and local environmental laws. Regulation affects almost every aspect of our businesses, including, among other things, our ability to determine the terms and rates of services provided by some of our businesses; make acquisitions; issue equity or debt securities; and pay dividends. Changes in such regulations may affect our capacity to conduct this business effectively and sustain or increase profitability.

Potential Legislative And Regulatory Actions Could Increase The Costs Of Oil And Gas Exploration Activities Of Our Customers, Reduce Their Revenues And/Or Prohibit Certain Activities, Which Could Decrease Demand For Our Products And The Market For Oil And Gas Exploration In General.

The activities of exploration and production companies operating in the United States are subject to extensive regulation at the federal, state and local levels. Changes to existing laws and regulations or new laws and regulations such as those described below could, if adopted, have an adverse effect on the business and operations of our customers, which in turn could reduce the demand for our products and ultimately our revenues. For example:

Federal Taxation of Producers of Natural Gas and Oil . Federal budget proposals would potentially increase and accelerate the payment of federal income taxes of producers of natural gas and oil. Proposals that would significantly affect our customers would repeal the expensing of intangible drilling costs, the percentage depletion allowance and lengthen the amortization period of geological and geophysical expenses. These changes, if enacted, will make it more costly for our customers to explore for and develop natural gas and oil resources.

Hydraulic Fracturing . Hydraulic fracturing is used in completing greater than 90% of all natural gas and oil wells drilled today in the United States. Certain environmental and other groups have suggested that additional federal, state and local laws and regulations may be needed to more closely regulate the hydraulic fracturing process. We cannot predict whether any such federal, state or local laws or regulations will be enacted and, if so, what actions any such laws or regulations would require or prohibit. If additional levels of regulation or permitting requirements were imposed through the adoption of new laws and regulations, our customers’ business and operations could be subject to delays, increased operating and compliance costs and process prohibitions.

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RISKS RELATING TO OUR SECURITIES

We Have Not Paid Any Cash Dividends In The Past And Have No Plans To Issue Cash Dividends In The Future, Which Could Cause The Value Of Our Common Stock To Have A Lower Value Than Other Similar Companies Which Do Pay Cash Dividends.

We have not paid any cash dividends on our common stock to date and do not anticipate any cash dividends being paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As we have no plans to issue cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies who have historically paid cash dividends in the past.

The Market For Our Common Stock Is Volatile, Sporadic and Illiquid.

Our common stock is currently quoted on the OTC Pink Market, an over-the-counter electronic quotation service, under the symbol “CTBG”. The market for our common stock is currently volatile, sporadic and illiquid. Subsequent to the filing of this registration statement, we plan to engage a market maker and apply for quotation of our common stock on the Over-The-Counter Bulletin Board. If we are successful in quoting our common stock on the Over-The-Counter Bulletin Board and/or if we are unsuccessful in quoting our common stock on the Over-The-Counter Bulletin Board and continue instead to quote our common stock on the OTC Pink Market or the OTCQB, the market for our common stock will likely continue to be volatile, sporadic and illiquid. Additionally, we anticipate that the market for our common stock will be subject to wide fluctuations in response to several factors, including, but not limited to:

	(1)	actual or anticipated variations in our results of operations;
	(2)	our ability or inability to generate new revenues;
	(3)	increased competition; and
	(4)	conditions and trends in the oil and gas industry and/or the market for coil tubing technology products and tools in general.

Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.

Shareholders May Face Significant Restrictions On The Resale Of Our Common Stock Due To Federal Regulations Of Penny Stocks.

Our common stock is and will be subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended, as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of Company shareholders to sell their securities in the secondary market.

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Shareholders May Be Diluted Significantly Through Our Efforts To Obtain Financing And Satisfy Obligations Through The Issuance Of Additional Shares Of Our Common Stock.

We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.

State Securities Laws May Limit Secondary Trading, Which May Restrict The States In Which And Conditions Under Which You Can Sell Shares.

Secondary trading in our common stock may not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock cannot be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted.

Because We Are Not Subject To Compliance With Rules Requiring The Adoption Of Certain Corporate Governance Measures, Our Stockholders Have Limited Protections Against Interested Director Transactions, Conflicts Of Interest And Similar Matters.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

Because we only have two Directors, neither of whom is independent, we do not currently have an independent audit or compensation committee. As a result, our Directors have the ability to, among other things, determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and any potential investors may be reluctant to provide us with funds necessary to expand our operations.

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, Directors and members of board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of Directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

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We Will Incur Significant Increased Costs As A Result Of Operating As A Fully Reporting Company As Well As In Connection With Section 404 Of The Sarbanes Oxley Act.

We will incur legal, accounting and other expenses in connection with our future status as a fully reporting public company. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and rules subsequently implemented by the SEC have imposed various requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and make some activities more time-consuming and costly. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. In particular, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 and our future status as a publicly reporting company will require that we incur substantial accounting, legal and filing expenses and expend significant management efforts. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

ITEM 2. FINANCIAL INFORMATION

We have derived the summary financial information from our consolidated audited financial statements for the years ended December 31, 2010 and 2009 and our consolidated unaudited financial statements for the periods ended September 30, 2011 and 2010, appearing elsewhere in this registration statement. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the entire fiscal year. You should read the financial data set forth below in conjunction with our financial statements and related notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results are not necessarily indicative of our results to be expected in any future period.

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2011			2010
	(unaudited)
Assets

Current Assets:
Cash	$	223,505		$	330,313
Accounts receivable, net		1,366,134			280,353
Other current assets		16,116			3,795
Total Current Assets		1,605,755			614,461

Rental tools, net		3,301,646			463,439
Machinery and equipment, net		366,230			114,983
Intangible assets, net		1,153,333			1,193,333
Total Assets	$	6,406,964		$	2,386,216

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable	$	1,464,617		$	386,993
Accrued liabilities		65,973			65,109
Related party notes payable - current		155,556			617,593
Notes payable - current		59,580			-
Total Current Liabilities		1,745,726			1,069,695

Long Term Liabilities:
Related party notes payable, net of current portion		440,740			557,407
Related party convertible notes payable		-			471,951
Notes payable, net of current portion		126,004			-
Total Liabilities		2,312,470			2,099,053

Commitments and contingencies

Stockholders' Equity:
Preferred Stock, $.001 par value, 5,000,000 shares authorized
Series A Preferred Stock, $.001 par value, 1,000,000 shares authorized; 0 shares issued and outstanding, respectively		-			-
Series B Preferred Stock, $.001 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding, respectively		1,000			1,000
Common Stock, $.001 par value, 200,000,000 shares authorized; 13,665,042 and 985,518 shares issued and outstanding		13,665			986
Additional paid-in capital		7,283,025			3,960,747
Accumulated deficit		(3,203,196	)		(3,675,570	)
Total Stockholders' Equity		4,094,494			287,163
Total Liabilities and Stockholders' Equity	$	6,406,964		$	2,386,216

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CONSOLIDATED STATEMENTS OF OPERATIONS


	Nine Months Ended						Year Ended
	September 30,						December 31,
	2011			2010			2010			2009
Revenue:
Product revenue	$	548,031		$	797,412		$	533,026		$	175,355
Rental revenue		2,976,580			647,345			1,218,824			592,427
Total revenue		3,524,611			1,444,757			1,751,850			767,782

Cost of revenue:
Cost of products and rental revenues		1,174,699			410,402			1,291,701			494,648
Cost of revenue - depreciation of rental tools		335,140			108,235			140,593			148,405
Total cost of revenue		1,509,839			518,637			1,432,294			643,053

Gross profit		2,014,772			926,120			319,556			124,729

Operating Expenses:
General and administrative		1,393,575			906,804			678,181			921,836
Depreciation and amortization		122,101			28,636			44,397			34,720
Total operating expenses		1,515,676			935,440			722,578			956,556

Income (loss) from operations		499,096			(9,320	)		(403,022	)		(831,827	)

Other expense:

Interest expense		(26,722	)		(35,180	)		(54,568	)		(9,921	)

Total other expense		(26,722	)		(35,180	)		(54,568	)		(9,921	)

Net income (loss)		472,374			(44,500	)		(457,590	)		(841,748	)

Less: net loss attributable to noncontrolling interests		-			4,838			-			77,851

Net income (loss) attributable to common stockholders	$	472,374		$	(39,662	)	$	(457,590	)	$	(763,897	)

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this registration statement. This discussion and analysis contains forward-looking statements that are based upon current expectations and involve risks, assumptions and uncertainties. You should review the “Risk Factors” section of this registration statement for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis.

Plan of Operation For The Next Twelve Months

We believe that we will be able to continue our business operations for approximately the next twelve months without raising any additional capital. We anticipate the need for approximately $3,000,000 in additional funding to support the planned expansion of our operations over the next approximately twelve months.

We are currently working on a new generation of coil tubing tools to aid in and facilitate well drilling. We expect the market for new applications of coiled tubing to continue to expand our operations throughout fiscal 2012, especially in drilling and workover applications, which we are actively pursuing, including working to provide additional sales to Canada and moving into international markets including Indonesia.

Moving forward, we anticipate spending a larger percentage of our working capital on research and development activities, which we believe will be required to provide technological advancement to our coiled tubing technologies and workover product lines. We also hope to undertake acquisitions of related businesses, tool companies and other companies with whom we believe we may have synergistic relationships with in the future, funding permitting; provided that we do not currently have any planned acquisitions, have not entered into any definitive agreements relating to acquisitions and will need to raise additional funding in the future to complete acquisitions, which funding we hope to raise through the sale of debt or equity, which we may not be able to undertake on favorable terms, if at all.

Comparison Of Results Of Operations

Nine Months Ended September 30, 2011, Compared To The Nine Months Ended September 30, 2010

We had total revenue of $3,524,611 for the nine months ended September 30, 2011, compared to total revenue of $1,444,757 for the nine months ended September 30, 2010, an increase in total revenue of $2,079,854 or 144% from the prior period. Total revenues included $548,031 of product revenue for the nine months ended September 30, 2011, compared to $797,412 for the nine months ended September 30, 2010, a decrease in product revenue of $249,381 or 31% from the prior period. The decrease in product revenue was mainly due to a decrease in sales with Weatherford. Total revenues also included rental revenue of $2,976,580 for the nine months ended September 30, 2011, compared to $647,345 for the nine months ended September 30, 2010, an increase of $2,329,235 or 360% from the prior period. The increase in rental revenue was primarily due to the increase in the production and inventory of rental tools and the increase in field sales personnel subsequent to September 30, 2010.

We had cost of products and rental revenues of $1,174,699 for the nine months ended September 30, 2011, compared to cost of products and rental revenues of $410,402 for the nine months ended September 30, 2010, an increase in cost of product and rental revenues of $764,297 or 186% from the prior period, which increase was directly attributable to the increase in revenue for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010.

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We had cost of revenue – depreciation of rental tools of $335,140 for the nine months ended September 30, 2011, compared to $108,235 for the nine months ended September 30, 2010, an increase of $226,905 or 210% from the prior period, which increase was mainly due to the associated depreciation expense on the addition of approximately $3.2 million in rental tools added during the nine-month period ended September 30, 2011.

Cost of revenues (including depreciation) as a percentage of revenue was 43% for the nine months ended September 30, 2011, compared to 36% for the nine months ended September 30, 2010, an increase in cost of revenues as a percentage of revenue of 7%.

We had gross profit of $2,014,772 for the nine months ended September 30, 2011, compared to gross profit of $926,120 for the nine months ended September 30, 2010, an increase in gross profit of $1,088,652 or 118% from the prior period.

We had total general and administrative expenses of $1,393,575 for the nine months ended September 30, 2011, compared to total general and administrative expenses of $906,804 for the nine months ended September 30, 2010, an increase in general and administrative expenses of $486,771 or 54% from the prior period. The main reasons for the increase in general and administrative expenses were mainly due to additional sales expenses associated with the increase in sales and service personnel.

Depreciation and amortization expense increased by $93,465 or 326%, to $122,101 for the nine months ended September 30, 2011, compared to $28,636 for the nine months ended September 30, 2010. The increase was primarily due to the associated depreciation expense on the addition of shop equipment and automobiles for the sales force.

Total operating expenses increased by $580,236 or 62%, to $1,515,676 for the nine months ended September 30, 2011, compared to $935,440 for the nine months ended September 30, 2010.

We had income from operations of $499,096 for the nine months ended September 30, 2011, compared to a loss from operations of $9,320 for the nine months ended September 30, 2010, an increase in income from operations of $508,416 from the prior period. The increase in income from operations was mainly due to the $2,079,854 or 144% increase in total revenues offset by the $991,202 or 191% increase in cost of revenue and the $580,236 or 62% increase in total operating expenses for the nine months ended September 30, 2011, compared to the prior period.

We had interest expense of $26,722 for the nine months ended September 30, 2011, compared to interest expense of $35,180 for the nine months ended September 30, 2010.

We had net income of $472,374 for the nine months ended September 30, 2011, compared to net loss of $44,500 for the nine months ended September 30, 2010, an increase in net income of $516,874 from the prior period.

Year Ended December 31, 2010 Compared To The Year Ended December 31, 2009

We had total revenue of $1,751,850 for the year ended December 31, 2010, compared to total revenue of $767,782 for the year ended December 31, 2009, an increase in total revenue of $984,068 or 128% from the prior period. Total revenues included $533,026 of product revenue for the year ended December 31, 2010, compared to $175,355 for the year ended December 31, 2009, an increase in product revenue of $357,671 or 204% from the prior period. The increase in product revenue was mainly due to increased inventory levels. Total revenues also included rental revenue of $1,218,824 for the year ended December 31, 2010, compared to $592,427 for the year ended December 31, 2009, an increase in rental revenue of $626,397 or 106% from the prior period. The increase in rental revenue was mainly due to increased sales and marketing efforts of the Company.

We had cost of revenue products and rental revenues of $1,291,701 for the year ended December 31, 2010, compared to cost of products and rental revenues of $494,648 for the year ended December 31, 2009, an increase in cost of product and rental revenues of $797,053 or 161% from the prior period, which increase was directly attributable to the increase in revenue for the year ended December 31, 2010, compared to the year ended December 31, 2009.

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We had cost of revenue – depreciation of rental tools of $140,593 for the year ended December 31, 2010, compared to $148,405 for the year ended December 31, 2009, a decrease of $7,812 or 5% from the prior period, which decrease was mainly due to the reduction in depreciation expense on older rental tools that became fully depreciated in 2010, partially offset by depreciation on additional rental tools acquired in the fourth quarter of 2010.

Cost of revenues (including depreciation) as a percentage of revenue was 82% for the year ended December 31, 2010, compared to 84% for the year ended December 31, 2009, an increase in cost of revenues as a percentage of revenue of 2% from the prior period.

We had gross profit of $319,556 for the year ended December 31, 2010, compared to gross profit of $124,729 for the year ended December 31, 2009, an increase in gross profit of $194,827 or 156% from the prior period.

We had total general and administrative expenses of $678,181 for the year ended December 31, 2010, compared to total general and administrative expenses of $921,836 for the year ended December 31, 2009, a decrease in general and administrative expenses of $243,655 or 26% from the prior period. The main reasons for the decrease in general and administrative expenses were mainly due to a decline in legal and accounting expenses over the period.

Depreciation and amortization expense increased by $9,677 or 28%, to $44,397 for the year ended December 31, 2010, compared to $34,720 for the year ended December 31, 2009.

Total operating expenses decreased by $233,978 or 24%, to $722,578 for the year ended December 31, 2010, compared to $956,556 for the year ended December 31, 2009.

We had a loss from operations of $403,022 for the year ended December 31, 2010, compared to a loss from operations of $831,827 for the year ended December 31, 2009, a decrease in loss from operations of $428,805 or 52% from the prior period. The decrease in loss from operations was mainly due to the $984,068 or 128% increase in total revenues and the $233,978 or 24% decrease in total operating expenses offset by the $789,241 or 123% increase in cost of revenue for the year ended December 31, 2010, compared to the prior period.

We had interest expense of $54,568 for the year ended December 31, 2010, compared to interest expense of $9,921 for the year ended December 31, 2009, an increase of $44,647 or 450% from the prior period. Interest expense for the year ended December 31, 2010 included $44,281 in accrued interest on convertible notes payable to Herbert C. Pohlmann, the Company’s majority shareholder.

We had a net loss of $457,590 for the year ended December 31, 2010, compared to a net loss of $841,748 for the year ended December 31, 2009, a decrease in net loss of $384,158 or 45.6% from the prior period.

Liquidity and Capital Resources

As of September 30, 2011, we had total assets of $6,406,964, which included total current assets of $1,605,755, consisting of $223,505 of cash; $1,366,134 of accounts receivable, net and $16,116 of other current assets; and long term assets including $3,301,646 of rental tools, net; $366,230 of machinery and equipment, net; and $1,133,333 of intangible assets consisting of our rights to the patents purchased from Jerry Swinford pursuant to the IP Purchase Agreement, described in greater detail below.

We had total liabilities of $2,312,470 as of September 30, 2011, which included total current liabilities of $1,745,726, consisting of accounts payable of $1,464,617; accrued liabilities of $65,973; current portion of related party notes payable of $155,556, relating to amounts owed to Jerry Swinford in connection with the IP Purchase Agreement, described below; and current portion of notes payable of $59,580 relating to the amount due on loans associated with the purchase of Company automobiles.

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We had negative working capital of $139,971 and an accumulated deficit of $3,203,196 as of September 30, 2011.

We had net cash provided by operating activities of $992,579 for the nine months ended September 30, 2011, which consisted of $472,374 of net income, $457,241 of increase in depreciation and amortization; $19,571 of loss on sale of property and equipment; $864 of increase in accrued liabilities; and $1,140,631 of increase in accounts payable, offset by $1,085,781 of increase in accounts receivable and $12,321 of increase in other assets.

We had $3,506,267 of net cash used in investing activities for the nine months ended September 30, 2011, which was due to $3,188,883 of purchase of rental tools and $331,884 of purchase of machinery and equipment, offset by $14,500 of proceeds from the sale of machinery and equipment.

We had $2,406,880 of net cash provided by financing activities for the nine months ended September 30, 2011, which included $2,800,000 from the proceeds from the sale of common stock (described in greater detail below) and $221,435 of proceeds from notes payable in connection with the amount due on loans associated with the purchase of Company automobiles, offset by $578,704 of payments on related party notes payable in connection with the payment of the notes issued to Mr. Swinford in connection with the IP Purchase Agreement, as described below and $35,851 of payments on notes payable.

As described below under “Certain Relationships and Related Transactions, and Director Independence”, the Company’s majority shareholder, Herbert C. Pohlmann loaned the Company an aggregate of $471,951 in fiscal 2010, which loans were evidenced and memorialized by four Convertible Promissory Notes, which accrued interest at the rate of 12% per annum, and were due and payable on February 1, 2012 (as to three notes totaling $212,404) and May 13, 2012 (as to one note totaling $259,547). The Convertible Promissory Notes provided Mr. Pohlmann the right to convert the principal and accrued interest under the Convertible Promissory Notes into shares of the Company’s common stock at a conversion price of $0.90 per share, which Convertible Promissory Notes, along with accrued and unpaid interest thereon in the amount of $63,006 were converted into shares of the Company’s common stock pursuant to the Make Whole Agreement, described below.

As described in greater detail below under “Certain Relationships and Related Transactions, and Director Independence”, in November 2010, the Company entered into an IP Purchase Agreement with Jerry Swinford, the Company’s Executive Vice President and Chairman, pursuant to which the Company purchased Mr. Swinford’s rights to the Patents for $25,000 in cash and $1,175,000 in the form of two promissory notes payable to Mr. Swinford (the “Swinford Notes”). The Company obtained an independent valuation in order to determine the value of the Patents. The first note, in the amount of $475,000 was due January 20, 2011, together with interest at the rate of 12% per annum, which note was paid in full in January 2011.

The second note in the amount of $700,000 is due September 15, 2015, and is payable in monthly installments of the lesser of $12,963 or the amount outstanding under such note per month, with the first such payment due on February 15, 2011. The Company also agreed to grant Mr. Swinford a security interest in all of the Company’s assets in connection with and to secure the repayment of the Swinford Notes and Holdings also agreed, pursuant to a Guaranty, to guaranty the repayment of the Swinford Notes.

The IP Purchase Agreement also provide that in the event Mr. Swinford was required to pay taxes totaling more than 15% of the proceeds received by Mr. Swinford in connection with the payment of the Swinford Notes in any calendar year (the “15% Limit”), the Company would reimburse Mr. Swinford for any and all taxes due over such 15% Limit, which may substantially increase the amount due to Mr. Swinford from the Company in connection with the payment of the Swinford Notes.

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During the year ended December 31, 2010, the Company sold 466,666 shares of restricted common stock to Mr. Pohlmann for aggregate consideration of $1,000,000 as follows:

In August 2010, the Company sold 33,333 shares of the Company’s common stock to Herbert C. Pohlmann, in consideration for $100,000 or $3.00 per share;

In September 2010, the Company sold 100,000 shares of the Company’s common stock to Mr. Pohlmann in consideration for $300,000 or $3.00 per share;

In October 2010, the Company sold 66,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $3.00 per share;

In November 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share; and

In December 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share.

During the nine months ended September 30, 2011, the Company sold an aggregate of 1,900,000 shares of the Company’s restricted common stock for aggregate consideration of $2,800,000 as follows:

In January 2011, the Company sold 666,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $1,000,000 or $1.50 per share;

In February 2011, the Company sold 333,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $500,000 or $1.50 per share;

In May 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $250,000 or $1.50 per share;

In May 2011, the Company sold 233,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $350,000 or $1.50 per share;

In July 2011, the Company sold 333,333 shares of the Company’s common stock to a third party for consideration for $500,000 or $1.50 per share; and

Effective in September 2011, the Company sold 166,667 shares of the Company’s common stock to a third party in consideration for $200,000 or $1.20 per share.

In May 2011, the Company and Mr. Pohlmann entered into an Anti-Dilution and Make Whole Agreement, which was subsequently amended in June 2011 (as amended, the “Make Whole Agreement”). Pursuant to the Make Whole Agreement, we agreed to adjust the purchase price of Mr. Pohlmann’s August 2010, September 2010 and October 2010 purchases of 200,000 shares of our common stock from $3.00 per share to $1.50 per share (and to therefore issue Mr. Pohlmann an additional 200,000 shares of common stock). We also agreed to provide Mr. Pohlmann anti-dilutive rights in connection with the 760,456 shares of common stock issuable to shareholders of Grifco and the Company as described under “Organizational History”, in connection with the shares of common stock which he held as of the issuance date of such shares and the Convertible Promissory Notes which he held as of such issuance date. The consideration for the Make Whole Agreement was Mr. Pohlmann’s continued funding of the Company throughout 2010 and through the date of such Make Whole Agreement. As a result of the anti-dilutive rights, Mr. Pohlmann was issued 6,474,154 shares of common stock in connection with the anti-dilutive rights associated with the shares of common stock he held and 3,511,580 shares of common stock in connection with the conversion of the Convertible Promissory Notes (and accrued interest thereon) into shares of the Company’s common stock, which notes were automatically converted into shares of common stock in connection with the parties’ entry into the Make Whole Agreement in order that Mr. Pohlmann could maintain his proportional ownership rights in the Company following such issuance of 760,456 shares in May through August 2011 in connection with the settlement of a lawsuit described in greater detail above under “Organizational History”.

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In October 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.20 per share.

In December 2011, the Company sold an aggregate of 1,600,000 units to Mr. Pohlmann, each consisting of (a) one share of common stock and (b) one common stock purchase warrant to purchase one share of common stock with a five year term and an exercise price of $1.00 per share (collectively the “Units”) for an aggregate of $1,600,000 or $1.00 per Unit. A total of $200,000 of the amount due in connection with the purchase of the Units was due prior to December 31, 2011 (which amount has been received to date); a total of $200,000 is due prior to January 25, 2012 (which has been received to date); a total of $100,000 is due prior to February 28, 2012; a total of $1,000,000 is due prior to April 30, 2012; and a total of $100,000 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from Mr. Pohlmann, which notes shall not accrue interest until due.

In January 2012, the Company sold 52,500 Units to a third party in consideration for $52,500 or $1.00 per unit. A total of $22,500 of the amount due in connection with the purchase of the Units was payable at the time of the parties’ entry into the subscription agreement evidencing the sale; a total of $2,500 is due prior to February 28, 2012 (which has been received to date); a total of $25,000 is due prior to April 30, 2012; and a total of $2,500 was due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from the third party, which notes shall not accrue interest until due. The Company has received $25,000 to date.

We currently believe that we will be able to continue our business operations for approximately the next twelve months with our current cash on hand, the amount that our majority shareholder has committed to invest, and from revenues from our operations. We anticipate the need for approximately $3,000,000 of additional funding to continue our operations for the next twelve months and to support the planned expansion of our operations, which we can provide no assurance will be available on favorable terms, if at all.

We have a formal commitment from our majority shareholder, Mr. Pohlmann to invest $1.6 million pursuant to subscription agreements that were entered into in December 2011 (of which $400,000 has been received to date), and $52,500 (of which $25,000 has been received to date) from a third party investor, but do not have any other formal commitments or identified sources of additional capital from third parties or from our officers or Directors. We can provide no assurance that if we require additional financing, it will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan and/or suspend our business activities.

In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we will be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.

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Critical Accounting Policies:

Noncontrolling Interest. The Company follows paragraph 810-10-45 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (‘ASC”) to recognize noncontrolling interest in Holdings, its formerly wholly-owned subsidiary, in the equity section of the consolidated balance sheets. During November 2010, the Company acquired the outstanding noncontrolling interest and now owns 100% of the equity of Holdings. In accordance with ASC 810-10, the Company accounted for the transaction as an equity transaction.

Use of Estimates in Financial Statement Preparation. The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates.

Cash Equivalents. The Company considers all highly liquid investments with original purchased maturities of three months or less to be cash equivalents.

Revenue Recognition. The Company's revenue is generated primarily from the rental of its tools used for oilfield services primarily in the States of Texas and Louisiana. The Company also generates income from the sale of tools. Rental income is recognized over the rental periods, which are generally from one to thirty days. The estimated amounts of sales discounts, returns and allowances are accounted for as reductions of sales when the sale occurs and the realization of collectability is reasonably assured. These estimates are based on historical amounts and adjusted periodically based on changes in facts and circumstances when the changes become known to the Company.

Sales of coil tubing related products are primarily derived from instances where a customer has a specific need for a particular coil tubing related product and desires to have the Company obtain and/or manufacture the particular product. These sales may include replacement parts, as well as proprietary tools which are manufactured to the customer’s specification, but which are not part of the Company’s tool line. This is not a significant source of revenue for the Company at this time. The Company recognizes product revenue generally at the time the product is shipped. Concurrent with the recognition of revenue, the Company provides for the estimated cost of product returns. Sales incentives are generally classified as a reduction of revenue and are recognized at the later of when revenue is recognized or when the incentive is offered. Shipping and handling costs are included in cost of goods sold.

Allowance for Doubtful Accounts. Accounts receivable consists of amounts billed and currently due from customers. The Company monitors the aging of its accounts receivable and related facts and circumstances to determine if an allowance should be established for doubtful accounts.

Machinery and Equipment. Machinery and Equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight line method over the useful lives of the assets of five to seven years. Maintenance, repairs, and minor renewals and betterments are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized.

Rental Tools. Rental tools are recorded on the Company’s books as rental equipment at cost. The primary focus of the rental equipment is to generate rental income. As a result, the Company does not list inventory as a line item on the Company’s balance sheet. Depreciation is calculated using the straight line method over the useful lives of the assets of five years.

Lost or destroyed tools are not a significant source of revenue for the Company; however, the Company bills customers for the full cost of any tools which are lost and/or damaged in use and the cost and related accumulated depreciation are removed from the accounts and any resulting revenue or expense is recognized. The gain or loss on lost tools is recognized in the revenue section and cost of sales expense, respectively.

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Intangible Assets. The Company’s intangible assets, which are recorded at cost, consist primarily of the unamortized cost basis of issued and pending patents. These assets are being amortized on a straight line basis over the estimated useful lives of 15 years. The Company continually evaluates the amortization period and carrying basis of intangible assets to determine whether subsequent events and circumstances warrant a revised estimated useful life or impairment in value. To date, no such impairment has occurred. To the extent such events or circumstances occur that could affect the recoverability of our Intangible assets, we may incur charges for impairment in the future.

Stock Based Compensation. The Company accounts for stock-based employee compensation arrangements using the fair value method in accordance with the provisions of ASC 718 – Stock Compensation . ASC 718 requires that the fair value of employees’ awards issued, modified, repurchased or cancelled after implementation, under share-based payment arrangements, be measured as of the date the award is issued, modified, repurchased or cancelled. The resulting cost is then recognized in the statement of earnings over the service period.

The Company periodically issues common stock for acquisitions and services rendered. Common stock issued is valued at the estimated fair market value, as determined by management and the board of directors. Management and the board of directors consider market price quotations, recent stock offering prices and other factors in determining fair market value for purposes of valuing the common stock. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the various weighted average assumptions, including dividend yield, expected volatility, average risk-free interest rate and expected lives.

Income Taxes. The Company accounts for income taxes under ASC 740, Income Taxes . Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date.

Financial instruments. Financial instruments, as defined in FASB ASC 825, Financial Instruments, consist of cash, accounts receivable, accounts payable, accrued expenses, notes payable, and debt.

The Company carries cash, accounts receivable, accounts payable and accrued expenses at historical costs; their respective estimated fair values approximate carrying values due to their current nature. The Company also carries convertible debt. The fair values of the convertible debt instruments approximate carrying values based on the comparable market interest rates applicable to similar instruments.

Impairment of Long-Lived Assets. The carrying values of long-lived assets, which include intangible assets, are evaluated whenever changes in circumstances indicate the carrying amount of such assets may not be recoverable. If necessary, the Company recognizes an impairment loss for the difference between the carrying amount of the assets and their estimated fair value. Fair value is based on current and anticipated future undiscounted cash flows.

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Customer Deposits. The Company receives deposits from customers under certain agreements. Deposits are usually liquidated over the period of product deliveries.

Recently Issued Accounting Pronouncements. There were various accounting standards and interpretations issued during 2010, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows upon adoption.

ITEM 3. PROPERTIES

In September 2011, the Company entered into a six month residential sub-lease agreement (expiring on March 1, 2012), pursuant to which the Company agreed to rent a residence located in Blairsville, Pennsylvania. The lease has a monthly rental cost of $300 per month. The Company plans to use the leased residence as a district office for sales in Ohio, Pennsylvania, and West Virginia and repair of equipment for that area.

The Company sub-leases approximately 10,000 square feet in Spring, Texas at 19511 Wied Rd., Suites A through Suite E, that serves as its corporate offices and machine shop. The lease is on a month-to-month basis at a monthly cost of $6,625. There is no written lease agreement in place associated with the lease of this space.

Additionally, the Company leases space for its sales offices (1) outside of Dallas, Texas encompassing 395 square feet at a cost of $640 per month, pursuant to a lease agreement expiring on February 21, 2012, (2) in Kilgore, Texas at a cost of $500 per month, on a month-to-month basis, and (3) in Aultman, Pennsylvania at a cost of $600 per month, pursuant to a lease agreement expiring on May 1, 2012. The Dallas and Kilgore leases are on a month-to-month basis and the Pennsylvania lease expires in May 2012.

The Company also leases a sales office, warehouse and machine shop in Haynesville, Louisiana. The Company paid the landowner (an employee of the Company) an aggregate of $77,632 in connection with the construction of the warehouse and machine shop (which is owned by the employee). In consideration for paying for the cost to construct the warehouse and machine shop, the landowner agreed to allow the Company to use the warehouse and machine shop and sales office free of charge until August 2012. The Company currently pays recurring operating costs for the rental of the space only. The Company and the employee have agreed to negotiate an extension of the lease in good faith upon the expiration of the current arrangement.

The Company also leases approximately 1,560 square feet of warehouse and office space in Red Deer, Alberta, Canada, which lease arrangement has a term of one (1) year beginning on November 4, 2011 and ending on November 3, 2012, provided that we have an option to extend the lease on mutually agreeable terms for an additional one (1) year. Rent due under the lease is $1,300 per month plus the Company’s portion of common expenses associated with the rental property which total approximately $487 per month and goods and service tax of approximately $90 per month, for a total monthly rental expense of approximately $1,877 per month during the term of the lease.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents certain information regarding the beneficial ownership of all shares of common stock as of January 20, 2012 by (i) each person who owns beneficially more than five percent (5%) of the outstanding shares of common stock based on 15,651,827 shares outstanding as of January 20, 2012 (which includes 1,652,500 shares which we have agreed to issue, which have not been physically issued as of the date of this Registration Statement, but which will be physically issued subsequent to the date of this Registration Statement), (ii) each of our Directors, (iii) each named executive officer and (iv) all Directors and officers as a group. Except as otherwise indicated, all shares are owned directly.

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Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and/or investing power with respect to securities. We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Additionally, shares of common stock subject to options, warrants or other convertible securities that are currently exercisable or convertible, or exercisable or convertible within 60 days of January 20, 2012, are deemed to be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.

We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Unless otherwise indicated, the address for each of the officers or Directors listed in the table below is 19511 Wied Rd., Suite E, Spring, Texas 77388.

	Name and Address	Number of Shares of Common Stock Beneficially Owned	Percentage of Common Stock Owned

Executive Officers and Directors

	Jerry Swinford	111,667(1)	*
	Jason Swinford	101,667(1)	*

All of the officers and Directors as a group (2 persons)		213,334	1.3%

5% Shareholders

	Herbert C. Pohlmann 1290 North Ocean Blvd. Palm Beach, Florida 33480	16,000,219(2)	92.7%

* Indicates beneficial ownership of less than 1% of the total outstanding common stock.

(1)

Pursuant to the Executive Employment Agreements entered into in November 2010 and amended in December 2011, with Jerry and Jason Swinford (as described below under “Employment Agreements”), the Company granted Jerry and Jason Swinford each options to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that the executives are still employed by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date. The table above includes 101,667 options which are exercisable within 60 days of January 20, 2012.

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(2)

Includes warrants to purchase 1,600,000 shares of the Company’s common stock which have an exercise price of $1.00 per share, and a term expiring on December 14, 2016. Also includes 1,600,000 shares of common stock sold to Mr. Pohlmann in December 2011, which have not been physically issued as of the date of this Registration Statement, but which the Company plans to issue subsequent to the date of this Registration Statement.

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age and position of each Director and executive officer of the Company. There are no other persons who can be classified as a promoter or controlling person of the Company. The officers and directors of the Company are as follows:

NAME	AGE	POSITION

Jerry Swinford	62	Chief Financial Officer, Secretary, Treasurer, Executive Vice President, and Chairman

Jason Swinford	32	Chief Executive Officer and Director

Jerry Swinford:

Since January 2006, Mr. Swinford has served as our Chief Financial Officer and Secretary. From January 2006 to December 2011, Mr. Swinford served as our Chief Executive Officer. From January 2006 to January 2012, Mr. Swinford served as our President. Since August 2006, Mr. Swinford has served as a Director of the Company, serving as Chairman since December 2011. Since December 2011, Mr. Swinford has also served as our Executive Vice President. Mr. Swinford has served as the President of and as a Director of Steplyn Holdings, LLC (“Steplyn”) since August 2007. Steplyn is a privately owned entity. Mr. Swinford served as the President and Chief Executive Officer of Holdings from July 1999 to June 2009 and from November 2010 to present (Mr. Swinford served as Vice President of Holdings from June 2009 to November 2010), and as Chief Financial Officer, Secretary and Treasurer of Holdings since May 2007. Mr. Swinford served as Director of Holdings from April 2002 until March 2005, and has served as sole Director of Holdings from August 2006 to present. From July 1995 until November 1998, Mr. Swinford served as the Director of the Thru Tubing and Manufacturing Division of Ponder Industries in Houston, Texas. From June 1995 until June 1996, Mr. Swinford was President and sole director of Reel Tubing Components, Inc. From January 1990 until June 1995, Mr. Swinford served as a Division Manager at Houston Engineers in Houston, Texas. For more than fifteen years, Mr. Swinford was employed by Dresser Industries where he held various research and development and managerial positions. For the last three years of his tenure with Dresser Industries, Mr. Swinford also previously served as the Eastern U.S. Division Manager for Sales and Operations for multiple oilfield products divisions for Dresser Oil Tools in New Orleans, Louisiana.

Mr. Swinford is a member of the Intervention & Coiled Tubing Association (ICOTA), and was formerly a member of the Society of Petroleum Engineers (SPE), and the International Association of Drilling Contractors (IADC).

Qualifications as Director:

As founder of Holdings, Mr. Swinford has over 35 years of expertise in the design and development of drilling tools. His diverse background in the Oil and Gas Industry includes responsibility of business policy implementation, product design, research and development, and field engineer. This experience provided the foundation for building the Company into a successful company that designs, develops, and patents proprietary drilling tools that are a widely respected brand of the industry. Mr. Swinford continues as an innovative force in the Oil and Gas Industry.

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Jason Swinford

Jason Swinford served as our Chief Operating Officer from November 30, 2010 to December 2011, when he was appointed as Chief Executive Officer. Mr. Swinford has served as a Director of the Company since December 2011. Mr. Swinford’s career with the Company began as Operations Manager of Holdings in 1999 when Holdings was founded. Mr. Swinford was responsible for establishing and organizing the manufacturing operating procedures and the supervision of seven (7) employees. Also, during this period, Mr. Swinford was responsible for the marketing effort and manufacturing endeavors of PMR, Holding’s wholly-owned subsidiary. In April 2005, Mr. Swinford left the Company to become President of Houston Vehicles Unlimited (“HVU”), a subsidiary of Steplyn Holdings, Inc., a private equity company. During his tenure with HVU, the company had approximately $7,000,000 in sales. Since August 2007, Mr. Swinford has served on the Board of Directors of and as the Secretary of Steplyn Holdings. Since returning to the Company in November 2010, Mr. Swinford has supervised the day to day operations, sales and manufacturing of the Company. During the last twelve months, Mr. Swinford established and developed a successful sales force that not only services the initial sales territories of Texas, Oklahoma and Louisiana, but has extended the Company’s presence into California, Colorado, North Dakota, New Mexico, Pennsylvania, Utah, West Virginia, Wyoming and Canada.

Qualifications as Director:

Mr. Swinford’s significant experience as an officer and employee of the Company, as well as his other management experience gained through his time spent with HVU gives Mr. Swinford significant insight into the Company’s operations and provides him with unique experience which he uses as a member of the Board of Directors of the Company.

Family Relationships:

Jason Swinford is the son of Jerry Swinford.

--------------------------------

Our Directors are elected annually and hold office until the annual meeting of the shareholders of the Company and until their successors are elected and qualified. Officers hold their positions at the pleasure of the Board of Directors, absent any employment agreement. In the event we employ any additional officers or Directors of the Company, they may receive compensation as determined by the Company from time to time by vote of the Board of Directors. Vacancies in the Board will be filled by majority vote of the remaining Directors or by our majority shareholders. Our Directors may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors.

Involvement in Certain Legal Proceedings

Our Directors, executive officers and control persons have not been involved in any of the following events during the past ten years:

1.	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.	being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

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Committees of the Board

Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions, nor does our Company have a written nominating, compensation or audit committee charter. Our Directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the Directors.

Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Directors believe that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our Chief Executive Officer, at the address appearing on the first page of this registration statement.

Code of Ethics

We have not adopted a formal Code of Ethics. The Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by only a small number of employees, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines. In the event our operations, employees and/or Directors expand in the future, we may take actions to adopt a formal Code of Ethics.

Risk Oversight

Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities.

CORPORATE GOVERNANCE

The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company’s employees, officers and Directors as the Company is not required to do so.

In lieu of an Audit Committee, the Company’s Directors are responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company's financial statements and other services provided by the Company’s independent public accountants. The Directors review the Company's internal accounting controls, practices and policies.

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Employment Agreements:

Jerry Swinford

In November 2010, the Company entered into an Executive Employment Agreement with Jerry Swinford, pursuant to which Mr. Swinford agreed to serve as Chief Executive Officer of the Company (which was subsequently amended by the parties entry into an amended agreement pursuant to which Mr. Swinford agreed to serve as Executive Vice President and to revise certain other sections of the agreement, which amendment has been reflected in the discussion below) for five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement) and the Company agreed to pay Mr. Swinford a base salary of not less than $108,000 per year, with such salary payable at the rate of $120,000 per year for the months of November and December 2010 and $108,000 per year beginning in January 2011. The Company agreed to pay for Mr. Swinford’s and his wife’s health insurance through the end of the term of the agreement, regardless of whether such agreement is terminated as provided below. The Company also agreed to pay Mr. Swinford a bonus of $10,000 upon his entry into the agreement and provide him the right to earn an additional bonus (the “Bonus”). The Bonus shall be paid at the end of each calendar year during the term of the agreement in the event the Company has positive earnings before interest, taxes, depreciation and amortization (minus extraordinary items including stock buybacks, acquisitions and other extraordinary items as determined at the reasonable discretion of the Board of Directors of the Company, and legal fees associated with such items) (“EBITDA”) for the prior calendar year ended December 31 (the “Prior Year”). The Bonus is based on a percentage of Mr. Swinford’s annual base salary for the Prior Year (the “Prior Year’s Salary”, provided that if the annual base salary has changed during such Prior Year, the Prior Year’s Salary shall equal the annual base salary at the end of such Prior Year), as provided below. If EBITDA for the Prior Year is:

i.	less than $2,000,000, no Bonus shall be due;

ii.	between $2,000,000 and $3,000,000, the Bonus shall be equal to 20% of the Prior Year’s Salary;

iii.	between $3,000,000 and $4,000,000, the Bonus shall be equal to 30% of the Prior Year’s Salary;

iv.	between $4,000,000 and $5,000,000, the Bonus shall be equal to 40% of the Prior Year’s Salary;

v.	between $5,000,000 and $6,000,000, the Bonus shall be equal to 50% of the Prior Year’s Salary;

vi.	between $6,000,000 and $7,000,000 the Bonus shall be equal to 75% of the Prior Year’s Salary; or

vii.	$7,000,000 or more, the Bonus shall be equal to 100% of the Prior Year’s Salary.

Additionally, pursuant to the Executive Employment Agreement, the Company also granted Mr. Swinford an option to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that Mr. Swinford is still employed (either as an officer or Director) by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date. The Options have a term of 5 years from their vesting date, are subject to the Company’s 2010 Stock Incentive Plan (described in greater detail below under “Equity Compensation Plan Information”), and include a cashless exercise provision.

Finally, pursuant to the Executive Employment Agreement, Mr. Swinford agreed to cancel the 2,050,000 shares of common stock of Holdings which he was previously issued and any rights to additional shares pursuant to the employment agreement he previously entered into with Holdings as well as 1,000,000 shares of Series A Preferred Stock of the Company which he then held in consideration for 10,000 shares of the Company’s common stock. A required term and condition of the cancellation of the Series A Preferred Stock of the Company was the entry by Mr. Pohlmann into the Voting Agreement described below under “Certain Relationships and Related Transactions, and Director Independence.”

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The Board of Directors (consisting of himself and his son, Jason Swinford) along with the Company’s majority shareholder also agreed to pay Mr. Swinford a discretionary bonus of $108,000 in December 2011, which amount has been accrued and remains unpaid to date.

If Mr. Swinford’s employment is terminated by the Company for “cause” as defined in the agreement, the Company is required to pay him the compensation earned by him through the date of termination, including any Bonus which is due (which is calculated pro rata through the end of the last full calendar quarter), within 10 days of such termination date. In the event the Company terminates Mr. Swinford’s employment for no reason or Mr. Swinford terminates the agreement for “good reason” as provided for in the agreement, including his death, the Company materially diminishing his responsibilities, his disablement, the Company breaching any term of the employment agreement, or a constructive termination (including Mr. Swinford being demoted, having his salary decreased or being forced to re-locate), the Company is required pay Mr. Swinford his salary for the remaining amount of the term of the agreement (at such times as the consideration would be due as if he was still employed by the Company), along with an additional $100,000 lump sum payment, due within 10 days of the termination date of the agreement.

Concurrently with his entry into the employment agreement, Mr. Swinford also entered into an At-Will Employment, Non-Competition, Confidential Information, Invention Assignment and Arbitration Agreement (the “At-Will Agreement”). Pursuant to the At-Will Agreement, Mr. Swinford agreed that his employment is “at-will”; that he will not compete against the Company for a period of twelve months in south-eastern Texas following the termination of his employment agreement; that he would keep all of the Company’s confidential and proprietary information confidential following the termination of his employment agreement; that any inventions created by Mr. Swinford while employed by the Company belong to the Company; and that for twelve months following the termination of his employment agreement he will not solicit employees of the Company.

Jason Swinford

In November 2010, Jason Swinford, Jerry Swinford’s son, also entered into an Executive Employment Agreement with the Company, whereby Jason Swinford agreed to serve as the Chief Operating Officer of the Company (which agreement was revised and amended to provide for Mr. Swinford to serve as Chief Executive Officer of the Company and to revise certain other sections of the agreement in December 2011, which amendment has been reflected in the discussion below) in consideration for an annual base salary of $132,000 per year ($200,000 per year subsequent to the December 2011 amendment), for a term of five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement). Jason Swinford also received a bonus of $10,000 upon his entry into the agreement, and substantially similar rights to receive a Bonus and Options as Jerry Swinford has as provided above. Jason Swinford’s employment agreement has substantially similar terms as Jerry Swinford’s as provided above, except for the higher yearly salary payable to Jason Swinford. Additionally, in connection with the Company’s entry into the employment agreement with Jason Swinford, he entered into an At-Will Agreement with substantially similar terms as Jerry Swinford’s At-Will Agreement as discussed above.

The Board of Directors (consisting of himself and his father, Jerry Swinford) along with the Company’s majority shareholder also agreed to pay Mr. Swinford a discretionary bonus of $142,000 in December 2011, which amount has been accrued and remains unpaid to date.

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ITEM 6. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE*
Name And Principal Position	Fiscal Year Ended December 31	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Jerry Swinford Former President, Former CEO, Executive Vice President, Chief Financial Officer and Chairman (2)	2011	108,000	108,000 (1)	-	16,000 (4)	22,630 (5)	254,630
	2010	131,000	10,000	15,982 (6)	12,500 (7)	34,806 (8)	204,288

Jason Swinford CEO, Former Chief Operating Officer, and Director (2)	2011	146,668	142,000 (1)	-	16,000 (4)	27,191 (9)	331,859
	2010	22,000	10,000	-	12,500 (7)	4,955 (10)	49,455

Wayne Tynon Former President and Chief Executive Officer of Holdings (3)	2010	$132,000	-	15,982 (6)	-	15,866 (11)	163,848

Does not include perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation. No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above. During the periods indicated, the Company had no Directors who did not also serve as executive officers of the Company, whose total compensation as provided above, included compensation for services as Directors of the Company (if any). There have been no changes in the Company’s compensation policies since December 31, 2011.

(1) Accrued and unpaid to date.

(2)	Jason Swinford was appointed as Chief Operating Officer in November 2010 and as Chief Executive Officer in December 2011 upon the resignation of Jerry Swinford as Chief Executive Officer of the Company.

(3)	Mr. Tynon served as Chief Executive Officer and President of Holdings, the Company’s former majority-owned subsidiary and current wholly-owned subsidiary from June 1, 2009 to November 23, 2010. Mr. Tynon currently serves as a consultant to the Company and receives a monthly fee of $5,000 per month.

(4)	Represents the value of 100,000 options to purchase shares of the Company’s common stock at an exercise price of $1.00 per share, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718.

(5)	Includes $10,800 ($900 per month for twelve months) paid as an automobile allowance to Mr. Swinford, which vehicle he drove for personal and work purposes and $11,830 in health insurance premiums for Mr. Swinford and his wife, which are paid for by the Company.

(6)	Represents the value of 10,000 shares of the Company’s common stock, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718.

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(7)	Represents the value of 1,667 options to purchase shares of the Company’s common stock at an exercise price of $7.50 per share, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718.

(8)	Includes $10,800 ($900 per month for twelve months) paid as an automobile allowance to Mr. Swinford, which vehicle he drove for personal and work purposes and $24,006 in health insurance premiums for Mr. Swinford and his wife, which were paid for by the Company.

(9)	Includes $10,800 ($900 per month for twelve months) paid as an automobile allowance to Mr. Swinford, which vehicle he drove for personal and work purposes and $16,391 in health insurance premiums for Mr. Swinford and his family, which were paid for by the Company.

(10)	Includes $1,800 ($900 per month for two months) paid as an automobile allowance to Mr. Swinford, which vehicle he drove for personal and work purposes and $3,155 in health insurance premiums for Mr. Swinford and his family, which were paid for by the Company.

(11)	Includes $13,500 ($900 per month for fifteen months) paid as an automobile allowance to Mr. Tynon, which vehicle he drove for personal and work purposes and $2,366 in health insurance premiums for Mr. Tynon, which were paid for by the Company.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (1)

Name	Number of securities underlying unexercised options (#) Exercisable	Equity Incentive Plan Awards: Number of securities underlying unexercised options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#)	Option exercise price ($)	Option expiration date	Number of shares or units of stock that have not vested (#)	Market value of shares or units of stock that have not vested ($)	Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)	Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested
Jerry Swinford, Executive Vice President and CFO	1,667	-	-	$7.50	11/30/2015	-	-	-	-
	100,000	-	-	$1.00	12/14/2016	-	-	-	-
	-	-	100,000	(1)	12/31/2017	-	-	-	-
	-	-	100,000	(1)	12/31/2018	-	-	-	-

Jason Swinford CEO	1,667	-	-	$7.50	11/30/2015	-	-	-	-
	100,000	-	-	$1.00	12/14/2016	-	-	-	-
	-	-	100,000	(1)	12/31/2017	-	-	-	-
	-	-	100,000	(1)	12/31/2018	-	-	-	-

(1)

pursuant to the Executive Employment Agreements entered into in November 2010 and amended in December 2011, with Jerry and Jason Swinford (as described above under “Employment Agreements”), the Company granted Jerry and Jason Swinford each options to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that the executives are still employed by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date.

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Compensation Discussion And Analysis

Director Compensation

Our Directors do not receive any separate consideration from the Company other than the compensation they are paid as the Company’s officers for their service on the Board of Directors. However; the Board of Directors reserves the right in the future to award the members of the Board of Directors cash or stock based consideration for services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors.

Executive Compensation Philosophy

Our Board of Directors, determines the compensation provided to our executive officers, Jerry Swinford and his son, Jason Swinford, and/or any other executive officers we may hire in the future in our sole determination. Our executive compensation program is designed to attract and retain talented executives, to meet our short-term and long-term business objectives. In doing so, we attempt to align our executive’s interests with the interests of our shareholders by providing an adequate compensation package to such executive. This compensation package includes a base salary, which we believe is competitive with other companies of our relative size. Additionally, our Board of Directors reserves the right to award incentive bonuses which are linked to our performance, as well as to individual executive officer’s performance in the future. This package may also include long-term, stock based compensation similar to the Options, described above under “Employment Agreements”, which are intended to align the performance of our executives with our long-term business strategies.

Criteria for Compensation Levels

The Company has always sought to attract and retain qualified executives and employees able to positively contribute to the success of the Company for the benefit of its various stakeholders, the most important of which is its shareholders, but also including its customers, its employees, and the communities in which the Company operates.

The Board of Directors, in determining compensation levels, considers many factors, which may include, but are not limited to, the individual’s abilities and executed performance that results in: the advancement of corporate goals of the Company, execution of the Company’s business strategies, contributions to positive financial results, contributions to the Company’s overall image and reputation in the Company’s industry, and contributions to the development of the management team and other employees. An employee must demonstrate his or her ability to deliver results in his or her areas of responsibility, which can include, among other things: business development, efficient management of operations and systems, implementation of appropriate changes and improvements to operations and systems, personnel management, financial management, sales and strategic decision making.

Compensation levels for executives and employees are generally reviewed upon the expiration of such executive’s employment and/or consulting agreements (if any), and/or annually, but may be reviewed more often as deemed appropriate.

Compensation Philosophy and Strategy

In addition to the “Criteria for Compensation Levels” set forth above, the Company has a “Compensation Philosophy” for all employees of the Company (set forth below).

Compensation Philosophy

The Company’s compensation philosophy is as follows:

The Company believes that compensation is an integral component of its overall business and human resource strategies. The Company’s compensation plans strive to promote the hiring and retention of personnel necessary to execute the Company’s business strategies and achieve its business objectives.

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	·	The Company’s compensation is strategy-focused, and set up to recognize and reward individual and group contributions and results. The Company’s compensation plans strive to promote an alignment of the interests of employees with the interests of the shareholders by having a portion of compensation based on financial results and actions that generate future shareholder value.

	·	When determining compensation for officers, managers and consultants, the Company takes into account the employee’s (and/or consultant’s) knowledge, experience, past employment history and connections in the industry, including industry specific knowledge and experience, to the extent such knowledge and experience contributes to the Company’s ability to achieve its business objectives.

In order to reward financial performance over time, the Company’s compensation programs generally consist of: base compensation, and may also consist of short-term variable incentives and long-term variable incentives (such as those described above under “Employment Agreements,”), as appropriate.

The Company’s compensation plans are administered consistently and fairly to promote equal opportunities for the Company’s employees.

The Company reserves the right to adjust annual base salaries of employees and/or to award performance based bonuses if individual performance is at or above pre-established performance expectations.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

In June 2009, the Company entered into a Line of Credit Promissory Note (the “Line of Credit”) with Charles Wayne Tynon, the former Chief Executive Officer of the Company’s wholly-owned subsidiary Holdings. Pursuant to the Line of Credit, Mr. Tynon agreed to loan the Company up to $250,000. Any amounts borrowed under the Line of Credit bear interest at the rate of 6% per annum, and are payable at maturity, which maturity date was June 1, 2011. The Line of Credit is secured by a Security Agreement entered into between the Company and Mr. Tynon (the “Security Agreement”). At any time after June 1, 2010, Mr. Tynon could convert the then outstanding amount of the Line of Credit into shares of the Company’s common stock at a conversion price of $0.99 per share. The Security Agreement provided Mr. Tynon a first priority security interest in all of the Company’s current or future, machinery and equipment, inventory and proceeds or products derived there from, and rights under contracts, causes of action, documents, and evidence of title to inventory and contract rights. In December 2010, the Line of Credit and associated interest were paid in full.

In February 2010, the Company entered into a Convertible Promissory Note (as amended and restated from time to time, the “First Note”) with Herbert C. Pohlmann, pursuant to which Mr. Pohlmann converted $100,000 of a prior advance, $10,000 of expenses associated with the loan and accrued interest of $3,950 into the First Note in the principal amount of $113,950. The First Note was due and payable on or before February 1, 2012. Interest on the unpaid balance of the First Note accrued at a rate of 12% per annum payable monthly.

In February 2010, the Company entered into a second Convertible Promissory Note (as amended and restated from time to time, the “Second Note”) with Mr. Pohlmann, pursuant to which Mr. Pohlmann converted prior advances totaling $42,880 plus $5,574 in interest on said loans into the Second Note evidencing the principal sum of $48,454. The Second Note was due and payable on or before February 1, 2012. Interest on the unpaid balance of the Second Note accrued at a rate of 12% per annum payable monthly.

In February 2010, the Company entered into a third Convertible Promissory Note (as amended and restated from time to time, the “Third Note”) with Mr. Pohlmann, pursuant to which Mr. Pohlmann loaned the Company $50,000. The Third Note was due and payable on or before February 1, 2012. Interest on the unpaid balance of the Third Note accrued at a rate of 12% per annum payable monthly.

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In May 2010, the Company entered into a fourth Convertible Promissory Note (as amended and restated from time to time, the “Fourth Note” and together with the First Note, Second Note and Third Note, the “Convertible Promissory Notes”) with Mr. Pohlmann, pursuant to which Mr. Pohlmann converted prior advances totaling $225,000, plus $34,547 of expenses incurred by Mr. Pohlmann in connection with such note into the Fourth Note evidencing the principal sum of $259,547. The Fourth Note was due and payable on or before May 13, 2012. Interest on the unpaid balance of the Fourth Note accrued at a rate of 12% per annum payable monthly.

The Convertible Promissory Notes were convertible into shares of the Company’s common stock, at a conversion price equal to $0.90 per share. In connection with the Company’s and Mr. Pohlmann’s entry into the Make Whole Agreement, described in greater detail under “Liquidity and Capital Resources”, above, the entire amount of the principal and accrued interest on the Convertible Promissory Notes was converted into an aggregate of 3,511,580 shares of the Company’s common stock in May 2011.

In November 2010, the Company entered into a Cancellation, Resignation, Repayment and Issuance Agreement (the “Cancellation Agreement”), with Charles Wayne Tynon, the former Chief Executive Officer of Holdings, the Company’s wholly-owned subsidiary, and the Company, pursuant to which Mr. Tynon agreed to (a) resign as Chief Executive Officer of Holdings; (b) agree to a payment schedule for the repayment of the Line of Credit; (c) cancel 1,140,000 shares of Holdings which he either held or was due pursuant to the terms of a Compensation Agreement, previously entered into between Holdings and Mr. Tynon (the “Compensation Agreement”); and to (d) cancel the Compensation Agreement. The Company in turn agreed to repay the Line of Credit pursuant to the terms of the Cancellation Agreement and to issue Mr. Tynon 10,000 shares of the Company’s common stock.

In November 2010, the Company entered into an Intellectual Property Purchase Agreement (the “IP Purchase Agreement”) with Jerry Swinford, the Company’s Executive Vice President and Chairman. Pursuant to the IP Purchase Agreement, the Company agreed to purchase the patents and pending patents owned and held by Mr. Swinford (including those Patents described above under “Patents, Trademarks and Licenses” for $25,000 in cash and $1,175,000 in the form of two promissory notes payable to Mr. Swinford (the “Swinford Notes”). The Company obtained an independent valuation in order to determine the value of the Patents. The first note, in the amount of $475,000 was due January 20, 2011, together with interest at the rate of 12% per annum, which note was paid in full in January 2011.

In November 2010, the Company entered into an Executive Employment Agreement with Jerry Swinford, pursuant to which Mr. Swinford agreed to serve as Chief Executive Officer of the Company (which was subsequently amended by the parties entry into an amended agreement pursuant to which Mr. Swinford agreed to serve as Executive Vice President and to revise certain other sections of the agreement, which amendment has been reflected in the discussion below) for five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement), which is described in greater detail above under “Employment Agreements.” Pursuant to the Executive Employment Agreement, the Company granted Mr. Swinford an option to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that Mr. Swinford is still employed (either as an officer or Director) by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date. The Options have a term of 5 years from their vesting date and include a cashless exercise provision.

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Finally, pursuant to the Executive Employment Agreement, Mr. Swinford agreed to cancel the 2,050,000 shares of common stock of Holdings which he was previously issued and any rights to additional shares pursuant to the employment agreement he previously entered into with Holdings as well as 1,000,000 shares of Series A Preferred Stock of the Company which he then held in consideration for 10,000 shares of the Company’s common stock. A required term and condition of the cancellation of the Series A Preferred Stock of the Company was the entry by Mr. Pohlmann into the Voting Agreement described below. As a result of this cancellation, there was a change of control whereby Mr. Pohlmann obtained voting control over the Company.

In January 2011, the Company’s majority shareholder, Mr. Pohlmann, and the Company’s then Chief Executive Officer and then sole Director, Jerry Swinford, entered into a Voting Agreement, pursuant to which Mr. Herbert C. Pohlmann agreed to vote the shares of the Company which he owns as directed by Mr. Swinford from time to time, to appoint at least 40% of the Company’s Board of Directors, rounded up to the nearest whole number of Directors. The Company currently anticipates increasing the number of its Board of Directors to five (5) members in the future, which would provide Mr. Swinford the rights to direct Mr. Pohlmann to appoint two (2) of such five (5) Directors, as determined by Mr. Swinford in his sole discretion, pursuant to the Voting Agreement, which remains in effect until December 31, 2015.

In January 2011, the Company entered into a consulting agreement with Charles Wayne Tynon, the former Chief Executive Officer of Holdings, pursuant to which Mr. Tynon agreed to provide the Company consulting services in consideration for $5,000 per month, which agreement is in effect until either party provides the other 90 days written notice of their intent to terminate the agreement.

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In June 2011, Mr. Pohlmann, the Company’s largest shareholder, agreed to provide Mr. Swinford, the Company’s Executive Vice President and Chairman, an aggregate of $3.75 million, adjusted for the payment of Mr. Pohlmann’s estate taxes, from Mr. Pohlmann’s estate upon his death; provided that if Mr. Swinford were to pre-decease Mr. Pohlmann, such funds would be distributed 50% to Mr. Swinford’s spouse and 50% to his descendants. Mr. Pohlmann’s provision for Mr. Swinford from his estate after his death was not a required term or condition of any agreement, was voluntarily provided to Mr. Swinford by Mr. Pohlmann, and can be changed at any time by Mr. Pohlmann prior to his death.

From May 2007 to October 2011, Mr. Pohlmann purchased an aggregate of 2,184,848 shares of the Company’s common stock in consideration for an aggregate of $4.3 million in funding, which does not include the affects of the Make Whole Agreement or the Convertible Promissory Notes.

In December 2011, the Company sold an aggregate of 1,600,000 units to Mr. Pohlmann, each consisting of (a) one share of common stock and (b) one common stock purchase warrant to purchase one share of common stock with a five year term and an exercise price of $1.00 per share (collectively the “Units”) for an aggregate of $1,600,000 or $1.00 per Unit. A total of $200,000 of the amount due in connection with the purchase of the Units was due prior to December 31, 2011 (which amount has been received to date); a total of $200,000 is due prior to January 25, 2012; a total of $100,000 is due prior to February 28, 2012; a total of $1,000,000 is due prior to April 30, 2012; and a total of $100,000 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from Mr. Pohlmann, which notes shall not accrue interest until due.

In January 2012, Jerry Swinford, the Company’s Executive Vice President and Chairman entered into an Intellectual Property Assignment agreement with the Company, pursuant to which he assigned all rights to the Patents (defined above under “Patents, Trademarks and Licenses”) to the Company , provided that Mr. Swinford has a first priority security interest over the Patents until such time as the promissory notes he was provided in connection with the IP Purchase Agreement (described above) are satisfied in full .

Review, Approval and Ratification of Related Party Transactions

Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, Directors and significant stockholders. However, all of the transactions described above were approved and ratified by our Directors. In connection with the approval of the transactions described above, our Directors took into account various factors, including their fiduciary duty to the Company; the relationships of the related parties described above to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third party.

We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors. On a moving forward basis, our Directors will continue to approve any related party transaction based on the criteria set forth above.

Independence of Directors

The Company is not required to maintain independent Directors at this time. The Company will seek to appoint independent Directors, if and when it is required to do so.

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ITEM 8. LEGAL PROCEEDINGS

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common stock of the Company is currently quoted on the OTC Pink Market (otherwise known as the "pink sheets") under the symbol "CTBG". However, the fact that our securities have limited and sporadic trading on the OTC Pink Market does not by itself constitute a public market, and as such, historical price quotations relating to trades in our stock on the OTC Pink Market have not been included in this registration statement. In the future, following the effectiveness of our registration statement, we plan to apply for quotation on the Over-The-Counter Bulletin Board.

As of January 20, 2012, we had 15,651,827 shares of common stock outstanding (which includes 1,652,500 shares which we have agreed to issue, which have not been physically issued as of the date of this Registration Statement, but which will be physically issued subsequent to the date of this Registration Statement), held by 872 shareholders of record, no shares of Series A Preferred Stock issued or outstanding, and 1,000,000 shares of Series B Preferred Stock issued and outstanding held by one shareholder of record, as described in greater detail below under “Description of Registrant’s Securities to be Registered.”

Dividend Policy

To date, we have not declared or paid any dividends on our outstanding shares. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings to finance our operations and future growth, our Board of Directors will have discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements and other factors, which our Board of Directors may deem relevant.

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Equity Compensation Plan Information

On January 19, 2011, and with an effective date of November 30, 2010, the Company’s then sole Director, Jerry Swinford and its majority shareholder, Herbert C. Pohlmann approved the Company’s 2010 Stock Incentive Plan, which allows the Board of Directors to grant up to an aggregate of 83,333 qualified and non-qualified stock options, restricted stock and performance based awards of securities to the Company’s officers, Directors and consultants to help attract and retain qualified Company personnel (the “2010 Stock Plan”).

On and effective January 12, 2012, the Company’s Board of Directors and its majority shareholder, Herbert C. Pohlmann, approved the Company’s 2012 Stock Incentive Plan, which allows the Board of Directors to grant up to an aggregate of 750,000 qualified and non-qualified stock options, restricted stock and performance based awards of securities to the Company’s officers, Directors and consultants to help attract and retain qualified Company personnel (the “2012 Stock Plan” and together with the 2010 Stock Plan, the “Stock Plans”).

The following table provides information as of the filing of this report regarding the Plans (including individual compensation arrangements) under which equity securities are authorized for issuance:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities available for future issuance under equity compensation plans (excluding those in first column) *
Equity compensation plans approved by the security holders	3,333	$7.50	820,000
Equity compensation plans not approved by the security holders	600,000	$1.00	-
Total	603,333		820,000

* Also takes into account modified and terminated options originally issued under the 2010 Stock Plan.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

In May 2007, the Company sold 37,879 units, consisting of one share of common stock and one warrant to purchase one share of the Company’s common stock for $6.60 per share, to Herbert C. Pohlmann, an individual, for aggregate consideration of $250,000.

In August 2007, the Company sold 37,879 units, consisting of one share of common stock and one warrant to purchase one share of the Company’s common stock for $6.60 per share, to Herbert C. Pohlmann, an individual, for aggregate consideration of $250,000.

In January 2008, Mr. Pohlmann exercised the warrants to purchase shares of common stock he held (as described above) and purchased 75,758 shares of the Company’s common stock at an exercise price of $6.60 per share or $500,000 in aggregate.

The Company did not issue or sell any equity securities during the year ended December 31, 2009.

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During the year ended December 31, 2010, the Company sold 466,666 shares of restricted common stock to Mr. Pohlmann for aggregate consideration of $1,000,000 as follows:

In August 2010, the Company sold 33,333 shares of the Company’s common stock to Herbert C. Pohlmann, in consideration for $100,000 or $3.00 per share;

In September 2010, the Company sold 100,000 shares of the Company’s common stock to Mr. Pohlmann in consideration for $300,000 or $3.00 per share;

In October 2010, the Company sold 66,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $3.00 per share;

In November 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share; and

In December 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share.

As described above under “Certain Relationships and Related Transactions, and Director Independence”, the Company’s majority shareholder, Herbert C. Pohlmann loaned the Company an aggregate of $471,951 in fiscal 2010, which loans were evidenced and memorialized by four Convertible Promissory Notes, which accrued interest at the rate of 12% per annum, and were due and payable on February 1, 2012 (as to three notes totaling $212,404) and May 13, 2012 (as to one note totaling $259,547). The Convertible Promissory Notes provided Mr. Pohlmann the right to convert the principal and accrued interest under the Convertible Promissory Notes into shares of the Company’s common stock at a conversion price of $0.90 per share, which Convertible Promissory Notes, along with accrued and unpaid interest thereon in the amount of $63,006 were converted into shares of the Company’s common stock pursuant to the Make Whole Agreement, described below.

In November 2010, the Company entered into a Cancellation, Resignation, Repayment and Issuance Agreement (the “Cancellation Agreement”), with Charles Wayne Tynon, the former Chief Executive Officer of Holdings, the Company’s wholly-owned subsidiary, and the Company, pursuant to which Mr. Tynon agreed to (a) resign as Chief Executive Officer of Holdings; (b) agree to a payment schedule for the repayment of the Line of Credit (described above in greater detail under “Certain Relationships and Related Transactions, and Director Independence”); (c) cancel 1,140,000 shares of Holdings which he either held or was due pursuant to the terms of a Compensation Agreement, previously entered into between Holdings and Mr. Tynon (the “Compensation Agreement”); and to (d) cancel the Compensation Agreement. The Company in turn agreed to repay the Line of Credit pursuant to the terms of the Cancellation Agreement and to issue Mr. Tynon 10,000 shares of the Company’s common stock.

In November 2010, the Company entered into an Executive Employment Agreement with Jerry Swinford, pursuant to which Mr. Swinford agreed to serve as Chief Executive Officer of the Company (which was subsequently amended by the parties entry into an amended agreement pursuant to which Mr. Swinford agreed to serve as Executive Vice President and to revise certain other sections of the agreement, which amendment has been reflected in the discussion below) for five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement), which is described in greater detail above under “Employment Agreements.” Pursuant to the Executive Employment Agreement, the Company granted Mr. Swinford an option to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that Mr. Swinford is still employed (either as an officer or Director) by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date. The Options have a term of 5 years from their vesting date and include a cashless exercise provision.

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Finally, pursuant to the Executive Employment Agreement, Mr. Swinford agreed to cancel the 2,050,000 shares of common stock of Holdings which he was previously issued and any rights to additional shares pursuant to the employment agreement he previously entered into with Holdings as well as 1,000,000 shares of Series A Preferred Stock of the Company which he then held in consideration for 10,000 shares of the Company’s common stock. A required term and condition of the cancellation of the Series A Preferred Stock of the Company was the entry by Mr. Pohlmann into the Voting Agreement described above. As a result of this cancellation, there was a change of control whereby Mr. Pohlmann obtained voting control over the Company.

During the nine months ended September 30, 2011, the Company sold an aggregate of 1,900,000 shares of the Company’s restricted common stock for aggregate consideration of $2,800,000 as follows:

In January 2011, the Company sold 666,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $1,000,000 or $1.50 per share;

In February 2011, the Company sold 333,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $500,000 or $1.50 per share;

In May 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $250,000 or $1.50 per share;

In May 2011, the Company sold 233,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $350,000 or $1.50 per share;

In July 2011, the Company sold 333,333 shares of the Company’s common stock to a third party for consideration for $500,000 or $1.50 per share; and

Effective in September 2011, the Company sold 166,667 shares of the Company’s common stock to a third party in consideration for $200,000 or $1.20 per share.

In May 2011, the Company and Mr. Pohlmann entered into an Anti-Dilution and Make Whole Agreement, which was subsequently amended in June 2011 (as amended, the “Make Whole Agreement”). Pursuant to the Make Whole Agreement, we agreed to adjust the purchase price of Mr. Pohlmann’s August 2010, September 2010 and October 2010 purchases of 200,000 shares of our common stock from $3.00 per share to $1.50 per share (and to therefore issue Mr. Pohlmann an additional 200,000 shares of common stock). We also agreed to provide Mr. Pohlmann anti-dilutive rights in connection with the 760,456 shares of common stock issuable to shareholders of Grifco and the Company (as described greater detail above under “Organizational History”), in connection with the shares of common stock which he held as of the issuance date of such shares and the Convertible Promissory Notes which he held as of such issuance date. The consideration for the Make Whole Agreement was Mr. Pohlmann’s continued funding of the Company throughout 2010 and through the date of such Make Whole Agreement. As a result of the anti-dilutive rights, Mr. Pohlmann was issued 6,474,154 shares of common stock in connection with the anti-dilutive rights associated with the shares of common stock he held and 3,511,580 shares of common stock in connection with the conversion of the Convertible Promissory Notes (and accrued interest thereon) into shares of the Company’s common stock, which notes were automatically converted into shares of common stock in connection with the parties’ entry into the Make Whole Agreement in order that Mr. Pohlmann could maintain his proportional ownership rights in the Company following such issuance of such 760,456 shares.

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In October 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.20 per share.

In December 2011, the Company sold an aggregate of 1,600,000 units to Mr. Pohlmann, each consisting of (a) one share of common stock and (b) one common stock purchase warrant to purchase one share of common stock with a five year term and an exercise price of $1.00 per share (collectively the “Units”) for an aggregate of $1,600,000 or $1.00 per Unit. A total of $200,000 of the amount due in connection with the purchase of the Units was due prior to December 31, 2011 (which amount has been received to date); a total of $200,000 is due prior to January 25, 2012 (which amount has been received to date); a total of $100,000 is due prior to February 28, 2012; a total of $1,000,000 is due prior to April 30, 2012; and a total of $100,000 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from Mr. Pohlmann, which notes shall not accrue interest until due.

In January 2012, the Company sold 52,500 Units to a third party in consideration for $52,500 or $1.00 per unit. A total of $22,500 of the amount due in connection with the purchase of the Units was payable at the time of the parties’ entry into the subscription agreement evidencing the sale; a total of $2,500 was due prior to February 28, 2012 (which amount has been received to date); a total of $25,000 is due prior to April 30, 2012; and a total of $2,500 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from the third party, which notes shall not accrue interest until due.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares, options and warrants, as applicable, for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions. Additionally, the Company claims an exemption from registration afforded by Section 3(a)(9) of the Act for the conversions of the Convertible Promissory Notes, as the securities were exchanged by the Company with its existing security holders exclusively in transactions where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.

ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

We have authorized capital stock consisting of 200,000,000 shares of common stock, $0.001 par value per share and 5,000,000 shares of preferred stock, $0.001 par value per share ("Preferred Stock"). We have 1,000,000 designated shares of Series A Preferred Stock and 1,000,000 designated shares of Series B Preferred Stock.

Common Stock

Voting Rights . Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. Directors are appointed by a plurality of the votes present at any special or annual meeting of shareholders (by proxy or in person), and a majority of the votes present at any special or annual meeting of shareholders (by proxy or in person) shall determine all other matters. There is no cumulative voting of the election of Directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption.

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Dividend Rights . The holders of outstanding shares of common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the board from time to time may determine.

Liquidation . Upon liquidation, dissolution or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.

Other Rights . All of our outstanding shares of common stock are fully paid and non-assessable. The holders of our common stock have no preemptive rights and no rights to convert their common stock into any other securities, and our common stock is not subject to any redemption or sinking fund provisions.

Preferred Stock

Shares of Preferred Stock may be issued from time to time in one or more series, each of which shall have such distinctive designation or title as shall be determined by our Board prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board prior to the issuance of any shares thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of our capital stock entitled to vote generally in the election of the directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.

Additionally, while it is not possible to state the actual effect of the issuance of any additional shares of Preferred Stock on the rights of holders of the common stock until the Board determines the specific rights of the holders of any additional shares of Preferred Stock, such rights may be superior to those associated with our common stock, and may include:

o	Restricting dividends on the common stock;

o	Rights and preferences including dividend and dissolution rights, which are superior to our common stock;

o	Diluting the voting power of the common stock;

o	Impairing the liquidation rights of the common stock; or

o	Delaying or preventing a change in control of the Company without further action by the stockholders.

Series A Preferred Stock

We designated 1,000,000 shares of Series A Preferred Stock, $0.001 par value per share in May 2007 (the "Series A Preferred Stock"). The Series A Preferred Stock had no dividend rights, no liquidation preference, no redemption rights and no conversion rights. Shortly after being designated, we granted all 1,000,000 shares of such Series A Preferred Stock to our Executive Vice President and Chairman, Jerry Swinford, who held such shares until his entry into the Executive Employment Agreement in November 2010, described above under “Employment Agreements” pursuant to which the Series A Preferred Stock was cancelled. The Series A Preferred Stock had the right, voting in aggregate, to vote on all shareholder matters equal to fifty-one percent (51%) of the total vote. Additionally, we were not allowed to adopt any amendments to our Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least 66-2/3% of the outstanding shares of the Series A Preferred Stock.

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In addition to our Series A Preferred Stock, Holdings has 1,000,000 shares of Series A Preferred Stock designated and outstanding with substantially similar terms and conditions to our Series A Preferred Stock as described above, which shares are still outstanding and are held by Jerry Swinford, our Executive Vice President and Chairman.

Series B Preferred Stock

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Nevada Revised Statutes and our Articles of Incorporation allow us to indemnify our officers and Directors from certain liabilities and our Bylaws state that we shall indemnify every (i) present or former Director, advisory director or officer of us, (ii) any person who while serving in any of the capacities referred to in clause (i) served at our request as a Director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) (each an "Indemnitee").

Our Bylaws provide that we shall indemnify an Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any proceeding in which he was, is or is threatened to be named as defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated to serve, if it is determined that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his Official Capacity, that his conduct was in our best interests and, in all other cases, that his conduct was at least not opposed to our best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to us or is found liable on the basis that personal benefit was improperly received by the Indemnitee, the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection with the Proceeding and (ii) shall not be made in respect of any Proceeding in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to us.

Other than in the limited situation described above, our Bylaws provide that no indemnification shall be made in respect to any proceeding in which such Indemnitee has been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the Indemnitee's official capacity, or (b) found liable to us. The termination of any proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee did not meet the requirements set forth in clauses (a) or (b) above. An Indemnitee shall be deemed to have been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall, include, without limitation, all court costs and all fees and disbursements of attorneys for the Indemnitee. The indemnification provided shall be applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven.

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Neither our Bylaws nor our Articles of Incorporation include any specific indemnification provisions for our officers or Directors against liability under the Securities Act of 1933, as amended. Additionally, insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the " Act ") may be permitted to Directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements, notes thereto and the related independent registered accounting firm’s report are set forth immediately following the signature page to this registration statement beginning on page F-1 and are incorporated herein by reference.

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements:

See “Index to Financial Statements” set forth on page F-1.

(b) Exhibits:

The following exhibits are filed as part of this registration statement:

Exhibit Number	Description of Exhibit
Exhibit 2.1*	Definitive Acquisition Purchase Agreement
Exhibit 2.2*	Agreement For Exchange of Common Stock between Grifco and Coil Tubing
Exhibit 2.3*	Plan and Agreement of Merger and Reorganization
Exhibit 3.1*	Articles of Incorporation
Exhibit 3.2*	Articles of Merger
Exhibit 3.3*	Series A Preferred Stock Designation
Exhibit 3.4*	Series B Preferred Stock Designation
Exhibit 3.5*	Certificate of Amendment (increasing authorized shares to 750,000,000 shares of common stock)
Exhibit 3.6*	Certificate of Amendment (increasing authorized shares to 1,990,000,000 shares of common stock)
Exhibit 3.7*	Certificate of Amendment (increasing authorized shares to 4,990,000,000 shares of common stock)
Exhibit 3.8*	Certificate of Amendment (affecting 1:300 reverse split and authorization of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock)
Exhibit 3.9*	Bylaws (Nevada)
Exhibit 4.1*	Coil Tubing Technology, Inc. 2010 Stock Incentive Plan
Exhibit 4.2*	Coil Tubing Technology, Inc. 2012 Stock Incentive Plan
Exhibit 10.1*	Hammelmann Statement of Understanding Coil Tubing Cleaner
Exhibit 10.2*	Hammelmann Statement of Understanding 5 1/8” RotorJet and TurboJet
Exhibit 10.3*	Agreement and Release between Grifco and Coil Tubing
Exhibit 10.4*	Restatement and Novation of Agreement for Exchange of Common Stock between Grifco and Coil Tubing

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Exhibit 10.5*	Employment Agreement with Jerry Swinford
Exhibit 10.6*	At-Will Employment, Non-Competition, Confidential information, Invention Assignment and Arbitration Agreement with Jerry Swinford
Exhibit 10.7*	Employment Agreement with Jason Swinford
Exhibit 10.8*	At-Will Employment, Non-Competition, Confidential information, Invention Assignment and Arbitration Agreement with Jason Swinford
Exhibit 10.9*	Intellectual Property Purchase Agreement Between Jerry Swinford and the Company
Exhibit 10.10*	Secured Promissory Note ($475,000) – November 30, 2010
Exhibit 10.11*	Secured Promissory Note ($700,0000) – November 30, 2010
Exhibit 10.12*	Guaranty Agreement, Whereby Holdings Guaranteed The Repayment of Jerry Swinford’s Notes
Exhibit 10.13*	Cancellation, Resignation, Repayment and Issuance Agreement with Charles Wayne Tynon
Exhibit 10.14*	Voting Agreement Between Herbert C. Pohlmann and Jerry Swinford
Exhibit 10.15*	Anti-Dilution and Make Whole Agreement with Herbert C. Pohlmann
Exhibit 10.16*	First Amendment to Anti-Dilution and Make Whole Agreement with Herbert C. Pohlmann
Exhibit 10.17*	First Amendment to Employment Agreement with Jerry Swinford
Exhibit 10.18*	First Amendment to Employment Agreement with Jason Swinford
Exhibit 10.19*	Intellectual Property Assignment Agreement between Jerry Swinford and the Company
Exhibit 10.20*	Form of Officer and Director Stock Option Agreement (granted to Jerry and Jason Swinford)
Exhibit 10.21*	Form of Common Stock Purchase Warrant (granted in connection with the January 2012 sale of Units)
Exhibit 21.1*	Subsidiaries

* Filed as an exhibit to this registration statement

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	COIL TUBING TECHNOLOGY, INC.


Date: January 20, 2012	/s/ Jason Swinford
	JASON SWINFORD
	Chief Executive Officer (Principal Executive Officer)

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COIL TUBING TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Coil Tubing Technology, Inc.

Unaudited Consolidated Balance Sheets	F-2

Unaudited Consolidated Statements of Operations	F-3

Unaudited Consolidated Statements of Cash Flows	F-4

Notes to the Unaudited Consolidated Financial Statements	F-5

Report of Independent Registered Public Accounting Firm	F-11

Consolidated Balance Sheets	F-12

Consolidated Statements of Operations	F-13

Consolidated Statement of Stockholders’ Equity	F-14

Consolidated Statements of Cash Flows	F-15

Notes to the Consolidated Financial Statements	F-16

F-1

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2011			2010
Assets	(Unaudited)

Current Assets:
Cash	$	223,505		$	330,313
Accounts receivable, net		1,366,134			280,353
Other current assets		16,116			3,795
Total Current Assets		1,605,755			614,461

Rental tools, net		3,301,646			463,439
Machinery and equipment, net		366,230			114,983
Intangible assets, net		1,133,333			1,193,333
Total Assets	$	6,406,964		$	2,386,216

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable	$	1,464,617		$	386,993
Accrued liabilities		65,973			65,109
Related party notes payable - current		155,556			617,593
Notes payable - current		59,580			-
Total Current Liabilities		1,745,726			1,069,695

Long Term Liabilities:
Related party notes payable, net of current portion		440,740			557,407
Related party convertible notes payable		-			471,951
Notes payable, net of current portion		126,004			-
Total Liabilities		2,312,470			2,099,053

Commitments and contingencies

Stockholders' Equity:
Preferred Stock, $.001 par value, 5,000,000 shares authorized
Series A Preferred Stock, $.001 par value, 1,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Series B Convertible Preferred Stock, $.001 par value, 1,000,000 shares authorized;
1,000,000 shares issued and outstanding, respectively		1,000			1,000
Common Stock, $.001 par value, 200,000,000 shares authorized;
13,665,042 and 985,518 shares issued and outstanding, respectively		13,665			986
Additional paid-in capital		7,283,025			3,960,747
Accumulated deficit		(3,203,196	)		(3,675,570	)
Total Stockholders' Equity		4,094,494			287,163

Total Liabilities and Stockholders' Equity	$	6,406,964		$	2,386,216

See accompanying notes to consolidated financial statements

F-2

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2011 and 2010 (Unaudited)
	September 30,			September 30,
	2011			2010
Revenue:
Product revenue	$	548,031		$	797,412
Rental revenue		2,976,580			647,345
Total revenue		3,524,611			1,444,757

Cost of revenue:
Cost of revenue products and rental income		1,174,699			410,402
Cost of revenue - depreciation of rental tools		335,140			108,235
Total cost of revenue		1,509,839			518,637

Gross profit		2,014,772			926,120

Operating Expenses:
General and administrative		1,393,575			906,804
Depreciation and amortization		122,101			28,636
Total operating expenses		1,515,675			935,440

Income (loss) from operations		499,096			(9,320	)

Other expense:
Interest expense		(26,722	)		(35,180	)
Total other expense		(26,722	)		(35,180	)

Net income (loss)		472,374			(44,500	)

Less: net loss attributable to noncontrolling interests		-			4,838

Net income (loss) attributable to common stockholders	$	472,374		$	(39,662	)

Net earnings (loss) per share :
Basic and diluted earnings (loss)	$	0.06		$	(0.03	)

Weighted average common shares outstanding:
Basic and diluted		7,425,893			1,267,122

See accompanying notes to consolidated financial statements

F-3

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2011 and 2010

(Unaudited)

	September 30,			September 30,
	2011			2010
Cash Flows From Operating Activities:
Net income (loss)	$	472,374		$	(44,500	)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization		457,241			136,871
(Gain)/loss on sale of property and equipment		19,571			-
Changes in:
Accounts receivable		(1,085,781	)		(255,865	)
Other assets		(12,321	)		(883	)
Accounts payable		1,140,631			(129,264	)
Accrued liabilities		864			(17,404	)
Net provided by (used in) operating activities		992,579			(311,045	)

Cash Flows From Investing Activities:
Purchase of rental tools		(3,188,883	)		(57,226	)
Purchase of machinery and equipment		(331,884	)		(45,044	)
Proceeds from sale of machinery and equipment		14,500			-
Net cash used in investing activities		(3,506,267	)		(102,270	)

Cash Flows From Financing Activities:
Proceeds from sale of common stock		2,800,000			400,000
Proceeds from related party convertible notes		-			310,712
Payments on line of credit - related party		-			(90,000	)
Payments on related party notes payable		(578,704	)		(7,000	)
Payments on notes payable		(35,851	)		-
Proceeds from notes payable		221,435			-
Net cash provided by financing activities		2,406,880			613,712

Net increase in cash		(106,808	)		200,397
Cash at beginning of period		330,313			239
Cash at end of period	$	223,505		$	200,636

See accompanying notes to consolidated financial statements

F-4

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2011

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

BASIS OF ACCOUNTING

The accompanying consolidated financial statements include the accounts of Coil Tubing Technology, Inc. and its wholly-owned subsidiary, Coil Tubing Technology Holdings, Inc., a Nevada corporation and its subsidiaries, Coil Tubing Technology, Inc., a Texas corporation and Precision Machining Resources, Inc., a Texas corporation (“we” or the “Company”). The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10 Registration Statement.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position have been included. Operating results for the nine- month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. Notes to the financial statements that would substantially duplicate disclosures contained in the audited financial statements for the most recent fiscal year have been omitted.

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Earnings or Loss Per Share . Basic earnings or loss per common share equals net earnings or loss attributable to common shareholders divided by the weighted average shares outstanding during the period. Diluted earnings per share include the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company had net income for the nine months ended September 30, 2011. Basic and diluted earnings per share are the same as all potential common equivalent shares are anti-dilutive. All previously reported earnings per share amounts in the accompanying financial statements are being retroactively presented to reflect the stock distribution described in Note 6 and the reverse stock split described in Note 9.

Recently Issued Accounting Pronouncements. We have adopted recently issued accounting pronouncements and have determined that they have no material effect on our financial position, results of operations, or cash flow. We do not expect any recently issued but not yet adopted accounting pronouncements to have a material effect on our financial position, results of operations or cash flow.

NOTE 2 – STOCKHOLDERS’ EQUITY

The total number of shares of stock of all classes which the Company has authority to issue as a result of the amendment described in Note 9 is two hundred and five million (205,000,000), of which five million (5,000,000) are shares of Preferred Stock with a par value of $0.001 per share ("Preferred Stock"), and two hundred million (200,000,000) are shares of Common Stock with a par value of $0.001 per share ("Common Stock").

In January 2011, the Company’s majority shareholder, Mr. Herbert C. Pohlmann, and the Company’s sole Director, Jerry Swinford, entered into a Voting Agreement, pursuant to which Mr. Herbert C. Pohlmann agreed to vote the shares of the Company which he owns as directed by Mr. Swinford from time to time, to appoint at least 40% of the Company’s Board of Directors, rounded up to the nearest whole number of Directors. The Company currently anticipates increasing the number of its Board of Directors to five, which would provide Mr. Swinford the rights to direct Mr. Herbert C. Pohlmann to appoint two of such five Directors, as determined by Mr. Swinford in his sole discretion, pursuant to the Voting Agreement, which remains in effect until December 31, 2015.

F-5

COMMON STOCK

As of September 30, 2011, the Company had 13,665,042 shares of its $0.001 par value common stock issued and outstanding.

In May 2011, the Company’s sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 4,990,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in May 2011.

In September 2011, the Company’s sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were reduced to 200,000,000 shares of common stock $0.001 par value per share. (See Note 9).

In September 2011, the Company’s sole Director and majority shareholder approved an amendment to the Company’s Articles of Incorporation to affect a 1:300 reverse stock split of the Company’s outstanding shares of common stock. The amendment was effective with the Secretary of State of Nevada on October 21, 2011. (See Note 9).

All share amounts presented herein reflect retroactive recognition of the 1:300 reverse stock split.

During the nine months ended September 30, 2011, the Company issued 12,679,524 shares of common stock as follows:

·	In January 2011, the Company sold 666,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $1,000,000 or $1.50 per share.

·	In February 2011, the Company sold 333,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $500,000 or $1.50 per share.

·	In May 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $250,000 or $1.50 per share.

·	In May 2011, the Company sold 233,333 shares of the Company’s common stock to Mr. Herbert C. Pohlmann for consideration of $350,000 or $1.50 per share.

·	In May 2011, the Company issued 594,397 shares of the Company’s common stock to Mr. Herbert C. Pohlmann in connection with the conversion of the Convertible Promissory Notes as described in Note 4, below.

·	In May 2011, the Company issued 760,456 shares of common stock to shareholders of Grifco and the Company as described in Note 6, below.

In May 2011, the Company issued 9,591,337 shares of the Company’s common stock to Mr. Herbert C. Pohlmann in connection with an Anti-Dilution and Make Whole Agreement, which was subsequently amended in June 2011 (as amended, the “Make Whole Agreement”). In connection with the Make Whole Agreement, we agreed to adjust the purchase price of Mr. Herbert C. Pohlmann’s common stock purchases and to provide Mr. Herbert C. Pohlmann anti-dilutive rights in connection with the 760,456 shares of common stock issuable to shareholders of Grifco and the Company as described in Note 6, below, and to adjust the conversion price of his Convertible Promissory Notes. The Company allocated an additional 7,673,070 common shares for cash proceeds and 1,918,267 common shares for the conversion of related party debt based on the amounts received in connection with the Make Whole Agreement.

F-6

·	In July 2011, the Company sold 333,333 shares of the Company’s common stock to a third party for consideration of $500,000 or $1.50 per share.

In September 2011, the Company sold 166,667 shares of the Company’s common stock to a third party for consideration of $200,000 or $1.20 per share. As of September 30, 2011, these shares have not been issued and will be issued subsequent to quarter end. The proceeds relating to this subscription are included in additional paid in capital in the accompanying consolidated financial statements.

As a result of the issuances made pursuant to the Make Whole Agreement and the issuances described above, the Company had 13,665,042 shares of common stock issued and outstanding of which approximately 12,434,888 shares (or 92%) were held by Mr. Herbert C. Pohlmann, as of September 30, 2011.

PREFERRED STOCK

The Company has five million (5,000,000) shares of preferred stock authorized. The shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the Board of Directors of the Company ("Board of Directors") prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors.

The total number of designated shares of the Company’s Series A Preferred Stock is one million (1,000,000). As of September 30, 2011, the Company had -0- shares of its Series A Preferred Stock, $.001 par value issued and outstanding.

The Series A Preferred Stock has no dividend rights, no liquidation preference, no redemption rights and no conversion rights and has 51% voting rights or voting equal to 51% of the Company’s outstanding common stock.

The total number of designated shares of the Company’s Series B Preferred Stock is one million (1,000,000). As of September 30, 2011, the Company had one million (1,000,000) shares of its Series B preferred stock, $0.001 par value issued and outstanding.

The Series B Preferred Stock has no dividend rights, no liquidation preference, no redemption rights, no voting rights and conversion rights of 0.0667 shares of common stock for each one preferred share during the Option Period (the “Option”). The “Option Period” that allows the holder of such Series B Preferred Stock to purchase shares of Series A Preferred Stock of the Company for aggregate consideration of one hundred dollars, lasts two years from the date that the holder of the Series A Preferred Stock no longer desires to hold the Series A Preferred Stock (November 30, 2010).

NOTE 3 - STOCK OPTIONS

In January 2011, the Company’s sole Director and its majority shareholder, approved the Company’s 2010 Stock Incentive Plan, which allows the Board of Directors to grant up to an aggregate of eighty-three thousand three hundred and thirty-three (83,333) qualified and non-qualified stock options, restricted stock and performance based awards of securities to the Company’s officers, Directors and consultants to help attract and retain qualified Company personnel.

There were no options granted during the nine months ended September 30, 2011.

F-7

Summary of options outstanding and exercisable as of September 30, 2011 is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)
Outstanding at January 1, 2011		13,333	$	7.50		9.9
Granted		-		-
Exercised		-		-
Forfeited and canceled		-		-

Outstanding at September 30, 2011		13,333	$	7.50		9.2

Exercisable at September 30, 2011		3,333	$	7.50		9.2

NOTE 4 - RELATED PARTY TRANSACTIONS

NOTES PAYABLE – RELATED PARTIES AND OTHER

Convertible Promissory Notes –Herbert C. Pohlmann

All of the Convertible Promissory Notes due to Mr. Herbert C. Pohlmann (and accrued interest thereon) described above were converted into 2,512,664 shares of the Company’s common stock in May 2011, in connection with the entry into the Make Whole Agreement as described above in Note 2, which included 594,397 shares issuable in connection with the original terms of the Convertible Promissory Notes (and accrued interest thereon) and 1,918,267 shares allocated in connection with the Make Whole Agreement.

Promissory Notes –Jerry Swinford

The $475,000 promissory note to Jerry Swinford was paid in full in January 2011.

The promissory note to Jerry Swinford in the amount of $700,000 is due September 15, 2015, and is payable in monthly installments of the lesser of $12,963 or the then outstanding amount of the note per month. As of September 30, 2011, $596,296 is outstanding of which $155,556 is classified as current in the accompanying consolidated financial statements.

NOTE 5 – CONCENTRATION OF RISK

NOTE 6 - LITIGATION

In March 2010, we filed a Motion for Fairness Hearing to Issue Securities Pursuant to Section 3(a)(10) of the Securities Act of 1933, as Amended (the “Motion”) in order to issue shares of common stock to certain prior shareholders of the Company, Grifco International, Inc., a Nevada corporation (“Grifco”), and Mr. Herbert C. Pohlmann in order to settle an ongoing lawsuit. The court subsequently held a fairness hearing and approved the issuance of 760,456 shares of the Company’s common stock, plus additional shares issuable due to rounding (the “Shares”) without restrictive legend pursuant to an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended (the “Act”). The shares were issued in May 2011 and the lawsuit was dismissed.

F-8

NOTE 7 – INCOME TAXES

At September 30, 2011, the Company had an unused net operating loss carryover of approximately $3.2 million that is available to offset future taxable income which expires beginning in 2028.

The ability of the Company to utilize NOL carryforwards to reduce future federal taxable income and federal income tax is subject to various limitations under the Internal Revenue Code of 1986, as amended. The utilization of such carryforwards may be limited upon the occurrence of certain ownership changes, including the issuance or exercise of rights to acquire stock, the purchase or sale of stock by 5% stockholders, as defined in the Treasury regulations, and the offering of stock during any three-year period resulting in an aggregate change of more than 50% in the beneficial ownership of the Company.

In the event of an ownership change (as defined for income tax purposes), Section 382 of the Code imposes an annual limitation on the amount of a corporation's taxable income that can be offset by these carryforwards. The limitation is generally equal to the product of (i) the fair market value of the equity of the company multiplied by (ii) a percentage approximately equivalent to the yield on long-term tax exempt bonds during the month in which an ownership change occurs. In addition, the limitation is increased if there are recognized built-in gains during any post-change year, but only to the extent of any net unrealized built-in gains (as defined in the Code) inherent in the assets sold. Certain NOLs acquired through various acquisitions are also subject to limitations.

There are no significant differences between the Company’s operating results for financial reporting purposes and for income tax purposes.

NOTE 8 - COMMITMENTS

In September 2011, the Company opened a district office in Pennsylvania when it entered into a Residential Sub-Lease Agreement to lease a residence located in Blairsville, Pennsylvania. The lease has a term of six months ending on March 1, 2012. Rent due pursuant to the lease is $300 per month. The Company plans to use the district office for sales in Ohio, Pennsylvania, and West Virginia and repair of equipment for that area.

NOTE 9 – SUBSEQUENT EVENTS

In September 2011, the Company’s sole Director and majority shareholder approved an amendment to the Company’s Articles of Incorporation to affect a 1:300 reverse stock split of the Company’s outstanding shares of common stock and to authorize 205,000,000 shares of capital stock, including 200,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share, which amendment was effective with the Secretary of State of Nevada on October 21, 2011. All share amounts presented herein reflect retroactive recognition of the 1:300 reverse stock split.

In October 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.20 per share.

In December 2011, Jerry Swinford resigned as Chief Executive Officer and Jason Swinford was appointed as Chief Executive Officer of the Company.

In November 2010, the Company entered into an Executive Employment Agreement with Jerry Swinford, pursuant to which Mr. Swinford agreed to serve as Chief Executive Officer of the Company (which was subsequently amended by the parties entry into an amended agreement pursuant to which Mr. Swinford agreed to serve as Executive Vice President and to revise certain other sections of the agreement, which amendment has been reflected in the discussion below) for five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement). Pursuant to the Executive Employment Agreement, the Company granted Mr. Swinford an option to purchase 301,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford as follows: 100,000 options on December 14, 2011 (the “2011 Option”); 100,000 options on December 31, 2012 (the “2012 Option”) and 100,000 options on December 31, 2013 (the “2013 Option”), provided that Mr. Swinford is still employed (either as an officer or Director) by the Company on such vesting date(s). The Initial Option has an exercise price of $7.50 per share, the 2011 Option has an exercise price of $1.00 per share, and the 2012 Option and 2013 Option will have an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the applicable vesting date. The Options have a term of 5 years from their vesting date and include a cashless exercise provision.

Finally, pursuant to the Executive Employment Agreement, Mr. Swinford agreed to cancel the 2,050,000 shares of common stock of Holdings which he was previously issued and any rights to additional shares pursuant to the employment agreement he previously entered into with Holdings as well as 1,000,000 shares of Series A Preferred Stock of the Company which he then held in consideration for 10,000 shares of the Company’s common stock. A required term and condition of the cancellation of the Series A Preferred Stock of the Company was the entry by Mr. Pohlmann into the Voting Agreement described below. As a result of this cancellation, there was a change of control whereby Mr. Pohlmann obtained voting control over the Company.

F-9

In December 2011, the Company sold an aggregate of 1,600,000 units to Mr. Pohlmann, each consisting of (a) one share of common stock and (b) one common stock purchase warrant to purchase one share of common stock with a five year term and an exercise price of $1.00 per share (collectively the “Units”) for an aggregate of $1,600,000 or $1.00 per Unit. A total of $200,000 of the amount due in connection with the purchase of the Units was due prior to December 31, 2011 (which amount has been received to date); a total of $200,000 is due prior to January 25, 2012 (which amount has been received to date); a total of $100,000 is due prior to February 28, 2012; a total of $1,000,000 is due prior to April 30, 2012; and a total of $100,000 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from Mr. Pohlmann, which notes shall not accrue interest until due.

In January 2012, the Company sold 52,500 Units to a third party in consideration for $52,500 or $1.00 per unit. A total of $22,500 of the amount due in connection with the purchase of the Units was payable at the time of the parties’ entry into the subscription agreement evidencing the sale; a total of $2,500 was due prior to February 28, 2012 (which amount has been received to date); a total of $25,000 is due prior to April 30, 2012; and a total of $2,500 is due prior to April 30, 2012, with any and all unpaid amounts treated for all purposes as an outstanding promissory note due to the Company from the third party, which notes shall not accrue interest until due.

In January 2012, Jerry Swinford resigned as President of the Company.

In January 2012, Jerry Swinford, the Company’s Executive Vice President and Chairman entered into an Intellectual Property Assignment agreement with the Company, pursuant to which he assigned all rights to the intellectual property and patents which he owned to the Company , provided that Mr. Swinford has a first priority security interest over the intellectual property and patents until such time as the promissory notes he was provided in connection with the IP Purchase Agreement are satisfied in full .

F-10

LBB & ASSOCIATES LTD., LLP

10260 Westheimer Road, Suite 310

Houston, TX 77042

Phone: (713) 800-4343 Fax: (713) 456-2408

Report of Independent Registered Public Accounting Firm

To the Board of Directors of

Coil Tubing Technology, Inc.

Spring, Texas

We have audited the accompanying consolidated balance sheets of Coil Tubing Technology, Inc. (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coil Tubing Technology, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ LBB & Associates Ltd., LLP

LBB & Associates Ltd., LLP

Houston, Texas

August 19, 2011

Except for Notes 6, 7, 11, 12, and 13, for which the date is January 18, 2012.

F-11

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009

	2010			2009
Assets

Current Assets:
Cash	$	330,313		$	239
Accounts receivable, net		280,353			173,467
Other current assets		3,795			512
Total Current Assets		614,461			174,218


Rental tools, net		463,439			378,912
Machinery and equipment, net		114,983			110,340
Intangible assets, net		1,193,333			-
Total Assets	$	2,386,216		$	663,470

Liabilities and Stockholders' Equity (Deficit)

Current Liabilities:
Accounts payable	$	386,993		$	478,848
Accrued liabilities		65,109			109,375
Related party notes payable - current portion		617,593			-
Total Current Liabilities		1,069,695			588,223

Long Term Liabilities:
Related party notes payable, net of current portion		557,407			-
Related party convertible notes payable		471,951			168,239
Line of credit - related party		-			187,255
Total Liabilities		2,099,053			943,717

Commitments and contingencies

Stockholders' Equity (Deficit):
Preferred Stock, $.001 par value, 5,000,000 shares authorized
Series A Preferred Stock, $.001 par value, 1,000,000 shares authorized; 0 and 1,000,000 shares issued and outstanding, respectively		-			1,000
Series B Preferred Stock, $.001 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding, respectively		1,000			1,000
Common Stock, $.001 par value, 200,000,000 shares authorized; 985,518 and 498,851 shares issued and outstanding, respectively		986			499
Additional paid-in capital		3,960,747			2,902,510
Accumulated deficit		(3,675,570	)		(3,217,220	)
Total Parent Company Stockholders' Equity (Deficit)		287,163			(312,211	)
Noncontrolling interest		-			31,964
Total Stockholders' Equity (Deficit)		287,163			(280,247	)

Total Liabilities and Stockholders' Equity (Deficit)	$	2,386,216		$	663,470

See accompanying notes to consolidated financial statements.

F-12

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2010 and 2009

	2010			2009
Revenue:
Product revenue	$	533,026		$	175,355
Rental revenue		1,218,824			592,427
Total revenue		1,751,850			767,782

Cost of revenue:
Cost of revenue products and rental income		1,291,701			494,648
Cost of revenue - depreciation of rental tools		140,593			148,405
Total cost of revenue		1,432,294			643,053

Gross profit		319,556			124,729

Operating Expenses:
General and administrative		678,181			921,836
Depreciation and amortization		44,397			34,720
Total operating expenses		722,578			956,556

Loss from operations		(403,022	)		(831,827	)

Other expenses:
Interest expense		(54,568	)		(9,921	)
Total other expense		(54,568	)		(9,921	)

Net loss		(457,590	)		(841,748	)

Less: net loss attributable to noncontrolling interests		-			77,851

Net loss attributable to common stockholders	$	(457,590	)	$	(763,897	)

Net loss per share :
Basic and diluted loss	$	(0.34	)	$	(0.61	)

Weighted average common shares outstanding:
Basic and diluted		1,347,307			1,259,307

See accompanying notes to consolidated financial statements.

F-13

COIL TUBING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2010 and 2009

	Preferred Stock										Common Stock				Paid-In		Accumulated			Noncontrolling
	Series A			Amount			Series B		Amount		Shares		Amount		Capital		Deficit			Interests			Totals

Balances at December 31, 2008		1,000,000		$	1,000			1,000,000	$	1,000		498,851	$	499	$	2,902,510	$	(2,453,323	)	$	67,815		$	519,501

Issuance of the Company's majority owned subsidiary's common stock for services		-			-			-		-		-		-		-		-			42,000			42,000

Net loss		-			-			-		-		-		-		-		(763,897	)		(77,851	)		(841,748	)
Balances at December 31, 2009		1,000,000			1,000			1,000,000		1,000		498,851		499		2,902,510		(3,217,220	)		31,964			(280,247	)

Issuance of common stock for cash		-			-			-		-		466,667		467		999,533		-			-			1,000,000
Stock distribution in connection with Depository
Trust and Clearing Corporation		-			-			-		-		-		-		760		(760	)		-			-
Issuance of common stock and cancellation of Series A Preferred Stock		(1,000,000	)		(1,000	)		-		-		10,000		10		16,972		-			(15,982	)		-
Issuance of common stock in connection with the cancellation of Coil Tubing Technology Holdings, Inc. common stock		-			-			-		-		10,000		10		15,972		-			(15,982	)		-
Option expense		-			-			-		-		-		-		25,000		-			-			25,000
Net loss		-			-			-		-		-		-		-		(457,590	)		-			(457,590	)
Balances at December 31, 2010		-		$	-			1,000,000	$	1,000		985,518	$	986	$	3,960,747	$	(3,675,570	)	$	-		$	287,163


See accompanying notes to consolidated financial statements.

F-14

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2010 and 2009


	2010			2009
Cash Flows From Operating Activities:
Net loss	$	(457,590	)	$	(841,748	)
Adjustments to reconcile net loss to net cash used
in operating activities:
Stock based compensation		25,000			86,400
Depreciation and amortization		184,990			183,126
Bad debt expense		-			18,359
Loss on sale of property and equipment		1,900			-
Changes in:
Accounts receivable		(106,886	)		(10,044	)
Other assets		(3,283	)		3,468
Accounts payable and accrued expenses		(136,121	)		377,321
Net cash used in operating activities		(491,990	)		(183,118	)

Cash Flows From Investing Activities:
Purchase of rental tools		(225,120	)		(176,482	)
Purchase of machinery and equipment		(52,073	)		(79,964	)
Purchase of intangible assets		(25,000	)		-
Proceeds from sale of machinery and equipment		7,800			23,400
Net cash used in investing activities		(294,393	)		(233,046	)

Cash Flows From Financing Activities:
Proceeds from (payments on) related party advances		(7,000	)		168,239
Proceeds from related party notes payable		310,712			-
Proceeds from sale of common stock		1,000,000			-
Proceeds (payment) from line of credit		(187,255	)		187,255
Net cash provided by financing activities		1,116,457			355,494

Net increase (decrease) in cash		330,074			(60,670	)
Cash at beginning of period		239			60,909
Cash at end of period	$	330,313		$	239

Supplemental disclosure of cashflow information:
Cash paid for:
Interest	$	10,286		$	-
Income taxes	$	-		$	-

Supplemental non-cash investing and financing activities:
Cancellation of Series A Preferred Stock	$	1,000		$	-
Issuance of common stock for non-controlling interest	$	31,964		$	-
Reclassification of related party advances to convertible notes	$	471,951		$	-
Issuance of notes payable for intangible assets	$	1,175,000		$	-

See accompanying notes to consolidated financial statements.

F-15

COIL TUBING TECHNOLOGY, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES

Organization and Business. Coil Tubing Technology, Inc. (“we” or the “Company”) was formed as a result of a series of transactions in November and December 2005, that resulted in a reverse merger, change in domicile and name change.

In November 2005, IPMC Holdings Corp., a Florida corporation, formed on October 4, 1998, Coil Tubing Technology Holdings, Inc. (our current wholly-owned subsidiary) (“Holdings”) and Grifco International, Inc. (“Grifco”) entered into an Agreement For Exchange of Common Stock (the “Exchange Agreement”), whereby IPMC Holdings Corp. (which is the predecessor to the Company) agreed to exchange 75,000,000 newly issued shares of its common stock (representing approximately 89% of IPMC Holdings Corp.’s then outstanding stock) to Grifco for 20,000,000 shares of Holdings’ common stock, representing 100% of Holdings’ then outstanding shares. As a result of the Exchange Agreement, Holdings became our wholly-owned subsidiary and we became a majority owned subsidiary of Grifco.

In connection with the reverse merger and to convert our state of incorporation and change our name, on November 30, 2005, Coil Tubing Technologies, Inc. was formed in Nevada. On December 8, 2005, IPMC Holdings Corp. entered into a Plan and Agreement of Merger and Reorganization (the “Merger”) with Coil Tubing Technologies, Inc., pursuant to which each outstanding share of IPMC Holdings Corp. was exchanged for one share of Coil Tubing Technologies, Inc. As a result of the Merger, we became the sole surviving corporate entity of the merger between IPMC Holdings Corp. and Coil Tubing Technologies, Inc. (taking the name “Coil Tubing Technology, Inc.” in connection with the Merger). Coil Tubing Technologies, Inc. had no business or operations prior to the Merger with IPMC Holdings Corp.

In August 2007, Grifco distributed 75,000,000 of our shares which it held to certain of its shareholders of record as of May 1, 2006 (the “Grifco Distribution”). We subsequently filed a lawsuit (see Note 12) in connection with the Grifco Distribution and agreed to issue an aggregate of 760,456 shares of our common stock to (i) Grifco shareholders and our shareholders as of the record date of the Grifco Distribution and (ii) an additional shareholder who purchased shares of our common stock following the Grifco Distribution as partial consideration in connection with the settlement of such lawsuit.

The Company specializes in the design of proprietary tools for the coil tubing industry. The Company concentrates on three categories of coil tubing applications: thru tubing fishing, thru tubing work over, and coil tubing drilling. The Company supplies a full line of tools to oil companies, coiled tubing operations and service companies.

Basis of Presentation. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Coil Tubing Technology Holdings, Inc., a Nevada corporation and its subsidiaries, Coil Tubing Technology, Inc., a Texas corporation and Precision Machining Resources, Inc., a Texas corporation. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

F-16

NOTE 1 - BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES – (Continued)

Noncontrolling Interest. The Company follows paragraph 810-10-45 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (‘ASC”) to recognize noncontrolling interest in Coil Tubing Technology Holdings, Inc., its formerly wholly-owned subsidiary, in the equity section of the consolidated balance sheets. During November 2010, the Company acquired the outstanding noncontrolling interest and now owns 100% of the equity of the Company’s subsidiary, Coil Tubing Technology Holdings, Inc. In accordance with ASC 810-10, the Company accounted for the transaction as an equity transaction.

Reclassifications. Certain amounts in the consolidated financial statements of prior periods have been reclassified to conform to the current presentation for comparative purposes.

Cash Equivalents. The Company considers all highly liquid investments with original purchased maturities of three months or less to be cash equivalents.

F-17

NOTE 1 - BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES – (Continued)

Lost or destroyed tools is not a significant source of revenue for the Company; however, the Company bills customers for the full cost of any tools which are lost and/or damaged in use and the cost and related accumulated depreciation are removed from the accounts and any resulting revenue or expense is recognized. The gain or loss on lost tools is recognized in the revenue section and cost of sales expense, respectively.

Intangible Assets. The Company’s intangible assets, which are recorded at cost, consist primarily of the unamortized cost basis of issued and pending patents. These assets are being amortized on a straight line basis over the estimated useful lives of 15 years. The Company continually evaluates the amortization period and carrying basis of intangible assets to determine whether subsequent events and circumstances warrant a revised estimated useful life or impairment in value. To date, no such impairment has occurred. To the extent such events or circumstances occur that could affect the recoverability of our Intangibles assets, we may incur charges for impairment in the future.

Earnings or Loss Per Share . Basic earnings or loss per common share equals net earnings or loss attributable to common shareholders divided by the weighted average shares outstanding during the year. Diluted earnings per share include the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred a net loss for the years ended December 31, 2010 and 2009, and therefore, basic and diluted earnings per share for those periods are the same as all potential common equivalent shares would be anti-dilutive. Potentially dilutive securities excluded from the diluted earnings per share calculation for December 31, 2010 consisted of outstanding options to purchase 4,000,000 shares of our common stock. All previously reported earnings per share amounts in the accompanying financial statements are being retroactively presented to reflect the stock distribution described in Note 12.

Stock Based Compensation. The Company accounts for stock-based employee compensation arrangements using the fair value method in accordance with the provisions of ASC 718 – Stock Compensation . ASC 718 requires that the fair value of employees awards issued, modified, repurchased or cancelled after implementation, under share-based payment arrangements, be measured as of the date the award is issued, modified, repurchased or cancelled. The resulting cost is then recognized in the statement of earnings over the service period.

F-18

NOTE 1 - BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES – (Continued)

Financial instruments. Financial instruments, as defined in FASB ASC 825, Financial Instruments, consist of cash, accounts receivable, accounts payable, accrued expenses, notes payable, and debt.

Customer Deposits. The Company receives deposits from customers under certain agreements. Deposits are usually liquidated over the period of product deliveries.

F-19

NOTE 2 – RENTAL TOOLS

Rental tools are depreciated over their estimated useful life of 5 years and are presented in the accompanying financial statements, net of accumulated depreciation of $633,531 and $489,356 as of December 31, 2010 and 2009, respectively. For the years ended December 31, 2010 and 2009, depreciation expense of $140,593 and $148,405, respectively, was included in the cost of sales.

NOTE 3 – MACHINERY AND EQUIPMENT

As of December 31, 2010 and 2009, machinery and equipment consisted of the following:

Description	Life	2010			2009

Furniture	7 years	$	1,879			$	1,879
Office equipment	5 years		25,767				16,411
Shop Equipment	5 years		55,727				51,869
Vehicle	4 Years		28,630				-
Leasehold improvements	5 years		95,699				98,753
Total machinery and equipment			207,702				168,912
Less: accumulated depreciation			(92,719	)			(58,572	)
Machinery and equipment, net		$	114,983			$	110,340

For the years ended December 31, 2010 and 2009, depreciation expense was $37,730 and $34,720, respectively. During the year ended December 31, 2010, the Company sold machinery and equipment for $9,700 and recorded a gain on the sale of $1,900.

F-20

NOTE 4 - INTANGIBLE ASSETS

Intangible assets consisted of the following at December 31, 2010 and 2009

Description	Life	2010		2009

Issued patents	15 years	$	550,000	$	-
Pending patents	15 years		650,000		-
Total intangible assets			1,200,000		-
Less: accumulated amortization			6,667		-
Intangible assets, net		$	1,193,333	$	-

Amortization expense amounting to $6,667 and $0 during the years ended December 31, 2010 and 2009, respectively is reflected as a component of operating expenses in the accompanying consolidated financial statements.

In November 2010, the Company entered into an Intellectual Property Purchase Agreement (the “IP Agreement”) with Jerry Swinford, the Company’s Chief Executive Officer. Pursuant to the IP Agreement, the Company agreed to purchase the patents and pending patents owned and held by Mr. Swinford for $25,000 cash and $1,175,000 in the form of two promissory notes payable to Mr. Swinford (the “Swinford Notes”). The Company obtained an independent valuation in order to determine the value of the patents and pending patents. (See Note 8)

NOTE 5 – INCOME TAXES

The Company follows Statement of Financial, Accounting Standards Certification 740 (ASC 740) for Income Taxes." Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.

The provision for refundable Federal income tax consists of the following:

	December 31,			December 31,
	2010			2009
Refundable Federal income tax
attributable to current operations	$	150,000		$	257,000
Less change in valuation allowance		(150,000	)		(257,000	)
Net refundable amount	$	-		$	-

F-21

NOTE 5 – INCOME TAXES – (Continued)

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

	December 31,			December 31,
	2010			2009
Deferred tax asset attributable to:
Net operating loss carryover	$	1,250,000		$	1,100,000
Less, valuation allowance		(1,250,000	)		(1,100,000	)
Net deferred tax asset	$	-		$	-

At December 31, 2010, the Company had an unused net operating loss carryover of approximately $3.7 million that is available to offset future taxable income which expires beginning in 2028.

There are no significant differences between the Company’s operating results for financial reporting purposes and for income tax purposes.

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

The total number of shares of stock of all classes which the Company has authority to issue is two hundred and five million (205,000,000), of which five million (5,000,000) are shares of Preferred Stock with a par value of $0.001 per share ("Preferred Stock"), and two hundred million (200,000,000) are shares of Common Stock with a par value of $0.001 per share ("Common Stock").

All share amounts presented herein reflect retroactive recognition of the 1:300 reverse stock split approved in September 2011.

COMMON STOCK

As of December 31, 2010 and 2009, the Company had 985,518 shares and 498,851 shares of its $0.001 par value common stock issued and outstanding, respectively.

F-22

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT) – (Continued)

PREFERRED STOCK

The total number of designated shares of the Company’s Series A Preferred Stock is one million (1,000,000). As of December 31, 2010 and 2009, the Company had -0- and 1,000,000 shares of its Series A preferred stock, $.001 par value issued and outstanding, respectively.

The total number of designated shares of the Company’s Series B Preferred Stock is one million (1,000,000). As of December 31, 2010 and 2009, the Company had 1,000,000 shares of its Series B preferred stock, $0.001 par value issued and outstanding, respectively.

The Series B Preferred Stock has no dividend rights, no liquidation preference, no redemption rights, no voting rights and conversion rights of 20 shares of common stock for each 1 preferred share during the Option Period (the “Option”). The “Option Period” that allows the holder of such Series B Preferred Stock to purchase shares of Series A Preferred Stock of the Company for aggregate consideration of $100, lasts two (2) years from the date that the holder of the Series A Preferred Stock no longer desires to hold the Series A Preferred Stock (November 30, 2010).

Series A Preferred Stock – Coil Tubing Technology Holdings, Inc.

The Series A Preferred Stock of our wholly-owned subsidiary Coil Tubing Technology Holdings, Inc., has no dividend rights, no liquidation preference, no redemption rights and no conversion rights and has 51% voting rights or voting equal to 51% of the Company’s outstanding common stock. The Series A Preferred Stock was acquired by the Company in November 2010. (See Note 11).

During 2010 the Company issued 486,667 shares of common stock as follows:

In August 2010, the Company sold 33,333 shares of the Company’s common stock to Herbert C. Pohlmann, the Company’s majority shareholder in consideration for $100,000 or $3.00 per share.

In September 2010, the Company sold 100,000 shares of the Company’s common stock to Mr. Pohlmann in consideration for $300,000 or $3.00 per share.

In October 2010, the Company sold 66,667 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $3.00 per share.

In November 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share.

In December 2010, the Company sold 133,333 shares of the Company’s common stock to Mr. Pohlmann in consideration for $200,000 or $1.50 per share.

F-23

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT) – (Continued)

In November 2010, the Company issued 10,000 shares of the Company’s common stock to Jerry Swinford pursuant to the terms of his Executive Employment Agreement described in Note 11.

In November 2010, the Company issued 10,000 shares of the Company’s common stock to Wayne Tynon pursuant to the terms of his Executive Employment Agreement described in Note 11.

In February 2010, the Company’s sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 750,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in February 2010.

In September 2010, the Company’s sole Director and its majority shareholder approved the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of Nevada, pursuant to which our authorized shares of common stock were increased to 1,990,000,000 shares of common stock $0.001 par value per share and we re-authorized 5,000,000 shares of preferred stock $0.001 par value per share, which was filed and effective with the Secretary of State of Nevada in September 2010.

NOTE 7 - STOCK OPTIONS

During the year ended December 31, 2010, the Company granted an officer and employee 6,667 stock options each, pursuant to the terms of their employment agreements (See Note 11 below). The Company recognized total option expense of $25,000 for one-fourth of the options that vested on the grant date. The remaining amount of unamortized options expense at December 31, 2010 is $75,000. The fair value was determined using a Black-Scholes option-pricing model. The intrinsic value of outstanding as well as exercisable options at December 31, 2010 was $0.

Summary of options outstanding and exercisable as of December 31, 2010 is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contract Term in years
Outstanding at January 1, 2010		-	$	-
Granted		13,333		7.50		10
Exercised		-		-
Forfeited and canceled		-		-
Outstanding at December 31, 2010		13,333	$	7.50		9.9

Exercisable at December 31, 2010		13,333	$	7.50		9.9

F-24

NOTE 8 - RELATED PARTY TRANSACTIONS

NOTES PAYABLE – RELATED PARTIES AND OTHER

Convertible Promissory Notes – Herbert C. Pohlmann

In February 2010, the Company entered into a Convertible Promissory Note (as amended and restated from time to time, the “Note”) with Mr. Pohlmann (the “Lender”), pursuant to which the Lender converted $100,000 of a prior advance, $10,000 of expenses associated with the loan and accrued interest of $3,950 into a Note for the principal sum of $113,950. The Note is due and payable on or before February 1, 2012 (the “Maturity Date”). Interest on the unpaid balance of the Note accrues at a rate of 12% per annum payable monthly on or before the last business day of each month beginning in February, 2010. At the option of the Lender, the monthly interest accruing after February 1, 2010 shall accrue until such time as part or all of the principal is repaid in cash to Lender or may be paid by the Company to the Lender in shares of the Company’s common stock. The Note is convertible into shares of the Company’s common stock, at a conversion price equal to $0.003 per share.

In February 2010, the Company entered into a second Convertible Promissory Note (as amended and restated from time to time, the “Second Note”) with the Lender, pursuant to which the Lender converted prior advances totaling $42,880 plus $5,574 in interest on said loans into a Note for the principal sum of $48,454. The Second Note is due and payable on or before February 1, 2012 (the “Second Note Maturity Date”). Interest on the unpaid balance of the Second Note accrues at a rate of 12% per annum payable monthly on or before the last business day of each month beginning in February 2010. At the option of the Lender, the monthly interest accruing after February 1, 2010 shall accrue until such time as part or all of the principal is repaid in cash to Lender or may be paid by the Company to the Lender in shares of the Company’s common stock. The Second Note is convertible into shares of the Company’s common stock, at a conversion price equal to $0.003 per share.

In February 2010, the Company entered into a third Convertible Promissory Note (as amended and restated from time to time, the “Third Note”) with the Lender, to which the Lender loaned the Company $50,000. The Third Note is due and payable on or before February 1, 2012 (the “Third Note Maturity Date”). Interest on the unpaid balance of the Third Note accrues at a rate of 12% per annum payable monthly on or before the last business day of each month beginning in February 2010. At the option of the Lender, the monthly interest accruing after February 1, 2010 shall accrue until such time as part or all of the principal is repaid in cash to Lender or paid in shares of the Company’s common stock at a conversion price of $0.003 per share.

The notes referred to above are collectively referred to as the “February notes”.

In May 2010, the Company entered into a fourth Convertible Promissory Note (as amended and restated from time to time, the “Fourth Note”) with the Lender, pursuant to which the Lender converted prior advances totaling $225,000, plus $34,547 of expenses incurred by Lender in connection with such note into a Note for the principal sum of $259,547. The Fourth Note is due and payable on or before May 13, 2012 (the “Fourth Note Maturity Date”). Interest on the unpaid balance of the Fourth Note accrues at a rate of 12% per annum payable monthly on or before the last business day of each month beginning in June 2010. At the option of the Lender, the monthly interest accruing after May 13, 2010 shall accrue until such time as part or all of the principal is repaid in cash to Lender or may be paid by the Company to the Lender in shares of the Company’s common stock. The Fourth Note is convertible into shares of the Company’s common stock, at a conversion price equal to $0.003 per share. This note is referred to as the “May note”.

F-25

NOTE 8 - RELATED PARTY TRANSACTIONS – (Continued)

As described below under Note 13, all of the Convertible Promissory Notes described above were converted into shares of the Company’s Common Stock in May 2011, in connection with the entry into the Make Whole Agreement.

Promissory Notes – Jerry Swinford

The second note in the amount of $700,000 is due September 15, 2015, and is payable in monthly installments of the lesser of $12,963 or the amount outstanding of the note per month, with the first such payment due on February 15, 2011. The Company also agreed to grant Mr. Swinford a security interest in all of the Company’s assets in connection with and to secure the repayment of the Swinford Notes and Holdings also agreed, pursuant to a Guaranty, to guaranty the repayment of the Swinford Notes. Mr. Pohlmann agreed to subordinate the repayment of his Convertible Promissory Notes (as described above) to the repayment of the Swinford Notes.

In connection with the IP Agreement, Mr. Swinford agreed to cancel 1,000,000 shares of Series A Preferred Stock. As a result of this cancellation, there was a change of control whereby Mr. Pohlmann became the majority shareholder.

OTHER

Advances

In October 2009, Herbert C. Pohlmann, the Company’s majority shareholder paid legal fees on behalf of the Company totaling $161,239. In February 2010, the advance was converted into a promissory note as discussed above.

In June 2009, Jerry Swinford, the Company’s Chief Executive Officer, advanced the Company $7,000 to use in its operations. In September 2010, the advance was repaid in full.

These advances are non-interest bearing, unsecured and due on demand and are being shown on the 2009 year-end balance sheet as related party advances.

F-26

NOTE 8 - RELATED PARTY TRANSACTIONS – (Continued)

As of December 31, 2010 and 2009, the following promissory notes were outstanding:

	2010		2009
Promissory note - Jerry Swinford	$	475,000	$	-
Promissory note - Jerry Swinford		700,000		-
Total debt		1,175,000		-
Less current portion		617,593		-
Long-term debt	$	557,407	$	-

As of December 31, 2010 and 2009, the Convertible notes payable totaling $471,951 and $168,239, respectively, were classified as long-term.

NOTE 9 – LINE OF CREDIT – RELATED PARTY

In June 2009, the Company entered into a Line of Credit Promissory Note (the “Line of Credit”) with Charles Wayne Tynon, the former Chief Executive Officer of the Company’s wholly-owned subsidiary. Pursuant to the Line of Credit, Mr. Tynon agreed to loan the Company up to $250,000. Any amounts borrowed under the Line of Credit bear interest at the rate of 6% per annum, and are payable at maturity, which maturity date was June 1, 2011. The Line of Credit is secured by a Security Agreement entered into between the Company and Mr. Tynon (the “Security Agreement”). At any time after June 1, 2010, Mr. Tynon can convert the then outstanding amount of the Line of Credit into shares of the Company’s common stock at a conversion price of $0.0033333 per share. The Security Agreement provides Mr. Tynon a first priority security interest in all of the Company’s current or future, machinery and Equipment, inventory and proceeds or products derived there from, and rights under contracts, causes of action, documents, and evidence of title to inventory and contract rights. In December 2010, the line of credit and associated interest was paid in full. See Note 11.

NOTE 10 – CONCENTRATION OF RISK

The Company had gross sales of $1,751,850 and $767,782 for the years ended December 31, 2010 and 2009, respectively. The Company had three customers that represented approximately 18%, 14%, and 11% of gross sales for the year ended December 31, 2010. The Company had five customers that represented approximately 23%, 11%, 11%, 11% and 11% of gross sales for the year ended December 31, 2009.

NOTE 11 – AGREEMENTS

Cancellation Agreement

In November 2010, the Company entered into a Cancellation, Resignation, Repayment and Issuance Agreement (the “Cancellation Agreement”), with Charles Wayne Tynon, the former Chief Executive Officer of Coil Tubing Technology Holdings, Inc. (“Holdings”), the Company’s wholly-owned subsidiary, and the Company, pursuant to which Mr. Tynon agreed to (a) resign as Chief Executive Officer of Holdings; (b) agree to a payment schedule for the repayment of the Line of Credit (described in Note 9, above); (c) cancel 1,140,000 shares of Holdings which he either held or was due pursuant to the terms of a Compensation Agreement, previously entered into between Holdings and Mr. Tynon (the “Compensation Agreement”); and to (d) cancel the Compensation Agreement. The Company in turn agreed to repay the Line of Credit pursuant to the terms of the Cancellation Agreement and to issue Mr. Tynon 10,000 shares of the Company’s common stock.

F-27

As discussed in Note 1, the Company accounted for the issuance of common stock, to Mr. Tynon, in exchange for Coil Tubing Technology Holdings, Inc. common stock as an equity transaction, in accordance with ASC 810-10-45.

Employment Agreements

Jerry Swinford

In November 2010, the Company entered into an Executive Employment Agreement with Jerry Swinford, pursuant to which Mr. Swinford agreed to serve as Chief Executive Officer of the Company for five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement) and the Company agreed to pay Mr. Swinford a base salary of not less than $108,000 per year, with such salary payable at the rate of $120,000 per year for the months of November and December 2010 and $108,000 per year beginning in January 2011. The Company also agreed to pay Mr. Swinford a bonus of $10,000 upon his entry into the agreement and provide him the right to earn an additional bonus (the “Bonus”). The Bonus shall be paid at the end of each calendar year during the term of the agreement in the event the Company has positive earnings before interest, taxes, depreciation and amortization (minus extraordinary items including stock buybacks, acquisitions and other extraordinary items as determined at the reasonable discretion of the Board of Directors of the Company, and legal fees associated with such items) (“EBITDA”) for the prior calendar year ended December 31 (the “Prior Year”). The Bonus is based on a percentage of Mr. Swinford’s annual base salary for the Prior Year (the “Prior Year’s Salary”, provided that if the annual base salary has changed during such Prior Year, the Prior Year’s Salary shall equal the annual base salary at the end of such Prior Year), as provided below. If EBITDA for the Prior Year is:

viii.

less than $2,000,000, no Bonus shall be due;

ix.	between $2,000,000 and $3,000,000, the Bonus shall be equal to 20% of the Prior Year’s Salary;

x.	between $3,000,000 and $4,000,000, the Bonus shall be equal to 30% of the Prior Year’s Salary;

xi.	between $4,000,000 and $5,000,000, the Bonus shall be equal to 40% of the Prior Year’s Salary;

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NOTE 11 – AGREEMENTS – (Continued)

xii.	between $5,000,000 and $6,000,000, the Bonus shall be equal to 50% of the Prior Year’s Salary;

xiii.

between $6,000,000 and $7,000,000 the Bonus shall be equal to 75% of the Prior Year’s Salary; or

xiv.	$7,000,000 or more, the Bonus shall be equal to 100% of the Prior Year’s Salary.

Additionally, pursuant to the Executive Employment Agreement, the Company also granted Mr. Swinford an option to purchase 6,667 shares of the Company’s common stock (the “Option”), with 1,667 options vesting upon the parties entry into the agreement (the “Initial Option”), with options to purchase the remaining amount of the Option vesting to Mr. Swinford at the rate of one- fourth of such Option per year, over the three years following such grant date, provided that Mr. Swinford is still employed (either as an officer or Director) by the Company on such anniversary date(s). The Option has an exercise price (the “Option Price”), equal to the mean between the highest and lowest quoted selling prices of the Company’s common stock on the OTC Pinksheets trading market or Over-The-Counter Bulletin Board (whichever is applicable) on the last day that the Company’s common stock trades prior to the end of such calendar year (provided that the Initial Option has an Option Price equal to $0.025 per share). The Options have a term of 10 years, are subject to the Company’s 2010 Stock Incentive Plan, and include a cashless exercise provision.

The Company recognized total option expense of $25,000 for one-fourth of the options that vested on the grant date. The remaining amount of unamortized options expense at December 31, 2010 is $75,000. The fair value was determined using a Black-Scholes option-pricing model using the following assumptions, expected volatility of 345%, expected dividends of 0%, expected term of 10 years and a risk-free rate of 2.9%.

As discussed in Note 1, the Company accounted for the issuance of common stock, to Mr. Swinford, in exchange for Coil Tubing Technology Holdings, Inc. common stock as an equity transaction, in accordance with ASC 810-10-45.

Jason Swinford

In November 2010, Jason Swinford, Jerry Swinford’s son, also entered into an Executive Employment Agreement with the Company, whereby Jason Swinford agreed to serve as the Chief Operating Officer of the Company in consideration for an annual base salary of $132,000 per year, for a term of five years (automatically renewable for additional one year terms unless terminated by either party as provided in the agreement). Jason Swinford also received a bonus of $10,000 upon his entry into the agreement, and substantially similar rights to receive a Bonus and Options as Jerry Swinford has as provided above.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Litigation

In March 2010, the Company filed a Motion for Fairness Hearing to Issue Securities Pursuant to Section 3(a)(10) of the Securities Act of 1933, as Amended (the “Motion”) in order to issue shares of common stock to certain prior shareholders of the Company, Grifco International, Inc., a Nevada corporation (“Grifco”), and Mr. Pohlmann in order to settle an ongoing lawsuit. The court subsequently held a fairness hearing and approved the issuance of 760,456 shares of the Company’s common stock, plus additional shares issuable due to rounding (the “Shares”) without restrictive legend pursuant to an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended (the “Act”), of which 756,399 shares were issued in May and June 2011 and which lawsuit was subsequently dismissed. The issuance of the common stock was accrued as of December 31, 2010 and recorded as a stock dividend.

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As a result of the court order, we reclassified approximately $760 from the Company’s accumulated deficit account to its common stock account. The $760 represents the fair value of the shares issued pursuant to the court order.

All previously reported earnings per share amounts in the accompanying financial statements are being retroactively presented to reflect the issuance of the 760,456 shares.

Leases

The Company sub-leases approximately 6,000 square feet in Spring, Texas that serves as its corporate offices and machine shop. The lease is on a month-to-month basis at a monthly cost of $3,325. Additionally, the Company leases space for its sales offices in (1) Dallas, Texas at a cost of $640 per month, (2) Kilgore, Texas at a cost of $500 per month and (3) Aultman, Pennsylvania at a cost of $600 per month. The Dallas and Kilgore leases are on a month-to-month basis and the Pennsylvania lease expires in May 2012. The Company has a sales office in Haynesville, Louisiana which lease expires in August 2012, for which the Company pays recurring operating costs only.

Years Ending December 31,	Amount
2011	$	7,200
2012		2,400
Total	$	9,600

NOTE 13 - SUBSEQUENT EVENTS

In January 2011, the Company’s sole Director and its majority shareholder, approved the Company’s 2010 Stock Incentive Plan, which allows the Board of Directors to grant up to an aggregate of 83,333 qualified and non-qualified stock options, restricted stock and performance based awards of securities to the Company’s officers, Directors and consultants to help attract and retain qualified Company personnel.

In January 2011, the Company’s majority shareholder, Mr. Pohlmann, and the Company’s sole Director, Jerry Swinford, entered into a Voting Agreement, pursuant to which Mr. Pohlmann agreed to vote the shares of the Company which he owns as directed by Mr. Swinford from time to time, to appoint at least 40% of the Company’s Board of Directors, rounded up to the nearest whole number of Directors. The Company currently anticipates increasing the number of its Board of Directors to five (5), which would provide Mr. Swinford the rights to direct Mr. Pohlmann to appoint two (2) of such five (5) Directors, as determined by Mr. Swinford in his sole discretion, pursuant to the Voting Agreement, which remains in effect until December 31, 2015.

In January 2011, the Company sold 666,667 shares of the Company’s common stock to Mr. Pohlmann for consideration of $1,000,000 or $1.50 per share.

In February 2011, the Company sold 333,333 shares of the Company’s common stock to Mr. Pohlmann for consideration of $500,000 or $1.50 per share.

In May 2011, the Company sold 166,667 shares of the Company’s common stock to Mr. Pohlmann for consideration of $250,000 or $1.50 per share.

In May 2011, the Company sold 233,333 shares of the Company’s common stock to Mr. Pohlmann for consideration of $350,000 or $1.50 per share.

F-30

NOTE 13 - SUBSEQUENT EVENTS – (Continued)

In May 2011, the Company and Mr. Pohlmann entered into an Anti-Dilution and Make Whole Agreement, which was subsequently amended in June 2011 (as amended, the “Make Whole Agreement”). Pursuant to the Make Whole Agreement, we agreed to adjust the purchase price of Mr. Pohlmann’s August 2010, September 2010 and October 2010 purchases of 200,000 shares of our common stock from $3.00 per share to $1.50 per share (and to therefore issue Mr. Pohlmann an additional 200,000 shares of common stock). We also agreed to provide Mr. Pohlmann anti-dilutive rights in connection with the 760,456 shares of common stock issuable to shareholders of Grifco and the Company as described in Note 12, above, in connection with the shares of common stock which he held as of the issuance date of such shares and the Convertible Promissory Notes which he held as of such issuance date. The consideration for the Make Whole Agreement was Mr. Pohlmann’s continued funding of the Company throughout 2010 and through the date of such Make Whole Agreement. As a result of the anti-dilutive rights, Mr. Pohlmann was issued 8,630,821 shares of common stock in connection with the anti-dilutive rights associated with the shares of common stock he held and 594,397 shares of common stock in connection with the conversion of the Convertible Promissory Notes (and accrued interest thereon) into shares of the Company’s common stock based on an adjusted conversion rate of $0.2314542 per share, which notes were automatically converted into shares of common stock in connection with the parties entry into the Make Whole Agreement and in order to maintain his proportional ownership rights in the Company following such issuance of 760,456 shares described in Note 12.

As a result of the issuances made pursuant to the Make Whole Agreement and the issuances described in Note 12 and 13, the Company has approximately 13,331,709 shares of common stock issued and outstanding of which approximately 11,585,734 shares (or 87%) are held by Mr. Pohlmann.

In July 2011, the Company sold 333,333 shares of the Company’s common stock to a third party for consideration of $500,000 or $1.50 per share.

F-31

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