UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q


(Mark
One)





[X]
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarter ended March 31, 2009





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





For the
transition period from __________ to __________





Commission
file number: 333-144677





COIL TUBING TECHNOLOGY
HOLDINGS, INC.


(Exact
name of small business issuer as specified in its charter)





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





19511
Wied Rd. Suite E


Spring, Texas
77388


(Address
of principal executive offices)





281-651-0200


(Registrant's
telephone number)





Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  þ
Yes   o No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). o
Yes   o No





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





Large
      Accelerated  Filer     o
            Accelerated
      Filer            oNon-Accelerated
      Filer        o
            Smaller
      reporting companyþ


(Do
not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). o
Yes   þ No





As of
June 15, 2009, there were outstanding 22,050,000 shares of the registrant’s
common stock, $.001 par value per share, which amount does not include 750,000
shares which the registrant has agreed to issue to Charles Wayne Tynon, as
described below under “Item 2. Unregistered Sales of Equity Securities And Use
Of Proceeds,” which have not been physically issued to date.





PART
I -- FINANCIAL INFORMATION





ITEM1.  FINANCIAL
STATEMENTS





COIL
TUBING TECHNOLOGY HOLDINGS, INC.
 
 Consolidated
Balance Sheets
 March 31,
2009 and December 31, 2008
  ASSETSMarch
      31,2009
                                    (unaudited)
                                  
                                  December
      31, 2008CURRENT
      ASSETS:Cash
                                  $
                                  24,388
                                  
                                  
                                  $
                                  60,909Accounts
      receivable, net
                                  
                                  43,973
                                  
                                  
                                  
                                  181,782Total
      Current Assets
                                  
                                  68,361
                                  
                                  
                                  
                                  242,691Rental
      tools, net
                                  
                                  356,175
                                  
                                  
                                  
                                  374,068Machinery
      and equipment, net
                                  
                                  48,097
                                  
                                  
                                  
                                  65,264Other
      assets
                                  
                                  5,850
                                  
                                  
                                  
                                  3,980TOTAL
      ASSETS
                                  $
                                  478,483
                                  
                                  
                                  $
                                  686,003LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                                  $
                                  31,091
                                  
                                  
                                  $
                                  166,502Total
      Current Liabilities
                                  
                                  31,091
                                  
                                  
                                  
                                  166,502Total
      Liabilities
                                  
                                  31,091
                                  
                                  
                                  
                                  166,502CommitmentsSTOCKHOLDERS’
      EQUITY:Preferred
      Stock at $0.001 par value: 10,000,000 authorized;
      1,000,000
                                    shares issued and outstanding, as of March 31, 2009 and December
      31,
                                    respectively
                                  
                                  1,000
                                  
                                  
                                  
                                  1,000Common
      stock at $0.001 par value; 500,000,000 authorized; 22,050,000
                                    and 21,000,000 shares issued and outstanding, as of March 31, 2009 and
                                    December 31, 2008 respectively
                                  
                                  22,050
                                  
                                  
                                  
                                  21,000Additional
      paid-in capital
                                  
                                  2,714,112
                                  
                                  
                                  
                                  2,691,162Accumulated
      deficit
                                  
                                  (2,289,770
                                  )
                                  
                                  
                                  (2,193,661
                                  )Total
      Stockholders’ Equity
                                  
                                  447,392
                                  
                                  
                                  
                                  519,501TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                  $
                                  478,483
                                  
                                  
                                  $
                                  686,003See
      accompanying notes to the consolidated financial
statements
 F-1
 COIL
TUBING TECHNOLOGY HOLDINGS, INC
 
 Consolidated
Statements of Operations
 For the
Three Month Periods Ended March 31, 2009 and 2008
 (Unaudited)
  March
      31, 2009
                        
                        
                        March
      31, 2008Revenue:Product
      sales
                        
                        $
                        23,428
                        
                        
                        $
                        412,093Rental  income
                        
                        
                        111,566
                        
                        
                        
                        170,569Total
      revenue
                        
                        
                        134,994
                        
                        
                        
                        582,662Cost
      of sales:
                          Cost
      of sales products and rental income
                          Cost
      of sales - depreciation
                        
                        
                        18,521
                          38,689
                        
                        
                        
                        152,863
                          31,783Total
      cost of sales
                        
                        
                        57,210
                        
                        
                        
                        184,646Gross
      profit
                        
                        
                        77,784
                        
                        
                        
                        398,016Operating
      expenses:General
      and administrative
                        
                        
                        142,844
                        
                        
                        
                        238,153Depreciation
      and amortization
                        
                        
                        5,326
                        
                        
                        
                        3,846Total
      operating expenses
                        
                        
                        148,170
                        
                        
                        
                        241,999Income
      (loss) from continuing operations
                        
                        
                        (70,386
                        )
                        
                        
                        156,017Loss
      on sale of assets
                        
                        
                        (1,942
                        )
                        
                        
                        -Loss
      from discontinued operations
                        
                        
                        (23,781
                        )
                        
                        
                        (23,514
                        )Net
      income (loss)
                        
                        $
                        (96,109
                        )
                        
                        $
                        132,503Basic
      and diluted loss per share:Continuing
      operations
                        
                        $
                        0.00
                        
                        
                        $
                        0.00Discontinued
      operations
                        
                        $
                        0.00
                        
                        
                        $
                        0.00Weighted
      common shares outstanding – basic and diluted
                        
                        
                        21,980,000
                        
                        
                        
                        21,000,000See
      accompanying notes to the consolidated financial
    statements.
 F-2
 COIL
TUBING TECHNOLOGY HOLDINGS, INC.
 Consolidated
Statements of Cash Flows
 For the
Three Month Periods Ended March 31, 2009 and 2008
 (Unaudited)
 
 March
      31, 2009
                        
                        
                        March
      31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                        
                        $
                        (96,109
                        )
                        
                        $
                        132,503Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:Depreciation
                        
                        
                        44,015
                        
                        
                        
                        35,629Gain/Loss
      on sale of asset
                        
                        
                        1,942
                        
                        
                        
                        -Changes
      in assets and liabilities:(Increase)
      decrease in accounts receivable
                        
                        
                        137,809
                        
                        
                        
                        (16,058
                        )(Increase)
      decrease in other assets
                        
                        
                        (1,871
                        )
                        
                        
                        500Increase
      (decrease) in accounts payable and accrued expenses
                        
                        
                        (111,411
                        )
                        
                        
                        (16,013
                        )Increase
      (decrease) in customer deposits
                        
                        
                        -
                        
                        
                        
                        (62,685
                        )Cash
      provided by (used in) Operating Activities
                        
                        
                        (25,625
                        )
                        
                        
                        73,876CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of machinery and equipment
                        
                        
                        (24,296
                        )
                        
                        
                        (35,139
                        )Proceeds
      from sale of machinery and equipment
                        
                        
                        13,400
                        
                        
                        
                        -Net
      Cash from Investing Activities
                        
                        
                        (10,896
                        )
                        
                        
                        (35,139
                        )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from capital contributions
                        
                        
                        -
                        
                        
                        
                        500,000Net
      Cash from Financing Activities
                        
                        
                        -
                        
                        
                        
                        500,000NET
      INCREASE (DECREASE) IN CASH
                        
                        
                        (36,521
                        )
                        
                        
                        538,737CASH
      AT BEGINNING OF PERIOD
                        
                        
                        60,909
                        
                        
                        
                        170,411CASH
      AT END OF PERIOD
                        
                        $
                        24,388
                        
                        
                        $
                        709,148SUPPLEMENTAL
      SCHEDULE OF CASH FLOW ACTIVITIES:Cash
      Paid For:Income
      taxes
                        
                        $
                        -
                        
                        
                        $
                        -Interest
                        
                        $
                        -
                        
                        
                        $
                        -
 See
accompanying notes to the consolidated financial statements.
 F-3
 COIL
TUBING TECHNOLOGY HOLDINGS, INC.
 Notes to
the Consolidated Financial Statements
 (Unaudited)
 
 NOTE
1 -  ORGANIZATION AND OPERATIONS
 
 Coil
Tubing Technology Holdings, Inc. (the “Company”) was incorporated on July 2,
1999 under the laws of the State of Texas. In May 2007, the Company converted to
a Nevada corporation. The Company specializes in the design of proprietary tools
for the coil tubing industry. The Company concentrates on four categories of
coil tubing applications: thru tubing fishing, thru tubing work over, pipeline
clean out, and coil tubing drilling.  The Company supplies a full line
of tools to oil companies, coiled tubing operations and service
companies.
 
 The
Company is a majority owned subsidiary of Coil Tubing Technology, Inc., a Nevada
corporation, (“Coil Tubing”) which is a non-reporting company. Coil Tubing
agreed to distribute to its shareholders of record, date yet to be determined,
100% of the common shares of the Company that it owns totaling 20,000,000
million shares or 95% of the issued and outstanding shares. Subsequent to the
spin-off, Coil Tubing will no longer have an ownership interest in the Company.
Notwithstanding the legal form of the distribution, the distribution will be
accounted for as a reverse spin off in accordance with Emerging Issues Task
Force Issue No. 02-11, “Accounting for Reverse Spin-offs.” Accordingly, the
Company is considered the divesting entity and treated as the “accounting
successor” to Coil Tubing for financial reporting purposes. This is required
because the business transferred generated all of Coil Tubing revenue and
constituted a majority of its book value. Coil Tubing will be treated as
discontinued operations following the spin-off.
 
 As a result of the application of EITF
02-11, the accompanying consolidated financial statements included all the
accounts of the Company and its wholly-owned subsidiaries, Coil Tubing
Technology, Inc., a Texas corporation ("CTT"), and Precision Machining
Resources, Inc., a Texas corporation, and Coil Tubing, our parent
company.
  The accompanying unaudited
financial statements of Coil Tubing Technology Holdings, Inc. have been prepared
in accordance with accounting principles generally accepted in the United States
of America and the rules of the Securities and Exchange Commission ("SEC"), and
should be read in conjunction with the audited financial statements and notes
thereto contained in the Company's filing with the SEC on Form 10-K. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year
December 31, 2008 as reported in Form 10-K, have been omitted.
  NOTE
2 -  GOING CONCERN
 
 The
accompanying financial statements have been prepared on a going concern basis
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. As of March 31, 2009 and December 31, 2008
respectively, the Company had accumulated deficits of $2,289,770 and $2,193,661
and, for the three months then ended March 31, 2009, had net loss of $96,109.
These factors raise substantial doubt about the Company’s ability to continue as
a going concern.
 
 While the
Company is attempting to increase revenues, the Company’s cash position may not
be sufficient enough to support its daily operations.  Management
intends to raise additional funds by way of a public or private
offering.  Management believes that the actions presently being taken
to further implement its business plan and generate revenues provide the
opportunity for the Company to continue as a going concern.  While the
Company believes in the viability of its strategy to increase revenues and in
its ability to raise additional funds, there can be no assurances to that
effect.  The Company is dependent upon its ability to achieve
profitable operations or obtain adequate financing. The financial statements do
not include any adjustments related to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in
existence.
 
 NOTE
3– STOCKHOLDERS’ EQUITY
 
 COMMON
STOCK
 
 As of
March 31, 2009 and December 31, 2008, the Company had 22,050,000 and 21,000,000
shares respectively of its $.001 par value common stock issued and
outstanding.
 
 In
January 2009, the Company issued 1,050,000 shares of common stock in connection
with a compensation agreement with our chief executive officer valued at
$24,000. The expense was recorded at December 31, 2008. The Company valued
the preferred shares at their fair value on the date of issuance of such
shares.
 F-4
 NOTE
4- REVERSE SPIN-OFF & DISCONTINUED OPERATIONS
 
 The
Company is a majority owned subsidiary of Coil Tubing which is a
non-reporting company. Coil Tubing agreed to distribute to its shareholders
of record, on a date which has not yet been established, 100% of the common
shares of the Company that it owns, totaling 20,000,000 million shares or
91% of the outstanding shares of the Company. Subsequent to the spin-off, Coil
Tubing will no longer have an ownership interest in the Company.
Notwithstanding the legal form of the distribution, the distribution has
been accounted for as a reverse spin off in accordance with Emerging Issues
Task Force Issue No. 02-11, “Accounting for Reverse Spin-offs.” Accordingly, the
Company is considered the divesting entity and treated as the
“accounting successor” to Coil Tubing for financial reporting purposes.
This is required based on the business transferred generated all of Coil
Tubing’s revenue and constituted a majority of its book value and
accordingly, Coil Tubing is being presented as discontinued
operations subsequent to the spin-off.
 
 The Company recorded $23,781 and
$23,514 as a loss from discontinued operations for the three months ended March
31, 2009 and 2008, respectively.  Other than its ownership interest in
the Company (which is not recognized for accounting purposes as explained above)
Coil Tubing has no assets and operations as of March 31, 2009 and December 31,
2008.  However, Coil Tubing incurred legal expenses which were paid by
the Company in 2009 and 2008 and has a liability to the Company as of March 31,
2009 and December 31, 2008.  The loss from discontinued operations for
the months ended March 31, 2009 and 2008 was due to professional
fees.
 
 The
interim financial information of the Parent as of March 31, 2009 was as
follows:
 F-5
 PARENT
COMPANY FINANCIAL STATEMENTS (UNCONSOLIDATED)
 
 March
      31, 2009Balance
      Sheet:Total
    assets
                    
                    $
                    -Advances
      by Coil Tubing Technology Holdings, Inc.
                    
                    
                    267,871Total
      liabilities
                    
                    
                    267,871Preferred  Series
      A stock
                      Preferred
      Series B stock
                    
                    
                    1,000
                      1,000Common
      stock
                    
                    
                    149,655Additional
      paid-in capital
                    
                    
                    1,186,746Accumulated
      deficit
                    
                    
                    (1,606,272
                    )Total stockholders’equity
                    
                    
                    (267,871
                    )Total liabilities and
      stockholders’equity
                    
                    $
                    -
  Statements of Operations
      :
                    
                    Three
      months ended
                      March
      31, 2009
                    
                    
                    Three
      months
                      ended
                      March
      31, 2008Operating
      expenses:Legal
      & Accounting Expenses
                    $
                    $23,781
                    
                    $
                    $ 23,514Total
      operating expenses23,781
                    
                    
                    
                    23,514Net
      Loss$
                    
                    (23,781
                    )
                    $
                    
                    (23,514
                    )
  NOTE
5– COMMITMENTS
 
 In July
2007, the Company retained Jerry Swinford as its President and Chief Executive
Officer pursuant to an employment agreement which was subsequently amended in
September 2007 ("Employment Agreement"). In connection with entering into the
Employment Agreement, the Company also entered into a Licensing Agreement (also
subsequently amended in September 2007) and a Waiver of Royalties Agreement with
Mr. Swinford.  The Employment Agreement provides for Mr. Swinford to
receive a salary of $132,000 for 2009 with yearly increases, assuming such
agreement is extended past the initial term, of a minimum of 10% of the prior
year’s salary, for each additional year he is employed under the
agreement.  The Employment Agreement also provides that Mr. Swinford
retains all rights to any inventions he may discover, originate or
invent.
 
 Under the
Licensing Agreement, Mr. Swinford is entitled to a royalty of 10% of gross
revenue from each invention licensed, with a minimum royalty of $100,000 per
year.  The royalty increases to 20% of gross revenue, with a minimum
royalty of $200,000 per year, from each invention licensed for which Letters
Patent are issued.
 
 Under the
Waiver of Royalties Agreement, Mr. Swinford agreed to waive any royalties due to
him as long as he was employed by the Company and on the Board of
Directors.  If Mr. Swinford's employment by the Company ceased or if
he were removed from the Board of Directors, the Waiver of Royalties Agreement
would terminate and the Company would be obligated to pay the royalties due
under the Licensing Agreement.  Further, if the company fails to meet
the minimum royalties requirements, Mr. Swinford may elect to terminate the
Licensing Agreement or, alternatively, convert the license to a non-exclusive
license with sixty (60) day written notice to the Company.
 F-6
 Pursuant
to the Employment Agreement, Mr. Swinford received 1,000,000 shares of our
common stock upon the execution of the Agreement.  At the expiration
of the initial term, December 31, 2008, and each extension year he is employed
under the Employment Agreement, the Company is to issue him additional shares of
common stock equal to 5% of the Company's then shares of outstanding common
stock.  As a result, because Mr. Swinford was employed as of December
31, 2008 under the Employment Agreement and the Company had 21,000,000 shares of
common stock outstanding, Mr. Swinford received 1,050,000 shares of common stock
in January 2009 pursuant to the Employment Agreement. The Company recorded stock
based compensation expense in the amount of $24,000  for the year
ended December 31, 2008 in connection with the Employment Agreement and issued
the common shares in January 2009.
 
 For the three months ended March 31,
2009 and March 31, 2008, the Company incurred rental expenses of approximately
$7,650 and $10,980, respectively. The Company accounts for rent expense over the
related lease term on a straight-line method. The current leases are on a
month-to-month basis.
 
 NOTE
6 – SUBSEQUENT EVENTS
 
 Effective
June 1, 2009, Mr. Tynon entered into an Executive Compensation and Retention
Agreement with us to serve as our Chief Executive Officer and President (the
“Tynon Employment Agreement”). The initial term of the Tynon Employment
Agreement is until December 31, 2011 (the “Initial
Term”).  Furthermore, the Tynon Employment Agreement is automatically
renewed on January 1, 2010 and each successive year (each an “Extension Year”),
unless Mr. Tynon provides the Company in writing that he will not be exercising
the extension by December 1 of each year prior to the relevant January
1.
 
 The Tynon
Employment Agreement provides for Mr. Tynon to receive a salary of $132,000 for
the first year of the Tynon Employment Agreement (pro rated for the remainder of
the year), with yearly increases, of a minimum of 10% of the prior year’s
salary. Additionally, pursuant to the Tynon Employment Agreement, Mr. Tynon
received 750,000 shares of our common stock upon the execution of the Tynon
Employment Agreement, and at the expiration of the Initial Term and each
Extension Year he is employed under the Tynon Employment Agreement, we agreed to
issue him additional shares of common stock equal to 5% of our then shares of
outstanding common stock (excluding any shares of common stock issuable to other
executives of the Company as a result of incentive share clauses of such
executive’s employment agreements).
 
 
 On or
around June 1, 2009, Coil Tubing entered into a Line of Credit Promissory Note
(the “Line of Credit”) with Charles Wayne Tynon, the Chief Executive Officer and
President of the Company, effective June 1, 2009.  Pursuant to the
Line of Credit, Mr. Tynon agreed to loan Coil Tubing up to
$250,000.  Any amounts borrowed under the Line of Credit bear interest
at the rate of 6% per annum, payable at maturity, which maturity date is June 1,
2011.  The Line of Credit is secured by a Security Agreement entered
into between Coil Tubing 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 Coil Tubing’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 Coil Tubing’s current or
future, machinery and equipment, inventory and proceeds or products derived
therefrom, and rights under contracts, causes of action, documents, and evidence
of title to inventory and contract rights.  As of the date of this
filing a total of $60,000 has been borrowed under the Line of
Credit.


F-7


ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS





SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS





CERTAIN
STATEMENTS IN THIS QUARTER REPORT ON FORM 10-Q (THIS "FORM 10-Q"), INCLUDING
STATEMENTS UNDER "BUSINESS", AND " MANAGEMENT'S DISCUSSION AND ANALYSIS",
CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT NECESSARILY ALL,
OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR
"ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES.
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF COIL TUBING TECHNOLOGY HOLDINGS, INC. AND ITS TWO WHOLLY-OWNED
TEXAS SUBSIDIARIES, PRECISION MACHINING RESOURCES, INC. (“PMR”) AND COIL TUBING
TECHNOLOGY, INC. (“CTT TEXAS”)(COLLECTIVELY "HOLDINGS", THE "COMPANY", "WE",
"US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE
OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
REFERENCES IN THIS FORM 10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO MARCH 31,
2009.





Coil
Tubing Technology Holdings, Inc. was formed as a Texas corporation on July 2,
1999. On March 20, 2005, our then sole shareholder, Jerry Swinford, our former
Chief Executive Officer and current Executive Vice President (see Item 5. Other
Information, below) and current sole Director, entered into a Definitive
Acquisition Purchase Agreement (the “Purchase Agreement”) with Grifco
International, Inc. [GFCI.PK] (“Grifco”), pursuant to which he sold 100% of our
outstanding common stock, 51,000 pre Forward Split (defined below) shares of
common stock (20,000,000 shares post Forward Split)  to Grifco for an
aggregate price of $510,000, payable as $50,000 in cash and $460,000 worth of
Grifco common stock (totaling 1,482,871shares of common stock, based on the
trading price of Grifco’s common stock on the Pink Sheets trading market on the
day of closing of the Purchase Agreement), of which $200,000 in stock (645,161
shares) was paid to settle an $800,000 debt owed by us 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, and 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.  Furthermore, Mr. Swinford has not ever served as an
officer or Director of Grifco.  Grifco held our common shares in its
own name and as such, we were a wholly-owned subsidiary of Grifco following the
Purchase Agreement.





Shortly
after the acquisition of the Company, Grifco determined it would be in the best
interests of its shareholders if the coil tubing portion of the business was a
standalone entity, which would once again focus solely on proprietary tools and
equipment.  In an effort to create such a stand alone entity, Grifco
acquired approximately 89% of IPMC Holdings Corp. in November 2005, as described
below, in exchange for the Company and the Company’s proprietary coil tubing
business therein.





THE
SPIN-OFF




The
Company previously registered twenty million (20,000,000) shares of its common
stock with the Securities and Exchange Commission, pursuant to a Form S-1
Registration Statement declared effective on February 17, 2009, to be
distributed by Coil Tubing Technology, Inc., our parent corporation (“Coil
Tubing”) to its shareholders (the “Distribution”) as of February 13, 2009 (the
“Record Date”). This equates to one share of our common stock distributed for
each approximately 7.483 shares of common stock held by each shareholder of Coil
Tubing as of the Record Date. Fractional shares will be rounded up to the
nearest whole share. Following the Distribution, we will be a stand alone
company. We also plan to take steps to quote our securities on the
Over-The-Counter Bulletin Board subsequent to the Distribution, as we believe
that this will improve our access to the capital markets for additional growth
capital. However, an active market for our securities may not develop following
the Distribution, if ever.  We are currently in the process of
determining the state blue-sky exemptions for the shares to be distributed
pursuant to the Distribution, and plan to distribute the twenty million
(20,000,000) shares of our common stock to the shareholders of Coil Tubing as of
the Record Date promptly after we have completed such blue sky analysis and made
the required filings with the various state securities divisions.


-2-


We plan
to either register the Distribution in each state and/or rely on exemptions from
registration in the states where the shares are distributed and such shares may
only be traded in such jurisdictions after compliance with applicable securities
laws. The shares may not be eligible for sale or resale in such jurisdictions.
We may apply to register the shares in several states for secondary trading;
however we are under no requirement to do so. Rather, we retain the option and
anticipate that we will pay the dividend in cash in lieu of shares, at a price
of $0.01 per share to holders of Coil Tubing common stock that reside in some
states which do not provide for an exemption from state registration for the
Distribution.




We will
not receive any proceeds from the spin-off of the shares of common
stock.





Transactions
Involving Our Parent, Coil Tubing Technology, Inc.




Our
parent company, Coil Tubing, was formed as a result of a series of transactions
in November and December 2005, that resulted in a reserve merger, change in
domicile and name change.




In
November 2005, IPMC Holdings Corp., a Florida corporation, we and Grifco entered
into an Agreement For Exchange of Common Stock (the “Exchange Agreement”),
whereby IPMC Holdings Corp. (which is the predecessor to our
parent corporation, Coil Tubing) agreed to exchange 75,000,000 newly issued
shares of its common stock (representing approximately 89% of IPMC Holdings
Corp.’s then outstanding stock, based on 14,200,794 shares of IPMC Holdings
Corp.’s outstanding common stock prior to the exchange) to Grifco for the 51,000
pre Forward Split shares of common stock (20,000,000 shares post Forward Split),
representing 100% of our outstanding shares, which Grifco held subsequent to the
Purchase Agreement (described above). As a result of the Exchange Agreement, we
became a wholly-owned subsidiary of IPMC Holdings Corp. and IPMC Holdings Corp.
became a majority owned subsidiary of Grifco (which held 75,000,000 shares of
IPMC Holdings Corp. as a result of the Exchange Agreement).   We had
no role in the Exchange Agreement, other than in certifying certain disclosures
made about the Company in the Exchange Agreement, and being the entity exchanged
from Grifco to IPMC Holdings Corp.  IPMC Holdings Corp. had
approximately 310 shareholders of record prior to the Exchange
Agreement.





The
acquisition by Grifco of IPMC Holdings Corp. was handled entirely by Grifco’s
management and presumably, its counsel.  Neither the current
management of Coil Tubing nor the Company 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 Coil Tubing was
taken over by Jerry Swinford, Coil Tubing’s current Chief Executive Officer and
sole Director and the Company’s former Chief Executive Officer and current
Executive Vice President (see Item 5. Other Information, below) and current sole
Director, 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 at that time un-auditable.  As a result, Coil
Tubing and 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.




Coil
Tubing is the result of Grifco’s acquisition of IPMC Holdings Corp. and related
“reverse merger.”  Coil Tubing’s current management, Jerry Swinford,
was not involved in negotiating or effecting the transaction.  Thus,
he was not aware of Coil Tubing’s reporting obligations pursuant to the
Securities Act of 1934, as amended, until sometime well after the 2005
merger.  As a result, Mr. Swinford did not consider Coil Tubing
a reporting company until such time as he became aware of its reporting
obligations.


-3-


Coil
Tubing Technologies, Inc. was formed in Nevada on November 30,
2005.  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, Coil Tubing Technology, Inc., our parent company
(Coil Tubing) 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 we became a
wholly-owned subsidiary of Coil Tubing.  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 President, James Dial.





Summary of Material
Corporate Events and Agreements Regarding the Company





In May
2007, our majority shareholder, Coil Tubing, determined it was in our best
interest to re-domicile from the State of Texas to the State of Nevada, and on
May 24, 2007, we entered into a Plan of Conversion and filed Articles of
Conversion with the Secretary of State of Texas and Nevada, shortly thereafter,
to affect a conversion to a Nevada corporation (the “Conversion”). Concurrently
with the Conversion, we increased our authorized shares of common stock to
500,000,000 shares, $0.001 par value per share, and authorized 10,000,000 shares
of blank check preferred stock, $0.001 par value per share.





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
Coil Tubing, Grifco, our former Chief Executive Officer and current Executive
Vice President (see Item 5. Other Information, below) and current sole Director
and James Dial, the then Chief Executive Officer of Grifco. Pursuant to the
Release and Restatement, the parties agreed that Grifco would distribute the
75,000,000 shares of Coil Tubing which it held (which shares were received in
connection with the Exchange Agreement, described above) to its shareholders as
of a previously determined record date, and Coil Tubing would issue Grifco
1,000,000 shares of Series B Preferred Stock, which will have no voting rights
and will not participate in the Distribution, but will be convertible into
20,000,000 shares of Coil Tubing common stock, if Grifco exercises its option to
purchase the Series A Preferred Stock of Coil Tubing. Our former Chief Executive
Officer and current Executive Vice President (see Item 5. Other Information,
below) and current sole Director, Jerry Swinford, who is also the Chief
Executive Officer of Coil Tubing, currently holds 1,000,000 shares of Series A
Preferred Stock of Coil Tubing, which Series A Preferred Stock gives him the
right to vote 51% of all of the outstanding voting shares on any shareholder
votes. The “Option Period” which allows Grifco the right to purchase the Series
A Preferred Stock of Coil Tubing for aggregate consideration of $100 lasts two
(2) years from the date Mr. Swinford no longer desires to hold the Series A
Preferred Stock of Coil Tubing.  It is not known when Mr. Swinford
will no longer desire to hold the Series A Preferred Stock of Coil Tubing, but
the Company anticipates that it will be some time after we have conducted our
Distribution. The Release and Restatement agreements also provided that Jerry
Swinford cancel 75,000,000 shares of Coil Tubing which he held, which shares
were cancelled in 2007.   Neither Coil Tubing's  Series A
Preferred Stock nor Series B Preferred stock will participate in the
Distribution, and because Mr. Swinford is not going to allow the purchase of the
Series A Preferred Stock of Coil Tubing by Grifco until after the successful
completion of the Distribution, such Series B Preferred Stock will not be able
to be converted into shares of Coil Tubing common stock and will therefore not
be eligible for the Distribution.  Grifco does not currently hold any
shares of our common stock or any shares of common stock of Coil Tubing and will
not hold any shares of our common stock following the Distribution.





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 released,
acquitted and forever discharged us, Coil Tubing 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 Coil Tubing
released Grifco from any claims or causes of action.


-4-


The
Release and Restatement also included a provision whereby the parties agreed
that Mr. Swinford would enter into an Employment Agreement with us, whereby he
will serve as our Chief Executive Officer for a period of time to be determined
by our Board of Directors (as described below), and that he would be issued
shares of our Preferred Stock enabling him to vote 51% of our outstanding common
stock.  The Company issued such shares of our Preferred Stock as
described in greater detail below under “Description of Capital Stock.”
Additionally, pursuant to the Release and Restatement, Grifco agreed to cancel
an Assignment of Patent made by Jerry Swinford in April 2005 in connection with
the Purchase Agreement.   Effective June 1, 2009, as described
below under Item 5. Other Information, Mr. Swinford resigned as our Chief
Executive Officer, Chief Financial Officer and President and was appointed
Executive Vice President.





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 Coil Tubing, us and Mr. Swinford from any and
all liability, claims or demands whatsoever in connection with the Exchange
Agreement.





The
Agreement and Release was entered into to clarify various agreements,
discussions and understandings between the parties to the Agreement and
Release.  Additionally, Grifco had made certain capital contributions
to the Company, and the Company desired to have Grifco release the Company from
any and all claims associated with such contributions and/or any other claims
that Grifco may have had against the Company.





On June
19, 2007, our Board of Directors, and majority shareholder, Coil Tubing,
approved a 392.1568627 for one forward stock split of our issued and outstanding
common stock, for all shareholders of record as of June 19, 2007 (the “Forward
Split”). As a result, our issued and outstanding shares increased from 51,000
prior to the forward stock split to 20,000,000 shares subsequent to the forward
stock split.





The
effects of the Conversion and Forward Split have been reflected throughout this
report.





On or
about June 19, 2007, our Board of Directors approved the designation of
1,000,000 shares of our Series A Preferred Stock. The Series A Preferred Stock
is described in greater detail below under “Description of Capital
Stock.”





Further,
on June 19, 2007, pursuant to the designation, subsequent to the Forward Split,
we issued 1,000,000 shares of Series A Preferred Stock in Coil Tubing Technology
Holdings, Inc. to Jerry Swinford, our sole Director.   Unless
otherwise stated or the context would suggest otherwise, all references to the
Series A Preferred Stock contained in this report refer to the Series A
Preferred Stock of the Company, and not of Coil Tubing.




BUSINESS
OPERATIONS





We
specialize in the design and production of proprietary tools for the coil tubing
industry. We concentrate on four categories of coil tubing applications: tubing
fishing, tubing work over, pipeline clean out, 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.


-5-


The Market for Coiled
Tubing





We
believe that the United States domestic market and Canada, which we operate 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 has historically been considered
to be the breeding ground for new technology; however with the recent general
economic downturn, the day rates for coil tubing have prohibited oil companies
from using coil tubing in the U.S.  As a result, we are attempting to
enter the Southeast Asian and Middle Eastern markets where coil tubing unit
pricing appears to be more stable.





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.





There are
four components to our strategic vision:





·
            Build
      profitable year over year sales of existing proprietary
      products;·
            Accelerate
      development of new proprietary products;·
            Accelerate
      growth of new distribution stockpoints worldwide; 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.





Hammelmann Distributor
Contracts





On or
about January 1, 2007, Coil Tubing Technology, Inc., our wholly-owned Texas
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 “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, with 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.





Subsidiaries





We
currently have two wholly-owned Texas subsidiaries, Precision Machining
Resources, Inc. (“PMR”) and Coil Tubing Technology, Inc., a Texas corporation
(“CTT Texas”). 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 work-over 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.


-6-


PLAN
OF OPERATIONS FOR THE NEXT TWELVE MONTHS





We
believe that we will be able to continue our business operations for
approximately the next forty-five days; however, due to the recent decline in
the demand for our products, we will be largely operating out of our current
receivables on hand.  In order to support our planned expansion of our
operations over the next approximately twelve (12) months, we
anticipate needing approximately $2,000,000 in additional
funding.




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 be curtailed somewhat in the U.S. markets with Southeast
Asia and Middle Eastern markets remaining active through fiscal 2009, especially
in drilling and workover applications. We are actively
pursuing international markets, potentially with the alliance of a yet to
be determined major service company.





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.


-7-


COMPARISON
OF OPERATING RESULTS




RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009, COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 2008





We had
total revenue, consisting of product sales and rental income of $134,994
for the three months ended March 31, 2009, compared to total revenue, consisting
of product sales and rental income of $582,662 for the three months ended March
31, 2008, a decrease in total revenue of $447,668 or 76.8% from the prior
period.





We had
total product sales of $23,428 for the three months ended March 31, 2009, a
decrease of $388,665 or 94.3% from total product sales of $412,093 for the three
months ended March 31, 2008.  The decrease in product sales was mainly
due to a large sale of tools made in the first quarter of 2008 that was not
present in the first quarter of 2009.





We had
total rental income of $111,566 for the three months ended March 31, 2009, a
decrease in total rental income of $59,003 or 34.6% from total rental income of
$170,569 for the three months ended March 31, 2008.  The decrease in
rental income was mainly due to reduced rental tool activity by our customers in
connection with the downturn in the oil and gas market, specifically a decrease
in drilling during the three months ended March 31, 2009.





We had
cost of sales of products and rental income of $18,521 for the three months
ended March 31, 2009, compared to cost of sales of products and rental income of
$152,863 for the three months ended March 31, 2008, a decrease of $134,342 or
87.9% from the prior period, which decrease was primarily the result of
decreased sales of tools and tool rentals during the three month period ended
March 31, 2009, compared to the three month period ended March 31, 2008, and the
resulting decreased costs associated with such decreased sales.





We had
cost of sales - depreciation of $38,689 for the three months ended March 31,
2009, compared to cost of sales - depreciation of $31,783 for the three months
ended March 31, 2008, an increase of $6,906 or 21.7% from the prior period,
which increase was primarily attributable to the increased size of the overall
rental tool fleet and reflects the $135,000 in rental tools built in
2008.





We had
total cost of sales of $57,210 for the three months ended March 31, 2009,
compared to total cost of sales of $184,646 for the three months ended March 31,
2008, a decrease of $127,436 or 69% from the prior period.





Total
cost of sales (including depreciation) as a percentage of revenue was 42.4% for
the three months ended March 31, 2009, compared to 31.7% for the three months
ended March 31, 2008, an increase in total cost of sales as a percentage of
revenue of 10.7% from the prior period.





We had
gross profit of $77,784 for the three months ended March 31, 2009, compared to
gross profit of $398,016 for the three months ended March 31, 2008, a decrease
of $320,232 or 80.5% from the prior period.





We had
general and administrative expenses of $142,844 for the three months ended March
31, 2009, compared to general and administrative expenses of $238,153 for the
three months ended March 31, 2008, a decrease of $95,309 or 40.0% from the prior
period. The main reasons for the decrease in general and administrative expenses
were that legal and auditor fees and consulting and contract labor fees were
lower for the three months ended March 31, 2009, as compared to the three months
ended March 31, 2008.  Additionally, general and administrative
expenses were lower during the three months ended March 31, 2009, compared to
the three months ended March 31, 2008, because 2008 included employee salaries
and rent related to our McAllen, Texas location which was closed in the first
half of 2008.


-8-


We had
depreciation and amortization expense of $5,326 for the three months ended March
31, 2009, compared to depreciation and amortization expense of $3,846 for the
three months ended March 31, 2008, an increase of $1,480 or 38.5% from the prior
period.





We had
total operating expenses of $148,170 for the three months ended March 31, 2009,
compared to total operating expenses of $241,999 for the three months ended
March 31, 2008, a decrease of $93,829 or 39% from the prior period.





We had a
loss from continuing operations of $70,386 for the three months ended March 31,
2009, compared to a gain from continuing operations of $156,017 for the three
months ended March 31, 2008, an increase in loss from continuing operations of
$226,403 or 145% from the prior period, which increase was mainly due to the 77%
decrease in revenues offset by the 69% decrease in cost of sales and the 39%
decrease in total operating expenses for the three months ended March 31, 2009,
compared to the three months ended March 31, 2008.





We had a
loss on sale of assets of $1,942 for the three months ended March 31, 2009,
compared to no loss on sale of assets for the three months ended March 31,
2008.





We had a
loss from discontinued operations of $23,781 for the three months ended March
31, 2009, compared to a loss from discontinued operations of $23,514 for the
three months ended March 31, 2008, an increase of $267 from the prior period.
The loss from discontinued operations in 2008 was the result of significant
legal, accounting and valuation expenses which were paid for by the Company on
behalf of Coil Tubing. The loss from discontinued operations in 2007 was the
result of stock compensation.





We had a
net loss of $96,109 for the three months ended March 31, 2009, compared to net
income of $132,503 for the three months ended March 31, 2008, an increase in net
loss of $228,612 or 172% from the prior period.





LIQUIDITY
AND CAPITAL RESOURCES





As of
March 31, 2009, we had total assets of $478,483, which included total current
assets of $68,361, consisting of $24,388 of cash and $43,973 of accounts
receivable, net; $356,175 of rental tools, net; $48,097 of machinery and
equipment, net; and $5,850 of other assets.





We had
total liabilities of $31,091 as of March 31, 2009, which were all current
liabilities, and which solely consisted of $31,091 of accounts payable and
accrued liabilities.





We had
total working capital of $37,270 and an accumulated deficit of $2,289,770 as of
March 31, 2009.





We had
net cash used in operating activities of $25,625 for the three months ended
March 31, 2009, which consisted of $96,109 of net loss, $111,411 of decrease in
accounts payable and accrued expenses, and $1,871 of decrease in other assets,
offset by $44,015 of depreciation, $1,942 of gain on sale of asset, and $137,809
of decrease in accounts receivable.





We had
$10,896 of net cash used in investing activities for the three months ended
March 31, 2009, which was due to $24,296 of purchase of machinery and equipment
and $13,400 of proceeds from sale of machinery and equipment.





On or
around June 1, 2009, Coil Tubing entered into a Line of Credit Promissory Note
(the “Line of Credit”) with Charles Wayne Tynon, the Chief Executive Officer and
President of the Company, effective June 1, 2009 (as described in greater detail
below under Item 5. Other Information).  Pursuant to the Line of
Credit, Mr. Tynon agreed to loan Coil Tubing up to $250,000.  Any
amounts borrowed under the Line of Credit bear interest at the rate of 6% per
annum, payable at maturity, which maturity date is June 1, 2011.  The
Line of Credit is secured by a Security Agreement entered into between Coil
Tubing 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 Coil Tubing’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 Coil Tubing’s current or future,
machinery and equipment, inventory and proceeds or products derived therefrom,
and rights under contracts, causes of action, documents, and evidence of title
to inventory and contract rights.  As of the date of this filing a
total of $60,000 has been borrowed under the Line of Credit.


-9-


We
believe that we will be able to continue our business operations for
approximately the next forty-five days; however, due to the recent decline in
the demand for our products, we will be largely operating out of our current
receivables on hand. In order to support our planned expansion of our operations
over the next approximately twelve (12) months, we anticipate needing
approximately $2,000,000 in additional funding.





We have
noticed a sharp decline in the market and demand for our products and services
due to the current global economic downturn and continuing
recession.  As the demand for new oil and gas has declined and
customers have decreased their budget for services such as ours, we have seen
the demand for our coil tubing products and our revenues decrease substantially
in fiscal 2009. As a result, we are attempting to enter the Southeast Asian and
Middle Eastern markets where coil tubing unit pricing appears to be more
stable.





Additionally,
with the tightening of our market, we recently entered into a longer term lease
arrangements with two clients, and are having similar discussions with other
customers.  Under these longer term arrangements, we receive a monthly
lease payment for tools placed with such customers.  The result is a
more stable stream of revenue for the Company and more stable expenses for our
customer; however, the lease arrangement also reduces the per day utilization
rate of revenue received by the Company, and as such, may have a material
adverse effect on our revenues.





We have
no current commitment from our officers and Director (other than the Line of
Credit) or any of our shareholders, to supplement our operations or provide us
with financing in the future. If we are unable to raise additional capital from
conventional sources and/or additional sales of stock in the future, we may be
forced to curtail or cease our operations. Even if we are able to continue our
operations, the failure to obtain financing could have a substantial adverse
effect on our business and financial results. In the future, we may be required
to seek additional capital by selling debt or equity securities, selling assets,
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.




ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to
provide the information required by this Item as it is a “smaller reporting
company,” as defined by Rule 229.10(f)(1).





ITEM
4.  CONTROLS AND PROCEDURES





(a)           Evaluation
of disclosure controls and procedures. Our Chief Executive Officer and Principal
Accounting Officer, after evaluating the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934
Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded that as of
the Evaluation Date, our disclosure controls and procedures were effective to
provide reasonable assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Principal Accounting Officer, as appropriate, to allow timely decisions
regarding required disclosure.





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


-10-


PART
II - OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





DTCC/DTC,
Grifco & Dial Litigation




On or
around July 30, 2008, the Company, Coil Tubing and our former Chief Executive
Officer and current Executive Vice President (see Item 5. Other Information,
below) and current sole Director, Jerry Swinford ("Plaintiffs"), filed a lawsuit
against Grifco, Depository Trust & Clearing Corporation ("DTCC/DTC") and the
president of Grifco, James Dial (the "Defendants").  The case is
pending as Cause No. 08-07-07397-CV in the Montgomery County, Texas, District
Court, 9th Judicial District.  The suit stems from Grifco's
distribution of its 75,000,000 shares of Coil Tubing in August 2007 ("Grifco
Distribution").  Additionally, without informing Coil Tubing or
providing any consideration to Coil Tubing, the DTCC/DTC made “book entries” for
its participating members thereby unilaterally creating additional shares of
Coil Tubing stock.




In August
2007, Grifco attempted to distribute 75,000,000 shares of Coil Tubing common
stock which it held to its shareholders based on a record date of May 1,
2006.  Certain Grifco shareholders who held Grifco shares on the
record date were not issued shares of Coil Tubing in connection with the Grifco
Distribution.  Generally only Grifco shareholders who held their
shares in street name on the record date were distributed shares in the Grifco
Distribution.  Thus, shareholders who held their shares in certificate
form did not receive shares in the Grifco Distribution.  Mr. Swinford
was one such record shareholder of Grifco, who did not receive shares in the
Grifco Distribution.




Grifco
did not hold a sufficient number of shares to distribute to its shareholders who
held their shares in street name at the distribution ratio announced by
Grifco.  Grifco announced that each of its shareholders would receive
1.89 shares of CTBG stock for each share of Grifco stock held as of the record
date.  In late April 2008, the DTCC/DTC informed Coil Tubing (for the
first time) that Grifco did not transfer to DTCC/DTC's agent, Cede & Co., a
sufficient number of shares to affect the distribution at the ratio
announced.  The 1.89 ratio announced by Grifco implied that Grifco had
approximately 40,000,000 shares outstanding as of the record
date.  DTCC/DTC contends, however, that Grifco had approximately
68,000,000 shares outstanding in street name as of the record date, May 1,
2006.




Between
the time Grifco distributed its shares (August 2007) until the DTCC/DTC
contacted Coil Tubing (late April 2008), the DTCC/DTC contends it made various
demands on Grifco for additional shares.  Grifco provided the DTCC/DTC
with waivers from certain shareholders, but such waivers were not sufficient to
address the deficiency in its entirety.





Coil
Tubing was contacted by the DTCC/DTC regarding the shortfall in shares in April
2008.  Coil Tubing immediately took steps to have Grifco contact
shareholders who did not receive shares in the distribution and obtain signed
waivers of their right to receive shares in the stock dividend.  To
date, a limited number of such waivers have been obtained.  Because of
Grifco's failure to obtain waivers from a sufficient number of shareholders,
DTCC/DTC demanded that Coil Tubing acquire additional free trading shares in the
market or issue additional free trading shares to satisfy the
shortfall.  Coil Tubing did not purchase the additional shares
demanded by DTCC/DTC and Coil Tubing does not have a registration statement on
file allowing it to issue additional free trading
shares.  Additionally, issuing additional shares of Coil Tubing would
substantially dilute the interests of Coil Tubing’s existing
shareholders.





On July
10, 2008, DTCC/DTC issued a Stock Dividend E-Mail Alert to its participating
members.  The Alert stated that DTCC/DTC had not received sufficient
shares from Grifco in order to affect the stock dividend at the ratio Grifco
announced.  DTCC/DTC further stated that unless it received the
necessary shares by July 31, 2008, it would unilaterally adjust the ratio of
shares received in the stock dividend from the rate originally declared, 1.89
shares of Coil Tubing common stock for each share of Grifco common stock which
shareholders of Grifco held, to a reduced rate of approximately 1.29 shares of
Coil Tubing for each share of Grifco held.


-11-


On July
30, 2008, Coil Tubing filed suit against Defendants.  In the suit Coil
Tubing sought and obtained a temporary restraining order to restrain the
DTCC/DTC from adjusting shareholder accounts and against any Defendant
destroying any documentation in connection with the lawsuit.  While
Coil Tubing was in the process of obtaining the temporary restraining order from
the Court, and a day in advance of its announced adjustment date, DTCC/DTC
adjusted the ratio of the dividend with most of its participating members.
Despite the restraining order, DTCC/DTC's participating members adjusted
customers’ accounts on July 31, 2008 and thereafter.




The
Plaintiffs believe that all of the Defendants were aware or should have been
aware that a shortfall in the Grifco Distribution would occur, but negligently
allowed the stock distribution to go forward.  Additionally, the
Plaintiffs believe that the Defendants engaged in additional acts and omissions
which may give rise to other damages.  Coil Tubing has and expects to
continue to expend funds on the litigation which may negatively impact
operations.  The Court granted Plaintiffs’ Temporary Injunction and
denied DTCC/DTC's Motion to Dismiss.    The Court has set
the matter for trial on August 31, 2009, and the parties have tentatively agreed
to attempt to resolve the matter with the assistance of a
mediator.  It remains premature to speculate regarding the final
outcome of the litigation.




Litigation
Generally




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
1A.  RISK FACTORS





Our
securities are highly speculative and should only be purchased by persons who
can afford to lose their entire investment in our Company. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent. The Company's business is subject
to many risk factors, including the following:





WE
MAY REQUIRE ADDITIONAL FINANCING TO IMPLEMENT OUR BUSINESS PLAN AND CONTINUE
DEVELOPING AND MARKETING OUR ENVIRONMENTAL COMPLIANCE SYSTEMS.




We have
generated only limited revenues since our incorporation in July 1999. We
currently believe that we will be able to continue our business operations for
approximately the next forty-five days if we fail to raise additional funding;
however, due to the decline in the demand for our services, we will be largely
operating out of our current receivables on hand.   In order to
fund our planned expansion of operations over the next approximately twelve (12)
months, we anticipate the need for approximately $2,000,000 of additional
capital.  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. If we are unable to raise additional financing in the future,
we may be forced to abandon or curtail our business plan, which would cause the
value of our securities, if any, to decrease in value and/or become
worthless.





OUR
AUDITORS HAVE RAISED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.





Our
auditors have raised substantial doubt about our ability to continue as a going
concern primarily because we had a net loss of $573,881 and cash used in
operations of $438,702, for the year ended December 31, 2008 and a net loss of
$96,109 for the three months ended March 31, 2009. The accompanying consolidated
financial statements have been prepared assuming that the Company will continue
as a going concern. The financial statements do not include any adjustments that
might result from our inability to continue as a going concern. If we are unable
to continue as a going concern, our securities will become
worthless.


-12-


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.





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.





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 10,000,000 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. On June 19, 2007, the Company's Board of Directors approved the
issuance of 1,000,000 shares of Series A Preferred Stock to our sole Director,
Jerry Swinford. The 1,000,000 shares of 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. For example, if there are 22,050,000 shares of
the Company's common stock issued and outstanding at the time of a shareholder
vote, the holders of Series A Preferred Stock, voting separately as a class,
will have the right to vote an aggregate of 22,950,000 shares, out of a total
number of 45,000,000 shares voting. 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.


-13-


JERRY
SWINFORD, OUR FORMER CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR OF THE COMPANY
CAN VOTE A MAJORITY OF OUR COMMON STOCK AND CAN EXERCISE CONTROL OVER CORPORATE
DECISIONS.





Jerry
Swinford, our former Chief Executive Officer and current Executive Vice
President (see Item 5. Other Information, below) and current sole Director holds
2,050,000 shares of our common stock and 1,000,000 shares of our Series A
Preferred Stock, which preferred stock gives him the right to vote in aggregate,
51% of our outstanding shares of common stock on all shareholder votes.
Accordingly, Mr. Swinford will 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. Swinford may differ from the interests of the other
stockholders and thus result in corporate decisions that are adverse to other
shareholders.





WE
RELY ON OUR CHIEF EXECUTIVE OFFICER AND EXECUTIVE VICE PRESIDENT, AND IF THEY
WERE TO LEAVE OUR COMPANY OUR BUSINESS PLAN COULD BE ADVERSELY
EFFECTED





We rely
on Charles Wayne Tynon, our Chief Executive Officer and President and Jerry
Swinford, our former Chief Executive Officer and sole Director for the success
of our Company. Effective June 1, 2009, Mr. Tynon entered into an Executive
Compensation and Retention Agreement with us to serve as our Chief Executive
Officer and President (the “Tynon Employment Agreement”). The initial term of
the Tynon Employment Agreement is until December 31, 2011 (the “Initial
Term”).  Furthermore, the Tynon Employment Agreement is automatically
renewed on January 1, 2010 and each successive year (each an “Extension Year”),
unless Mr. Tynon provides the Company in writing that he will not be exercising
the extension by December 1 of each year prior to the relevant January
1.   Effective June 1, 2009, Mr. Swinford entered into an
Executive Compensation and Retention Agreement with us to serve as our Vice
President (the “Swinford Employment Agreement”), which replaced and superseded
the prior employment agreements he had with the Company. The initial term of the
Swinford Employment Agreement is until December 31, 2011 (the “Initial
Term”).  Furthermore, the Swinford Employment Agreement is
automatically renewed on January 1, 2010 and each successive year (each an
“Extension Year”), unless Mr. Swinford provides the Company in writing that he
will not be exercising the extension by December 1 of each year prior to the
relevant January 1.  The Company also holds a $650,000 life insurance
policy on Mr. Swinford. Mr. Tynon’s and Mr. Swinford’s experience and input
creates the foundation for our business and they are responsible for the
direction and control over the Company’s development activities. Moving forward,
should either be lost for any reason, the Company will incur costs associated
with recruiting replacements and any potential delays in operations which this
may cause. If we are unable to replace Mr. Tynon and/or Mr. Swinford with
another individual or individuals suitably trained in coil tubing technology we
may be forced to scale back or curtail our business plan. As a result, if we
were to lose the services of Mr. Tynon or Mr. Swinford for any reason, your
securities in our Company could become devalued.





MR.
SWINFORD WILL RETAIN THE RIGHTS TO AND OWNERSHIP OF ANY INVENTIONS HE MAY
DISCOVER, ORIGINATE OR INVENT, EITHER ALONE OR WITH OTHERS PURSUANT TO HIS
EMPLOYMENT AGREEMENT.





Pursuant
to Mr. Swinford’s Employment Agreement with us, as amended, Mr. Swinford will
retain the rights and ownership of any discoveries, inventions, improvements,
designs and innovations relating to the business of the Company (the
“Inventions”), whether or not patentable, copyrightable or reduced to writing
that he may discover, invent or originate during the term of the Employment
Agreement.  While Mr. Swinford has also agreed pursuant to a Waiver of
Royalties agreement to waive any royalties that he may be due for such
Inventions during the term of his employment, if Mr. Swinford were to leave the
Company for any reason, he would retain the ownership of any Inventions he
created and we could either be forced to pay Mr. Swinford substantial royalty
fees and/or cease using such Inventions.  Finally, Mr. Swinford will
retain ownership of the Inventions, and we will not receive any benefit if the
license agreement is terminated and such Inventions are sold by Mr. Swinford or
licensed to any other companies.  There is a risk that if Mr. Swinford
were to leave the Company, that the royalty payments due on the Inventions may
be too expensive for us to afford, and we may be forced to curtail or abandon
our business operations.


-14-


WE
FACE CORPORATE GOVERNANCE RISKS AND NEGATIVE PERCEPTIONS OF INVESTORS ASSOCIATED
WITH THE FACT THAT WE CURRENTLY HAVE ONLY THREE OFFICERS AND ONE
DIRECTOR.





As Jerry
Swinford is our only Director, there are no other members of the Board of
Directors available to second and/or approve related party transactions
involving Mr. Swinford, including the compensation Mr. Swinford is paid and the
employment agreements we enter into with Mr. Swinford.  Additionally,
there is minimal segregation of duties between officers because we only have
three officers.  Therefore, investors may perceive that because no
other Directors are approving related party transactions involving Mr. Swinford
and only a limited number of officers are reviewing and approving our financial
statements in our filings that such transactions are not fair to the Company
and/or that such financial statements may contain errors.  The price
of our common stock may be adversely affected and/or devalued compared to
similarly sized companies with multiple officers and Directors due to the
investing public’s perception of limitations facing our company due to the fact
that we only have three officers and only one director.




COIL
TUBING SHAREHOLDERS MAY WANT TO SELL THEIR DISTRIBUTED SHARES IMMEDIATELY AFTER
THEY ARE RECEIVED IN THE SPIN-OFF DISTRIBUTION AND THIS COULD ADVERSELY AFFECT
THE MARKET FOR OUR SECURITIES




Coil
Tubing will distribute up to 20,000,000 shares of our common stock to its
shareholders in the spin-off Distribution. The Coil Tubing shareholders that
will now be our shareholders may not be interested in retaining their investment
in us. Since Coil Tubing shareholders will receive registered shares in the
Distribution, they will generally be free to resell their shares immediately
upon receipt. However, shareholders of Coil Tubing or us who are affiliates of
us or Coil Tubing will receive restricted shares of our common stock, which will
be subject to the volume limitation provisions of Rule 144 of the Securities Act
of 1933, as amended (the “Act”). If any number of the Coil Tubing shareholders
offers their shares for sale, the market for our securities could be adversely
affected.





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 will 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 could not
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.





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.


-15-


OUR
FUTURE SUCCESS AND PROFITABILITY MAY BE ADVERSELY AFFECTED IF WE OR OUR
SUPPLIERS FAIL TO DEVELOP AND INTRODUCE NEW AND INNOVATIVE PRODUCTS AND SERVICES
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 and our
suppliers’ continued ability to develop and introduce new and innovative
products and services 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 or our
suppliers 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 and services, our revenue and profitability may
suffer.




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.





WE
DO NOT CURRENTLY HAVE INSURANCE POLICIES AND COULD THEREFORE SUFFER LIABILITY
FOR RISKS ASSOCIATED WITH OUR OPERATIONS.





Our
operations are subject to hazards inherent in the oil and gas industry, such as,
but not limited to, accidents, blowouts, explosions, fires, oil and chemical
spills and other hazards. These conditions can cause personal injury or loss of
life, damage to property, equipment and the environment, and suspension of oil
and gas operations of our customers. Litigation arising from a catastrophic
occurrence at a location where our equipment, products or services are being
used may result in us being named as a defendant in lawsuits asserting large
claims. We do not currently have insurance for our operations because of the
high premium costs. As a result, losses and liabilities arising from uninsured
events could have a material adverse effect on our business, financial condition
and results of operations.





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 filed by
Mr. Swinford, and he may choose to not move forward with those patent
applications in the future.  Finally, Mr. Swinford’s patent
applications may not be granted in the future.  In the event that Mr.
Swinford does not move forward with the patent applications and/or does 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.


-16-


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 four customers that represented approximately 34%, 22%, 17%, and 11%
of gross sales for the year ended December 31, 2008.  For the year
ended December 31, 2007, we had three customers, who accounted for 61%, 15%, and
10% of our net sales.   As a result, the majority of revenues for the
years ended December 31, 2008 and 2007 were 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 any of our customers 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 AN ENTITY WHICH IS ALSO OUR
COMPETITOR, AND IF WE WERE TO LOSE SUCH CUSTOMER, OR IT WERE TO CREATE PRODUCTS
TO DIRECTLY COMPETE WITH OURS, OUR RESULTS OF OPERATIONS WOULD BE ADVERSELY
AFFECTED.





For the
year ended December 31, 2008, a significant portion of our revenues,
approximately 27%, came from, one customer which is also a competitor of
us.  While such company does not currently compete directly for our
products, it offers similar products.  If such entity, 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 in California,
Utah, West Texas, South Texas, East Texas, Louisiana, and Canada and for use on
the North Sea in Norway.  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.




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 one Director. 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.


-17-


OUR
FORMER CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR IS ALSO THE CHIEF EXECUTIVE
OFFICER AND SOLE DIRECTOR OF OUR PARENT, COIL TUBING, AND AS SUCH, MAY NOT BE
ABLE TO DEVOTE SUFFICIENT TIME TO OUR OPERATIONS.





Jerry
Swinford, our Former Chief Executive Officer, and the current Executive Vice
President and sole Director is also the Chief Executive Officer and Director of
Coil Tubing, our Parent.  As such and because Mr. Swinford spends
approximately 30 hours per week on Company matters and approximately 20 hours
per week on matters relating to Coil Tubing, he may not be able to devote a
sufficient amount of time to our operations.  This may be exacerbated
by the fact that he is currently one of only three of our officers and our sole
Director.  Furthermore, because we operate in the coil tubing industry
(as does Coil Tubing, although Coil Tubing currently has no operations separate
from the Company) there may be conflicts between suppliers, contracts,
agreements, use of patents and/or other business relations between Coil Tubing
and us.  Additionally, investors should keep in mind that there are no
policies in place in regard to the allocation of corporate opportunities between
us, Coil Tubing or Mr. Swinford personally.





WE
MAY BE LATE IN FILING OUR PERIODIC REPORTS OR MAY NOT BE ABLE TO FILE OUR
PERIODIC REPORTS AS WE ONLY HAVE THREE OFFICERS AND ONE DIRECTOR, AND OUR SOLE
DIRECTOR WHO IS ALSO THE SOLE OFFICER AND DIRECTOR OF OUR PARENT COMPANY, COIL
TUBING, IS DELINQUENT IN ITS FILINGS.





Our
former Chief Executive Officer, the current Executive Vice President and current
sole Director, Jerry Swinford, is also the sole officer and Director of Coil
Tubing, which is currently deficient in its filing obligations with the SEC, and
has been delinquent since approximately May 2003 (when it was still IPMC
Holdings Corp. (as described in greater detail above under
“Business”)).  Although Mr. Swinford, with the assistance of legal and
accounting professionals, has previously tried to obtain the required financial
information to file Coil Tubing’s delinquent periodic filings with the SEC, he
has not been able to obtain that information.  As such, Coil Tubing
remains deficient in its current and periodic filings with the SEC, and is not
likely to, and currently has no plans to ever file such deficient
reports.  As a result of Coil Tubing’s deficient filings, Coil
Tubing’s shareholders do not have any current financial or other information
regarding Coil Tubing. Further, as Mr. Swinford is also an officer and the sole
Director of the Company, and the Company has similar current and periodic
reporting obligations with the SEC, there is a risk that the Company may not
meet these filing obligations and that investors similarly may not receive
current information regarding their investment in the Company.  If
this were to occur it may be difficult if not impossible for investors to sell
their shares in the Company, we could be delisted from any market or exchange on
which our common stock then trades, if any, and the value of our common stock
could become worthless.





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.


-18-


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 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.





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;•
            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.


-19-


RISKS
RELATING TO THE SPIN-OFF




WE
MAY BE UNABLE TO ACHIEVE SOME OR ALL OF THE BENEFITS THAT WE EXPECT TO ACHIEVE
FROM OUR SEPARATION FROM COIL TUBING.




We may
not be able to achieve the full strategic and financial benefits that we expect
will result from our separation from Coil Tubing or such benefits may be delayed
or may not occur at all. For example, analysts and investors may not regard our
corporate structure as clearer and simpler than the current Coil Tubing
corporate structure or place a greater value on our Company as a stand-alone
company than on our businesses being a part of Coil Tubing. As a result, in the
future the aggregate market price of Coil Tubing’s common stock and our common
stock as separate companies may be less than the market price per share of Coil
Tubing’s common stock had the separation and distribution not
occurred.





WE
ARE BEING SEPARATED FROM COIL TUBING, OUR PARENT COMPANY, AND, THEREFORE, WE
HAVE A LIMITED OPERATING HISTORY AS A SEPARATE COMPANY.





The
historical and financial information does not necessarily reflect the financial
condition, results of operations or cash flows that we would have achieved as a
separate publicly-traded company during the periods presented or those that we
will achieve in the future primarily as a result of the following
factors:




•
            Since
      November 2005, our business has in part been operated by Coil Tubing as
      part of its broader corporate organization, rather than as a separate,
      publicly-traded company;
and





•
            Other
      significant changes may occur in our cost structure, management, financing
      and business operations as a result of our operating as a company separate
      from Coil Tubing.




THE
DISTRIBUTION OF OUR SHARES MAY RESULT IN TAX LIABILITY.




Shareholders
of Coil Tubing may be required to pay income tax on the value of shares of
common stock received in connection with the spin-off Distribution. This
Distribution may be taxable as a dividend and/or as a capital gain, depending
upon the extent of the basis in Coil Tubing stock which such shareholders hold.
Shareholders of Coil Tubing are advised to consult their own tax advisor as to
the specific tax consequences of the Distribution.




THE
DISTRIBUTION MAY CAUSE THE TRADING PRICE OF COIL TUBING’S COMMON STOCK TO
DECLINE.




Following
the Distribution, Coil Tubing expects that its common stock will continue to be
quoted and traded on the Pink Sheets under the symbol “CTBG.” A trading market
may not continue for the shares of Coil Tubing’s common stock or even develop
for our shares. As a result of the Distribution, the trading price of Coil
Tubing’s common stock may be substantially lower following the Distribution than
the trading price of Coil Tubing’s common stock immediately prior to the
Distribution.  The closing price of Coil Tubing’s common stock was
approximately $0.05 at March 31, 2009, $0.06 at December 31, 2008, $0.06 at
September 30, 2008, $0.048 at June 30, 2008, $0.057 at March 31, 2008, $0.03 at
December 31, 2007, $0.034 at September 28, 2007, $0.031 at June 29, 2007, $0.022
at March 30, 2007, and $0.0275 at December 29, 2006.


-20-


Further,
the combined trading prices of Coil Tubing’s common stock and our common stock
after the Distribution may be less than the trading price of Coil Tubing’s
common stock immediately prior to the Distribution.




THE
LACK OF A BROKER OR DEALER TO CREATE OR MAINTAIN A MARKET IN OUR STOCK COULD
ADVERSELY IMPACT THE PRICE AND LIQUIDITY OF OUR SECURITIES.




We have
no agreement with any broker or dealer to act as a market maker for our
securities and as a result, we may not be successful in obtaining any market
makers. Thus, no broker or dealer will have an incentive to make a market for
our stock. The lack of a market maker for our securities could adversely
influence the market for and price of our securities, as well as your ability to
dispose of, or to obtain accurate information about, and/or quotations as to the
price of, our securities.





RISKS
RELATING TO OUR SECURITIES





WE
LACK A MARKET FOR OUR COMMON STOCK, WHICH MAKES OUR SECURITIES VERY
SPECULATIVE.





We
currently lack a market for the Company’s common stock. Because of this, it is
hard to determine exactly how much our securities are worth. As a result of the
lack of market, it is hard to judge how much our securities are worth and it is
possible that they will become worthless.





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.





IF
THERE IS A MARKET FOR OUR COMMON STOCK, OUR STOCK PRICE MAY BE
VOLATILE.





If
there's a market for our common stock, we anticipate that such market would 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.





Further,
if our common stock is traded on the over the counter bulletin board, as is our
intention, 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.


-21-


INVESTORS
MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO
FEDERAL REGULATIONS OF PENNY STOCKS.





Assuming
our common stock is quoted on the OTC Bulletin Board, it will be subject to the
requirements of Rule 15(g)9, promulgated under the Securities Exchange Act 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 purchasers to sell their securities in the
secondary market.





WE
HAVE BEEN FORCED TO BRING SUIT AGAINST OUR FORMER LARGEST SHAREHOLDER, GRIFCO
INTERNATIONAL, INC., ITS PRESIDENT AND THE DEPOSITORY TRUST & CLEARING
CORPORATION WHICH WILL IMPACT OUR OPERATIONS.




As is
more fully described below under Legal Proceedings, on July 30, 2008, the
Company, Coil Tubing’s President and our former President, Jerry Swinford
(“Plaintiffs”) filed a lawsuit against Grifco International, Inc. (“Grifco”),
the Depository Trust & Clearing Corporation (DTCC/DTC) and the President of
Grifco, James Dial (“Defendants”). The case is pending as Cause No.
08-07-07397-CV in Montgomery County Texas, District Court, 9th Judicial
District. The suit stems from Grifco’s stock distribution of 75,000,000 shares
of Coil Tubing’s common stock in August 2007 ("Grifco
Distribution").





ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





In
January 2009, our Board of Directors approved the issuance of 1,050,000 shares
of our common stock to Jerry Swinford (representing 5% of our then outstanding
shares of common stock), our then Chief Executive Officer and President, and
current Executive Vice President, in connection with the extension of the
Employment Agreement from January 1, 2009 to December 31,
2009.





Effective
June 1, 2009, in connection with Mr. Tynon’s Employment Agreement (described
below), the Board of Directors agreed to issue Mr. Tynon 750,000 shares of the
Company’s restricted common stock in consideration for him agreeing to the terms
of the Tynon Employment Agreement which shares are not included in the number of
outstanding shares disclosed throughout this report, as such shares have not
been physically issued to date.





The
Company claims an exemption from registration afforded by Section 4(2) of the
Act since the above issuances did not involve a public offering, the recipients
took the shares for investment and not resale, the recipients had such access to
similar information which would be included in an offering prospectus, and the
Company took appropriate measures to restrict transfer. No underwriters or
agents were involved in the issuance and no underwriting discounts or
commissions were paid by the Company.





ITEM 3. DEFAULTS UPON SENIOR
SECURITIES




None.





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





None.


-22-


ITEM
5. OTHER INFORMATION




Effective
June 1, 2009, Jerry Swinford resigned as Chief Executive Officer, Chief
Financial Officer and President of the Company and Charles Wayne Tynon was
appointed as the Chief Executive Officer and President of the
Company.  Effective June 1, 2009, Mr. Swinford was appointed as
Executive Vice President.  Mr. Swinford continues to serve as the sole
Director of the Company.





Charles
Wayne Tynon – Age 58





Mr. Tynon
was previously employed as a special project consultant by the Company from
December 2007 to February 2009, for which he was paid $3,000 per month in
consulting fees.  From June 2008 to October 2008, Mr. Tynon served as
the Manager of Superior Energy.  From September 2001 to May 2008, Mr.
Tynon served as an Operations Manager with Complete Production Services(formerly Arkoma Fishing
and Rental).  From February 2000 to June 2000, Mr. Tynon served
as a consultant to and worked in Inventory Control for Federal Coach, a
manufacturing company.  From March 1983 to August 1999, Mr. Tynon
served as Vice President of International Operations with Ponder Industries
(formerly Panther Oil Tools).  From August 1978 to September 1982, Mr.
Tynon served as Regional Sales Manager for Baker Hughes Intec (formerly
Tri-State Fishing and Rental) for Europe, Africa and the Middle
East.  From September 1973 to June 1978, Mr. Tynon served various
divisions for the Intairdril Companies in Europe, Africa and the Middle East in
different capacities.


.


Mr. Tynon
received his Bachelors degree in Journalism from the University of
Arkansas.





On or
around June 1, 2009, Coil Tubing entered into a Line of Credit Promissory Note
(the “Line of Credit”) with Charles Wayne Tynon.  Pursuant to the Line
of Credit, Mr. Tynon agreed to loan Coil Tubing up to $250,000.  Any
amounts borrowed under the Line of Credit bear interest at the rate of 6% per
annum, payable at maturity, which maturity date is June 1, 2011.  The
Line of Credit is secured by a Security Agreement entered into between Coil
Tubing 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 Coil Tubing’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 Coil Tubing’s current or future,
machinery and equipment, inventory and proceeds or products derived therefrom,
and rights under contracts, causes of action, documents, and evidence of title
to inventory and contract rights.  As of the date of this filing a
total of $60,000 has been borrowed under the Line of Credit.





Employment
Agreements:





Tynon Employment
Agreement:





Effective
June 1, 2009, Mr. Tynon entered into an Executive Compensation and Retention
Agreement with us to serve as our Chief Executive Officer and President (the
“Tynon Employment Agreement”). The initial term of the Tynon Employment
Agreement is until December 31, 2011 (the “Initial
Term”).  Furthermore, the Tynon Employment Agreement is automatically
renewed on January 1, 2010 and each successive year (each an “Extension Year”),
unless Mr. Tynon provides the Company in writing that he will not be exercising
the extension by December 1 of each year prior to the relevant January
1.





The Tynon
Employment Agreement provides for Mr. Tynon to receive a salary of $132,000 for
the first year of the Tynon Employment Agreement (pro rated for the remainder of
the year), with yearly increases, of a minimum of 10% of the prior year’s
salary. Additionally, pursuant to the Tynon Employment Agreement, Mr. Tynon
received 750,000 shares of our common stock upon the execution of the Tynon
Employment Agreement, and at the expiration of the Initial Term and each
Extension Year he is employed under the Tynon Employment Agreement, we agreed to
issue him additional shares of common stock equal to 5% of our then shares of
outstanding common stock (excluding any shares of common stock issuable to other
executives of the Company as a result of incentive share clauses of such
executive’s employment agreements).


-23-


Mr.
Tynon’s Employment Agreement can be terminated by us for “Cause,” defined as if
Mr. Tynon:





a)
            commits
      any intentional act of dishonesty, fraud, misrepresentation,
      misappropriation or embezzlement which has a material detriment on the
      Company;b)
            uses
      or discloses any confidential information or trade secrets of the Company,
      which has not been authorized by us, and which has a material detriment on
      the Company;c)
            significantly
      violates any law or regulation applicable to our business, which has a
      material detrimental impact on us, and the Board of
      Directors reasonably determines causes or is reasonably likely
      to cause material injury to us;d)
            is
      indicted of, or convicted of, or pleads nolo contendere or guilty in
      connection with any felony or any other crime which involves moral
      turpitude;e)
            continually
      fails in his efforts to perform his duties and responsibilities in
      connection with his positions, after giving notice thereof and thirty (30)
      days to cure such failure, or his gross negligence or willful misconduct
      in the performance of his duties; orf)
            materially
      and willfully breaches his fiduciary duties to us (each a termination “For
      Cause”).





The Tynon
Employment Agreement can also be terminated without cause by Mr. Tynon or us at
any time for any reason, provided the terminating party gives thirty (30) days
written notice to the non-terminating party (a termination “Without Cause”).
Finally, the Tynon Employment Agreement will be construed as constructively
terminated if Mr. Tynon terminates the Tynon Employment Agreement within six (6)
months following:




a)
            his
      demotion by us to a lesser position in title or
      responsibility;b)
            the
      decrease of Mr. Tynon’s compensation below the highest level of executive
      compensation we have in effect at any time;c)
            our
      requirement that Mr. Tynon relocate to a principal place of business more
      than fifty 50 miles away from our current office space or 50 miles away
      from his current address in Fort Smith, Arkansas;d)
            if
      we are subject to a change of control (defined as if more than 33% of the
      voting shares of the Company are acquired by a third party in a plan of
      reorganization, merger or consolidation); ore)
            if
      we breach any material term of the Tynon Employment Agreement, which is
      not cured within thirty (30) days after receiving written notice of such
      breach (each a “Constructive
Termination”).





Following
the termination of Mr. Tynon’s employment For Cause, or by Mr. Tynon, Without
Cause, we are obligated to pay him any compensation earned by him, but not yet
paid, to issue him any of the shares of common stock he may be due, but which
have not been issued to date, as provided above, and to provide him health
insurance until the end of the then current term. Following the termination of
Mr. Tynon’s employment by the Company Without Cause or any Constructive
Termination, we are required to pay him any compensation he would have been due
assuming the Tynon Employment Agreement had continued through the then current
term, issue him any shares he would have been due assuming the Tynon Employment
Agreement continued in effect through the then current term, to provide him
health insurance until the end of the then current term, and to pay him as a
lump sum an additional $100,000. Following the termination of the Tynon
Employment Agreement, as provided in the Tynon Employment Agreement, due to Mr.
Tynon’s disability or death, we are required to pay him any amount of
compensation earned but not paid, provide him and his wife health insurance
through the then current term, and to issue him any and all shares which he
would have been due assuming the Tynon Employment Agreement continued in effect
until the then of the then current term.


-24-


Swinford Employment
Agreement:





Effective
June 1, 2009, Mr. Swinford entered into an Executive Compensation and Retention
Agreement with us to serve as our Vice President (the “Swinford Employment
Agreement”), which replaced and superseded the prior employment agreements he
had with the Company. The initial term of the Swinford Employment Agreement is
until December 31, 2011 (the “Initial Term”).  Furthermore, the
Swinford Employment Agreement is automatically renewed on January 1, 2010 and
each successive year (each an “Extension Year”), unless Mr. Swinford provides
the Company in writing that he will not be exercising the extension by December
1 of each year prior to the relevant January 1.





The
Swinford Employment Agreement provides for Mr. Swinford to receive a salary of
$132,000 for the first year of the Swinford Employment Agreement (pro rated for
the remainder of the year), with yearly increases, of a minimum of 10% of the
prior year’s salary. Additionally, pursuant to the Swinford Employment
Agreement, at the expiration of the Initial Term and each Extension Year he is
employed under the Swinford Employment Agreement, we agreed to issue him
additional shares of common stock equal to 5% of our then shares of outstanding
common stock (excluding any shares of common stock issuable to other executives
of the Company as a result of incentive share clauses of such executive’s
employment agreements).





Mr.
Swinford’s Employment Agreement can be terminated by us for “Cause,” defined as
if Mr. Swinford:





a)
            commits
      any intentional act of dishonesty, fraud, misrepresentation,
      misappropriation or embezzlement which has a material detriment on the
      Company;b)
            uses
      or discloses any confidential information or trade secrets of the Company,
      which has not been authorized by us, and which has a material detriment on
      the Company;c)
            significantly
      violates any law or regulation applicable to our business, which has a
      material detrimental impact on us, and the Board of
      Directors reasonably determines causes or is reasonably likely
      to cause material injury to us;d)
            is
      indicted of, or convicted of, or pleads nolo contendere or guilty in
      connection with any felony or any other crime which involves moral
      turpitude;e)
            continually
      fails in his efforts to perform his duties and responsibilities in
      connection with his positions, after giving notice thereof and thirty (30)
      days to cure such failure, or his gross negligence or willful misconduct
      in the performance of his duties; orf)
            materially
      and willfully breaches his fiduciary duties to us (each a termination “For
      Cause”).





The
Swinford Employment Agreement can also be terminated without cause by Mr.
Swinford or us at any time for any reason, provided the terminating party gives
thirty (30) days written notice to the non-terminating party (a termination
“Without Cause”). Finally, the Swinford Employment Agreement will be construed
as constructively terminated if Mr. Swinford terminates the Swinford Employment
Agreement within six (6) months following:




a)
            his
      demotion by us to a lesser position in title or
      responsibility;b)
            the
      decrease of Mr. Swinford’s compensation below the highest level of
      executive compensation we have in effect at any time;c)
            our
      requirement that Mr. Swinford relocate to a principal place of business
      more than fifty 50 miles away from our current office space or 50 miles
      away from his current address in Fort Smith, Arkansas;d)
            if
      we are subject to a change of control (defined as if more than 33% of the
      voting shares of the Company are acquired by a third party in a plan of
      reorganization, merger or consolidation); ore)
            if
      we breach any material term of the Swinford Employment Agreement, which is
      not cured within thirty (30) days after receiving written notice of such
      breach (each a “Constructive
Termination”).


-25-


Following
the termination of Mr. Swinford’s employment For Cause, or by Mr. Swinford,
Without Cause, we are obligated to pay him any compensation earned by him, but
not yet paid, to issue him any of the shares of common stock he may be due, but
which have not been issued to date, as provided above, and to provide him and
his wife health insurance until the end of the then current term. Following the
termination of Mr. Swinford’s employment by the Company Without Cause or any
Constructive Termination, we are required to pay him any compensation he would
have been due assuming the Swinford Employment Agreement had continued through
the then current term, issue him any shares he would have been due assuming the
Swinford Employment Agreement continued in effect through the then current term,
to provide him and his wife health insurance until the end of the then current
term, and to pay him as a lump sum an additional $100,000. Following the
termination of the Swinford Employment Agreement, as provided in the Swinford
Employment Agreement, due to Mr. Swinford’s disability or death, we are required
to pay him any amount of compensation earned but not paid, provide him and his
wife health insurance through the then current term, and to issue him any and
all shares which he would have been due assuming the Swinford Employment
Agreement continued in effect until the then of the then current
term.





ITEM
6.  EXHIBITS




Exhibit Number
              Description of ExhibitExhibit
      3.1(1)
              Articles
      of Incorporation (Texas)Exhibit
      3.2(1)
              Plan
      of Conversion (Texas to Nevada)Exhibit
      3.3(1)
              Articles
      of Conversion (Texas)Exhibit
      3.4(1)
              Articles
      of Conversion (Nevada)Exhibit
      3.5(1)
              Articles
      of Incorporation (Nevada)Exhibit
      3.6(1)
              Series
      A Preferred Stock DesignationExhibit
      3.7(1)
              Bylaws
      (Nevada)Exhibit
      10.1(1)
              Acquisition
      Agreement with Grifco International, Inc.Exhibit
      10.2(1)
              Hammelmann
      Statement of Understanding Coil Tubing CleanerExhibit
      10.3(1)
              Hammelmann
      Statement of Understanding RotorJet and TurboJetExhibit
      10.4(1)
              Agreement
      For Exchange of Common Stock between Grifco and Coil
  TubingExhibit
      10.5(1)
              Agreement
      and Release between Grifco and Coil TubingExhibit
      10.6(1)
              Restatement
      and Novation of Agreement for Exchange of Common Stock between Grifco and
      Coil TubingExhibit
      10.7(1)
              Employment
      Agreement with Jerry Swinford and ExhibitsExhibit
      10.8(2)
              Amendment
      to Employment AgreementExhibit
      10.9(2)
              Amendment
      to Licensing AgreementExhibit
      10.10*
              Line
      of Credit Promissory Note with Charles Wayne TynonExhibit
      10.11*
              Security
      AgreementExhibit
      10.12*
              Executive
      Compensation and Retention Agreement with Jerry
SwinfordExhibit
      10.13*
              Executive
      Compensation and Retention Agreement with Charles Wayne
    TynonExhibit
      16.1(3)
              Letter
      from Li & Company, PCExhibit
      21.1(4)
              Subsidiaries
      of the CompanyExhibit
      31.1*
              Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002Exhibit
      32.1*
              Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002




* Filed
herewith.





(1) Filed
as exhibits to our Form SB-2 Registration Statement filed with the Commission on
July 18, 2007, and incorporated herein by reference.





(2) Filed
as exhibits to our Form SB-2A Registration Statement filed with the Commission
on September 27, 2007, and incorporated herein by reference.





(3) Filed
as an exhibit to our Form S-1/A Registration Statement filed with the Commission
on October 11, 2008, and incorporated herein by reference.





(4) Filed
as an exhibit to our Form 10-K filed with the Commission on April 23, 2009, and
incorporated herein by reference.


-26-





SIGNATURE





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




COIL TUBING TECHNOLOGY HOLDINGS,
      INC.DATED: 
      June 17, 2009By: /s/
      Charles Wayne TynonCharles Wayne
TynonChief
      Executive Officer and President(Principal
      Executive Officer and Principal Accounting
  Officer)


-27-


EXHIBIT
INDEX





Exhibit Number
                    Description of ExhibitExhibit
      3.1(1)
                    Articles
      of Incorporation (Texas)Exhibit
      3.2(1)
                    Plan
      of Conversion (Texas to Nevada)Exhibit
      3.3(1)
                    Articles
      of Conversion (Texas)Exhibit
      3.4(1)
                    Articles
      of Conversion (Nevada)Exhibit
      3.5(1)
                    Articles
      of Incorporation (Nevada)Exhibit
      3.6(1)
                    Series
      A Preferred Stock DesignationExhibit
      3.7(1)
                    Bylaws
      (Nevada)Exhibit
      10.1(1)
                    Acquisition
      Agreement with Grifco International, Inc.Exhibit
      10.2(1)
                    Hammelmann
      Statement of Understanding Coil Tubing CleanerExhibit
      10.3(1)
                    Hammelmann
      Statement of Understanding RotorJet and TurboJetExhibit
      10.4(1)
                    Agreement
      For Exchange of Common Stock between Grifco and Coil
  TubingExhibit
      10.5(1)
                    Agreement
      and Release between Grifco and Coil TubingExhibit
      10.6(1)
                    Restatement
      and Novation of Agreement for Exchange of Common Stock between Grifco and
      Coil TubingExhibit
      10.7(1)
                    Employment
      Agreement with Jerry Swinford and ExhibitsExhibit
      10.8(2)
                    Amendment
      to Employment AgreementExhibit
      10.9(2)
                    Amendment
      to Licensing AgreementExhibit
      10.10*
                    Line
      of Credit Promissory Note with Charles Wayne TynonExhibit
      10.11*
                    Security
      AgreementExhibit
      10.12*
                    Executive
      Compensation and Retention Agreement with Jerry
SwinfordExhibit
      10.13*
                    Executive
      Compensation and Retention Agreement with Charles Wayne
    TynonExhibit
      16.1(3)
                    Letter
      from Li & Company, PCExhibit
      21.1(4)
                    Subsidiaries
      of the CompanyExhibit
      31.1*
                    Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002Exhibit
      32.1*
                    Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002





* Filed
herewith.





(1) Filed
as exhibits to our Form SB-2 Registration Statement filed with the Commission on
July 18, 2007, and incorporated herein by reference.





(2) Filed
as exhibits to our Form SB-2A Registration Statement filed with the Commission
on September 27, 2007, and incorporated herein by reference.





(3) Filed
as an exhibit to our Form S-1/A Registration Statement filed with the Commission
on October 11, 2008, and incorporated herein by reference.




(4) Filed
as an exhibit to our Form 10-K filed with the Commission on April 23, 2009, and
incorporated herein by reference.


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