UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________




FORM
10-Q


_______________




x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the quarterly period ended September 30, 2008




o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the transition period from
______ to  ______.




ENERGY
& TECHNOLOGY, CORP.


(Exact
name of registrant as specified in Charter)




DELAWARE
            
            
            
            26-0198662(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (Commission
      File No.)
            
            (IRS
      Employee Identification No.)





Petroleum Towers,
Suite 530


P.O. Box
52523


Lafayette,
LA 70505


(Address
of Principal Executive Offices)


_______________




(337)
984-2000


(Issuer
Telephone number)


_______________




(Former
Name or Former Address if Changed Since Last Report)




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




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





Large
Accelerated Filer o   Accelerated
Filer o       Non-Accelerated
Filero       Smaller
Reporting Companyx




Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.


Yes o  No x




State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of November 10, 2008: 175,100,000 shares of common stock.












ENERGY
& TECHNOLOGY, CORP.




FORM
10-Q




September
30, 2008




INDEX


PART I
      - FINANCIAL INFORMATIONItem 1.
              
              Financial
      Statements
              
              2Item 2.
              
              Management
      Discussion and Analysis of Financial Condition
              
              13Item 3.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              18Item 4T.
              
              Controls
      and Procedures
              
              19PART II
      - OTHER INFORMATIONItem 1.
              
              Legal
      Proceedings
              
              20Item
      1A
              
              Risk
      Factors
              
              20Item 2.
              
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              
              20Item 3.
              
              Defaults
      Upon Senior Securities
              
              20Item 4.
              
              Submission
      of Matters to a Vote of Security Holders
              
              20Item 5.
              
              Other
      Information
              
              20Item 6.
              
              Exhibits
      and Reports on Form 8-K
              
              20SIGNATURE
              
              21









INTRODUCTORY NOTE





This
Quarterly Report on Form 10-Q contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 about Energy
& Technology, Corp. (the “Company”) and our subsidiary, Technical
Industries, Inc. (TII), and Energy Pipe, LLC (a variable interest entity), that
are subject to risks and uncertainties.  Forward-looking statements
include information concerning future financial performance, business strategy,
projected plans and objectives.  Statements preceded by, followed by
or that otherwise include the words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “may increase,” “may fluctuate” and similar
expressions of future or conditional verbs such as “will,” “should,” “would,”
and “could” are generally forward-looking in nature and not historical
facts.  Actual results may differ materially from those projected,
implied, anticipated or expected in the forward-looking
statements.  Readers of this quarterly report should not rely solely
on the forward-looking statements and should consider all uncertainties and
risks throughout this report. The statements are representative only as of the
date they are made.  The Company, TII, and Energy Pipe, LLC (sometimes
referred to herein on a consolidated basis as the Company, we, us, or similar
phrasing) undertakes no obligation to update any forward-looking
statement.





These
forward-looking statements, implicitly and explicitly, include the assumptions
underlying the statements and other information with respect to the Company's
beliefs, plans, objectives, goals, expectations, anticipations, estimates,
financial condition, results of operations, future performance and business,
including management's expectations and estimates with respect to revenues,
expenses, return on equity, return on assets, efficiency ratio, asset quality
and other financial data and capital and performance ratios.





Although
the Company believes that the expectations reflected in the forward-looking
statements are reasonable, these statements involve risks and uncertainties that
are subject to change based on various important factors, some of which are
beyond the control of the Company.  The following factors, among
others, could cause the Company's results or financial performance to differ
materially from its goals, plans, objectives, intentions, expectations and other
forward-looking statements:





·
            general
      economic and industry conditions;


·
            our
      capital requirements and dependence on the sale of our equity
      securities;


·
            the
      liquidity of the Company’s common stock will be affected by the lack of a
      trading market;


·
            industry
      competition;


·
            shortages
      in availability of qualified
personnel;


·
            legal
      and financial implications of unexpected catastrophic
    events;


·
            regulatory
      or legislative changes effecting the industries we serve;
    and


·
            reliance
      on, and the ability to attract, key
personnel.





For a
discussion of these and other risks and uncertainties that could cause actual
results to differ from those contained in the forward-looking statements, see
“Risk Factors” in the Company’s S-1 Report filed with the SEC, which is
available on the SEC’s website at www.sec.gov.  All
forward-looking statements are qualified in their entirety by this cautionary
statement, and the Company undertakes no obligation to revise or update this
Quarterly Report on Form 10-Q to reflect events or circumstances after the date
hereof.  New factors emerge from time to time, and it is not possible
for us to predict which factors, if any, will arise.  In addition, the
Company cannot assess the impact of each factor on the Company’s business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.





-1-





PART
I.  Financial Information





ITEM
1. Financial Statements







ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Balance SheetsSeptember
      30,
              
              
              December
      31,2008
              
              
              2007Assets
              
              (Unaudited)
              
              
              (Audited)Current
      AssetsCash
      and Cash Equivalents
              
              $
              1,292,934
              
              
              $
              437,997Accounts
      ReceivableTrade
              
              
              1,396,635
              
              
              
              1,428,724Other
              
              
              25,014
              
              
              
              5,704Inventory
              
              
              2,145,179
              
              
              
              -Investments
              
              
              117,996
              
              
              
              -Prepaid
      Expenses
              
              
              81,194
              
              
              
              38,117Deferred
      Tax Asset
              
              
              20,065
              
              
              
              369,055Total
      Current Assets
              
              
              5,079,017
              
              
              
              2,279,597Property
      and Equipment, Net
              
              
              8,310,456
              
              
              
              7,922,082Other
      AssetsPatent,
      net
              
              
              539,028
              
              
              
              564,427Deferred
      IPO Expenses
              
              
              47,980
              
              
              
              10,552Deposits
              
              
              4,988
              
              
              
              4,988Other
      Assets
              
              
              14,648
              
              
              
              10,026Total
      Other Assets
              
              
              606,644
              
              
              
              589,993Total
      Assets
              
              $
              13,996,117
              
              
              $
              10,791,672




The accompanying notes are
an integral of these financial statements




-2-




ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Balance SheetsSeptember
      30,
              
              
              December
      31,2008
              
              
              2007(Unaudited)
              
              
              (Audited)Liabilities
      and Stockholders' EquityCurrent
      LiabilitiesCash
      Overdraft
              
              $
              -
              
              
              $
              52,900Current
      Maturities of Notes Payable
              
              
              8,744
              
              
              
              10,033Accounts
      Payable
              
              
              1,074,032
              
              
              
              381,649Accrued
      Payroll and Payroll Liabilities
              
              
              139,199
              
              
              
              24,074Income
      Taxes Payable
              
              
              364,555
              
              
              
              -Customer
      Deposits
              
              
              551,075
              
              
              
              -Accrued
      Rent
              
              
              1,150,000
              
              
              
              1,037,500Accrued
      Liability for Capital Expenditures
              
              
              6,278,327
              
              
              
              6,326,200Total
      Current Liabilities
              
              
              9,565,932
              
              
              
              7,832,356Long-Term
      LiabilitiesNotes
      Payable
              
              
              4,558
              
              
              
              11,295Deferred
      Taxes Payable
              
              
              578,076
              
              
              
              566,910Due
      to Affiliates
              
              
              1,705,722
              
              
              
              1,407,718Total
      Long-Term Liabilities
              
              
              2,288,356
              
              
              
              1,985,923Stockholders'
      EquityPreferred
      Stock - $.001 Par Value; 10,000,000 Shares Authorized,None
      Issued
              
              
              -
              
              
              
              -Common
      Stock - $.001 Par Value; 250,000,000 Shares Authorized,175,100,000
      Shares Issued and Outstanding at September 30, 2008,(unaudited),
      175,000,000 Shares Issued and Outstanding atDecember
      31, 2007, 74,900,000 Shares Unissued atSeptember
      30, 2008 (unaudited), 75,000,000 Shares Unissued atDecember
      31, 2007 (72,000 Shares Subscribed atDecember
      31, 2007)
              
              
              175,100
              
              
              
              175,000Discount
      on Capital Stock
              
              
              (125,000
              )
              
              
              (125,000
              )Capital
      Stock Subscribed
              
              
              -
              
              
              
              72,000Paid-In
      Capital
              
              
              180,375
              
              
              
              80,475Retained
      Earnings
              
              
              1,911,354
              
              
              
              770,918Total
      Stockholders' Equity
              
              
              2,141,829
              
              
              
              973,393Total
      Liabilities and Stockholders' Equity
              
              $
              13,996,117
              
              
              $
              10,791,672
  The
      accompanying notes are an integral part of these financial
      statements.





-3-









ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Statements of Operations(Unaudited)Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenues
              
              $
              2,678,114
              
              
              $
              1,051,041
              
              
              $
              7,861,390
              
              
              $
              2,559,522Cost
      of RevenuesMaterials
      and Supplies
              
              
              1,663,853
              
              
              
              81,087
              
              
              
              3,202,735
              
              
              
              140,323Labor
      and Related Costs
              
              
              313,548
              
              
              
              227,536
              
              
              
              688,109
              
              
              
              644,620Subcontract
      Labor
              
              
              128,867
              
              
              
              87,079
              
              
              
              389,724
              
              
              
              190,084Depreciation
              
              
              80,391
              
              
              
              -
              
              
              
              244,826
              
              
              
              16,400Other
              
              
              173,473
              
              
              
              111,783
              
              
              
              391,785
              
              
              
              180,129Total
      Costs of Revenues
              
              
              2,360,132
              
              
              
              507,485
              
              
              
              4,917,179
              
              
              
              1,171,556Gross
      Profit
              
              
              317,982
              
              
              
              543,556
              
              
              
              2,944,211
              
              
              
              1,387,966Operating
      ExpensesGeneral
      and Administrative ExpensesSalaries
      and Wages
              
              
              156,660
              
              
              
              46,723
              
              
              
              430,574
              
              
              
              101,852Rent
              
              
              54,141
              
              
              
              49,240
              
              
              
              167,672
              
              
              
              150,404Professional
      Services
              
              
              32,641
              
              
              
              6,823
              
              
              
              102,849
              
              
              
              25,096Office
      Supplies and Expenses
              
              
              20,031
              
              
              
              20,082
              
              
              
              61,540
              
              
              
              49,738Other
              
              
              55,195
              
              
              
              56,267
              
              
              
              193,935
              
              
              
              158,612Total
      General and Administrative Expenses
              
              
              318,668
              
              
              
              179,135
              
              
              
              956,570
              
              
              
              485,702Depreciation
              
              
              23,107
              
              
              
              23,688
              
              
              
              57,482
              
              
              
              54,663Total
      Operating Expenses
              
              
              341,775
              
              
              
              202,823
              
              
              
              1,014,052
              
              
              
              540,365(Loss)
      Income from Operations
              
              
              (23,793
              )
              
              
              340,733
              
              
              
              1,930,159
              
              
              
              847,601Other
      Income (Expense)Interest
      Expense
              
              
              (24,460
              )
              
              
              (33,095
              )
              
              
              (71,474
              )
              
              
              (100,752
              )Investment
      Income
              
              
              (2,593
              )
              
              
              10,751
              
              
              
              6,461
              
              
              
              32,136Total
      Other Income (Expense)
              
              
              (27,053
              )
              
              
              (22,344
              )
              
              
              (65,013
              )
              
              
              (68,616
              )(Loss)
      Income Before Provision for Income Taxes
              
              
              (50,846
              )
              
              
              318,389
              
              
              
              1,865,146
              
              
              
              778,985Provision
      for Income Taxes
              
              
              (6,949
              )
              
              
              159,630
              
              
              
              724,710
              
              
              
              390,595Net
      (Loss) Income
              
              $
              (43,897
              )
              
              $
              158,759
              
              
              $
              1,140,436
              
              
              $
              388,390(Loss)
      Earnings per Share - Basic
              
              NM
              
              
              NM
              
              
              $
              0.01
              
              
              NMEarnings
      per Share - Diluted
              
              NM
              
              
              NM
              
              
              $
              0.01
              
              
              $
              0.00
  NM
      - Calculation not meaningful since less than $.01 per
shareThe
      accompanying notes are an integral part of these financial
      statements.




-4-


ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Statements of Changes in Stockholders' Equity(Unaudited)Discount
      on
              
              
              Additional
              
              
              
              
              
              
              
              
              TotalCommon
      Stock
              
              
              Capital
              
              
              Paid-In
              
              
              Retained
              
              
              Stock
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Stock
              
              
              Capital
              
              
              Earnings
              
              
              Subscriptions
              
              
              EquityBalance
      at January 1, 2007
              
              
              175,000,000
              
              
              $
              175,000
              
              
              $
              (125,000
              )
              
              $
              80,475
              
              
              $
              275,334
              
              
              $
              -
              
              
              $
              405,809Capital
      Stock Subscribed
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              72,000
              
              
              
              72,000Net
      Income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              388,390
              
              
              
              -
              
              
              
              388,390Balance
      at September 30, 2008
              
              
              175,000,000
              
              
              $
              175,000
              
              
              $
              (125,000
              )
              
              $
              80,475
              
              
              $
              663,724
              
              
              $
              72,000
              
              
              $
              866,199Balance
      at January 1, 2008
              
              
              175,000,000
              
              
              $
              175,000
              
              
              $
              (125,000
              )
              
              $
              80,475
              
              
              $
              770,918
              
              
              $
              72,000
              
              
              $
              973,393Issuance
      of Common Stock
              
              
              100,000
              
              
              
              100
              
              
              
              -
              
              
              
              99,900
              
              
              
              -
              
              
              
              (72,000
              )
              
              
              28,000Net
      Income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,140,436
              
              
              
              -
              
              
              
              1,140,436Balance
      at September 30, 2008
              
              
              175,100,000
              
              
              $
              175,100
              
              
              $
              (125,000
              )
              
              $
              180,375
              
              
              $
              1,911,354
              
              
              $
              -
              
              
              $
              2,141,829
  The
      accompanying notes are an integral part of these financial
      statements.







-5-






ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Statements of Cash Flows(Unaudited)Nine
      Months EndedSeptember
      30,2008
              
              
              2007Cash
      Flows from Operating ActivitiesNet
      Income
              
              $
              1,140,436
              
              
              $
              388,390Adjustments
      to Reconcile Net Income to Net CashProvided
      by (Used in) Operating ActivitiesDepreciation
              
              
              302,308
              
              
              
              71,063Amortization
      of Patent Costs
              
              
              25,399
              
              
              
              -Bad
      Debt Expense
              
              
              -
              
              
              
              2,010Deferred
      Income Taxes
              
              
              360,156
              
              
              
              387,579Changes
      in Assets and LiabilitiesTrade
      Receivables
              
              
              32,089
              
              
              
              (172,013
              )Other
      Receivables
              
              
              (19,310
              )
              
              
              (2,277
              )Inventory
              
              
              (2,145,179
              )
              
              
              -Prepaid
      Expenses
              
              
              (43,077
              )
              
              
              36,983Accounts
      Payable
              
              
              692,383
              
              
              
              (19,574
              )Accrued
      Payroll and Payroll Liabilities
              
              
              115,125
              
              
              
              42,706Income
      Taxes Payable
              
              
              364,555
              
              
              
              -Increase
      in Customers' Deposits
              
              
              551,075
              
              
              
              -Accrued
      Rent
              
              
              112,500
              
              
              
              112,500Net
      Cash Provided by Operating Activities
              
              
              1,488,460
              
              
              
              847,367Cash
      Flows from Investing ActivitiesPurchase
      of Investments
              
              
              (117,996
              )
              
              
              -Decrease
      (Increase) in Other Assets
              
              
              (4,622
              )
              
              
              (4,494
              )Payment
      on Accrued Liability for Capital Expenditures
              
              
              (47,873
              )
              
              
              -Purchase
      of Property and Equipment
              
              
              (690,682
              )
              
              
              (253,373
              )Net
      Cash Used in Investing Activities
              
              
              (861,173
              )
              
              
              (257,867
              )Cash
      Flows from Financing ActivitiesDecrease
      in Cash Overdraft
              
              
              (52,900
              )
              
              
              -Payment
      of IPO Costs
              
              
              (37,428
              )
              
              
              (551
              )Borrowings
      of Loans from Affiliates
              
              
              298,004
              
              
              
              117,197Repayment
      of Debt and Capital Lease Obligations
              
              
              (8,026
              )
              
              
              (32,831
              )Issuance
      of Stock/Stock Subscriptions
              
              
              28,000
              
              
              
              -Net
      Cash Provided by Financing Activities
              
              
              227,650
              
              
              
              83,815Net
      Increase in Cash and Cash Equivalents
              
              
              854,937
              
              
              
              673,315Cash
      and Cash Equivalents, Beginning of Period
              
              
              437,997
              
              
              
              492,752Cash
      and Cash Equivalents, End of Period
              
              $
              1,292,934
              
              
              $
              1,166,067
  The accompanying
      notes are an integral part of these financial
      statements.






-6-




ENERGY
      & TECHNOLOGY, CORP.Consolidated
      Statements of Cash Flows - Continued(Unaudited)Nine
      Months EndedSeptember
      30,2008
              
              
              2007Supplemental
      Disclosure of Cash Flow InformationCash
      Paid During the Period for Interest
              
              $
              2,154
              
              
              $
              3,233Cash
      Paid During the Period for Income Taxes
              
              $
              -
              
              
              $
              -
  The accompanying
      notes are an integral part of these financial
      statements.





-7-





ENERGY
& TECHNOLOGY CORP.


NOES
TO CONSOLIDATED FINANCIAL STATEMENTS.





Note
1.     Organization





Technical
Industries & Energy, Corp. (the Company) (TIE) was formed November 29, 2006
under the laws of the State of Delaware in order to acquire and to take over the
assets and business of Technical Industries, Inc. (TII).  On that
date, the Company issued 125,000,000 shares of common stock to American
Interest, LLC, in exchange for founder services rendered.  The fair
value of these services was considered immaterial, and no amounts were
recognized in the financial statements.  At the time the shares were
issued to American Interest, LLC, TIE had no assets, operations, or cash
flows.  As such, the stock had no value at the time TIE was
established.  The par value was arbitrarily established in order to
comply with the State of Delaware laws.  In order to reflect the par
value of the shares issued, the Company has recognized a discount on capital
stock as a contra-equity account within the equity section of the consolidated
balance sheets.





On
January 3, 2007, the Company entered into a Stock Exchange Agreement and Share
Exchange (the Agreement) whereby the sole shareholder of TII exchanged all of
the outstanding shares of the TII to the Company in exchange for 50,000,000
shares of Company stock.  Accordingly, TII became a wholly-owned
subsidiary of the Company.  The assets acquired and liabilities
assumed were recorded at the carrying value to TII since TII and the Company
were under common control prior to the acquisition.  In accordance
with SFAS No. 141 and APB Opinion No. 16, the financial statements have been
restated as if the transaction had occurred on January 1, 2006.  The
number of shares of common stock outstanding as of December 31, 2006, were
restated to reflect the 50,000,000 shares exchanged for TII.





TII
specializes in the non-destructive testing of vessels, oilfield equipment and
mainly pipe, including ultrasonic testing, utilizing the latest
technologies.  These technologies enable TII to (i) provide detailed
information to customers regarding each pipe tested, and (ii) reach energy
reserves present technology cannot reach without extra cost to the oil and gas
companies.  Because of the intense scrutiny applied to each section of
pipe, TII is able to generate data which allows the pipe to be used in the most
extreme conditions, and has been proven especially useful in deep water drilling
operations in the Gulf of Mexico.





On August
29, 2008, the Company effected a name change from Technical Industries &
Energy Corp. to Energy & Technology Corp. to better reflect the nature of
the Company’s business.





Note
2.     Acquisition





As
disclosed in Note 1, on January 3, 2007, the Company acquired all of the
outstanding common stock of Technical Industries, Inc, in exchange for
50,000,000 shares of $.001 par value common stock.  The assets and
liabilities assumed, which are summarized in the following paragraph, were
recorded at the carrying value to TII since TII and the Company were under
common control prior to the acquisition.





A summary
of the assets acquired and liabilities assumed in connection with the
acquisition of TII is as follows:




AssetsCash
      and Cash Equivalents
              
              $
              492,752Receivables
              
              
              570,801Prepaid
      Expenses
              
              
              42,555Deferred
      Tax Asset
              
              
              386,319Property
      and Equipment, net
              
              
              1,359,209Capitalized
      Patent Costs
              
              
              517,427Other
      Assets
              
              
              14,988




-8-




Note
2.     Acquisition (Continued)




LiabilitiesAccounts
      Payable and Accrued Expenses
              
              
              (956,825
              )Notes
      Payable
              
              
              (47,113
              )Obligations
      under Capital Leases
              
              
              (10,832
              )Deferred
      Tax Liability
              
              
              (85,779
              )Amounts
      due to Affiliates
              
              
              (1,877,693
              )




Since the
Company and TII were under common control prior to the acquisition, the
financial statements have been restated as if the transaction had occurred on
January 1, 2006.  The unaudited results of operations of the Company
and TII for periods prior to the acquisition are summarized as
follows:




Net Sales
              
              
              Net IncomeTwo
      days ended January 2, 2007Company
              
              $
              -
              
              
              $
              -TII
              
              
              -
              
              
              
              -$
              -
              
              
              $
              -Year
      ended December 31, 2006Company
              
              $
              -
              
              
              $
              -TII
              
              
              2,609,890
              
              
              
              369,117$
              2,609,890
              
              
              $
              369,117





Note
3.     Summary of Significant Accounting
Policies





Basis
of Presentation and Consolidation


The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary, Technical Industries, Inc., and the accounts of Energy
Pipe, LLC (a variable interest entity).  All significant intercompany
balances and transactions have been eliminated.





The
consolidated financial statements reflect all adjustments that are, in the
opinion of management, necessary for a fair presentation of financial
information for the interim periods presented.  These adjustments are
of a normal recurring nature and include appropriate estimated
provisions.





Basis
of Accounting


Assets,
liabilities, revenues and expenses are recognized on the accrual basis of
accounting in conformity with accounting principles generally accepted in the
United States of America.





Use
of Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect amounts reported in the financial
statements.  Accordingly, actual results could differ from those
estimates due to information that becomes available subsequent to the issuance
of the financial statements or for other reasons.





Revenue
Recognition


Revenue
for inspection services is recognized upon completion of the services
rendered.  Revenue for the sales of pipe is recognized when pipe is
delivered and the customer takes ownership and assumes the risks of loss,
collection of the relevant receivable is probable, persuasive evidence of an
arrangement exists, and the sales price is fixed or determinable.





Trade
Receivables


Trade
accounts receivable are carried at their estimated collectible amounts. Trade
credit is generally extended on a short-term basis; thus receivables do not bear
interest, although a finance charge may be applied to amounts past due. Trade
accounts receivable are periodically evaluated for collectibility based on past
credit history with customers and their current financial condition, and are
charged against bad debt expense when they are deemed uncollectible. Use of this
method does not result in a material difference from the valuation method
required by accounting principles generally accepted in the United States of
America.






-9-








Note
3.     Summary of Significant Accounting Policies
(Continued)





Investments


The
Company’s securities are bought and held principally for the purpose of selling
them in the near term, and are classified as trading securities. Trading
securities are recorded at fair value on the balance sheet in current assets,
with the change in fair value during the period included in earnings (recognized
as a component of investment income).





Inventory


Inventory
is stated at the lower of cost determined by the specific identification method
or market.  At September 30, 2008, inventory consisted of drilling
pipe available for sale.





Property
and Equipment


Property
and equipment are stated at cost.  Expenditures for property and
equipment and items that substantially increase the useful lives of existing
assets are capitalized at cost and depreciated. Routine expenditures for repairs
and maintenance are expensed as incurred.  The cost and related
accumulated depreciation of property and equipment disposed of are eliminated
from the accounts, and any resulting gain or loss is recognized.





Depreciation
is provided utilizing the straight-line method over the estimated useful lives
of the assets capitalized.





Valuation
of Long-Lived Assets


In the
event facts and circumstances indicate that carrying amounts of long-lived
assets may be impaired, the Company evaluates the recoverability of its
long-lived assets using the estimated future undiscounted cash flows associated
with the asset compared to the asset’s carrying amount to determine if a
write-down is required, pursuant to the provisions of SFAS No. 144, Accounting or Disposal of Long-Lived
Assets, and related interpretations.  Any impairment loss is
measured as the difference between the carrying amount and the fair value of the
impaired asset.





Credit
Risk


Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of temporary cash investments and trade
receivables.  For the three months ended September 30, 2008, four
customers made up approximately 85% of the Company’s revenues.  For
the nine months ended September 30, 2008, four customers made up approximately
61% of the Company’s revenues





The
Company maintains cash accounts at several financial institutions.  At
September 30, 2008, the Company also maintained a cash balance in an investment
account.  Cash balances at each financial institution are secured by
the Federal Deposit Insurance Corporation (FDIC) up to
$100,000.    The Company’s investment account is secured
through the Securities Investor Protection Corporation (SIPC).  At
September 30, 2008, the Company had deposits that exceeded the FDIC insured
limit by $782,567, and the Company’s investment account exceeded SIPC coverage
by $17,996.





On
October 3, 2008, the Emergency Economic Stabilization Act of 2008 was signed,
which raised the limit on federal deposit insurance from $100,000 to $250,000
per depositor.  This increase in basic deposit insurance is through
December 31, 2009.





Advertising


The
Company charges the costs of advertising to expense as incurred.




Cash
Flows


For
purposes of the consolidated statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.





Recent Accounting
Pronouncements


In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements.  This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements.  This Statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007.






-10-









Note
3.     Summary of Significant Accounting Policies
(Continued)





In
September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans (as
amended).  This Statement improves financial reporting by
requiring an employer to recognize the overfunded or under-funded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income.  This Statement also requires an employer to
measure the funded status of a plan as of the date of its year-end statement of
financial position.  An employer with publicly traded equity
securities shall initially apply the requirement to recognize the funded status
of a benefit plan as of the end of the fiscal year ending after December 31,
2006.  The requirement to measure plan assets and benefit obligations
as of the date of the employer’s fiscal year-end statement of financial position
is effective for fiscal years ending after


December
31, 2008.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (as amended).  This Statement
permits entities to choose to measure many financial instruments and certain
other items at fair value.  The objective is to provide entities with
the opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions.  This Statement is effective as of the
beginning of an entity’s first fiscal year that begins after November 15,
2007.





In
December 2007, the FSB issued SFAS 141(R), Business Combinations. SFAS
141(R) will impact how entities apply the acquisition method to business
combinations. Significant changes to how the Company accounts for business
combinations under this Statement include 1) the acquisition date will be the
date the acquirer obtains control, 2) all identifiable assets acquired,
liabilities assumed, and noncontrolling interests in the acquiree will be stated
at fair value on the acquisition date, 3) assets or liabilities arising from
noncontractual contingencies will be measured at their acquisition date fair
value only if it is more likely than not that they meet the definition of an
asset or liability on the acquisition date, 4) adjustments subsequently made to
the provisional amounts recorded on the acquisition date will be made
retroactively during a measurement period not to exceed one year, 5)
acquisition-related restructuring costs that do not meet the criteria in SFAS
146, Accounting for Costs
Associated with Exit or Disposal Activities, will be expensed as
incurred, transaction costs will be expensed as incurred, 7) reversals of
deferred income tax valuation allowances and income tax contingencies will be
recognized in earnings subsequent to the measurement period, and 8) the
allowance for loan losses of an acquiree will not be permitted to be recognized
by the acquirer. Additionally, SFAS No. 141(R) will require additional
disclosures regarding subsequent changes to acquisition-related contingencies,
contingent consideration, noncontrolling interests, acquisition-related
transaction costs, fair values and cash flows not expected to be collected for
acquired loans, and goodwill valuation.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (an amendment of ARB No.
51).  This Statement was issued to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements.  This
Statement is effective for fiscal years, and interim periods with those fiscal
years, beginning on or after December 31, 2008.





In March
2008, the FAS issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities (an amendment of FASB Statement No.
133).  This Statement requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the transparency of
financial reporting.  This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early adoption encouraged.





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles.  This Statement identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the
United States (the GAAP hierarchy).  This Statement is effective 60
days following the SEC’s approval of the PCAOB amendments to AU Section
411,The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting
Principles.





-11-








Note
4.     Patent





On
September 4, 2007, the Company’s chief executive officer was awarded a patent
from the United States Patent and Trademark Office pertaining to his development
of specialized testing procedures for drilling pipe utilized by oil-exploration
companies.





The
Company’s costs associated with its development of these testing procedures and
application for patent have been capitalized and recognized as an asset in the
Company’s balance sheet, and is being amortized over 17
years.  Estimated amortization expense for each of the ensuing years
through December 31, 2012 is $33,866 per year.





Note
5.     Accrued Liability for Capital
Expenditures





At
December 31, 2007, the Company had acquired a significant amount of equipment
and other capital assets for which the Company has recognized a liability for
the outstanding unpaid balance.  The Company intends to finance the
acquisition of these capital assets through a long-term financing
arrangement.  The Company has recognized the outstanding balance
associated with the acquisition of these capital assets as a current
liability.





Note
6.     Commitments





The
Company leases office premises, operating facilities, and equipment under
several operating leases expiring in various years through 2030.  The
Company also leases land for operating purposes on a month to month
basis.





Note
7.     Major Customers





For the
three months ended September30, 2008 (unaudited), the Company had four customers
which generated revenues in excess of 10% of the Company’s total
revenues.  Revenues for these four customers were approximately 66%,
and the total balance due from these four customers at September30, 2008
(unaudited) was $1,505,721.





For the
year ended December 31, 2007, the Company had one customer for which revenue
generated from the customer amounted to approximately 63% of the Company’s total
revenue.  At December 31, 2007, this customer had a trade receivable
balance of $672,549.  For the year ended December 31, 2006, the
Company had two customers which generated revenues in excess of 10% of the
Company’s total revenues.  Revenues for these two customers were
approximately 66%, and the total balance due from these two customers was
$352,236.





Note
8.     Related Party Transactions





Included
in due to affiliates at September30, 2008 (unaudited) and December 31, 2007, is
$1,155,336 in acquisition debts paid by affiliates upon the acquisition of the
Company in 1999.  The affiliates maintain a lien on the Company’s
accounts receivable and equipment to secure this loan.  The amounts
due to the affiliates have no set terms of repayment and bear interest at
5.00%.  Interest expense associated with this obligation for the three
months ended September30, 2008 and 2007 (unaudited) totaled $46,213 and $65,012,
respectively.  Interest expense totaled $130,025 and $116,009 for the
years ended December 31, 2007 and 2006, respectively.








-12-




















ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS




General





We have a
patented process which can help companies within the energy industry reach deep
energy reserves other equipment cannot.





The
following list highlights a few areas of opportunity to expand the Company's
business:





Increased sales and marketing
effort:We have
grown over the historical period without an aggressive marketing and sales
effort.  Currently, new business is generated from referrals, technical
sessions given to oil & gas and industry related companies, a website
and through the use of a marketing company on a limited basis.  To date, we
have not hired any in-house salespersons.  Currently, we have one employee
whose duties are focused on sales, marketing, and promotional activities for the
Company. Management believes revenue can be increased by expanding the
Company's sales force.





Applying for additional patents to
protect proprietary rights:We have recently
developed international patent pending new inspection technology needed in order
to reach deep energy reserves present technology cannot reach. Our
expandable inspection technology helps the oil & gas companies retrieve a
large amount of energy reserves that cannot be retrieved with current
technology.  We have manufactured several pieces of equipment in-house that
have enabled us to successfully serve the oilfield market.  Due to
proprietary infringement risk, we have discontinued manufacturing the equipment
for sale to third parties.  By securing a patent protecting our
proprietary technology, we could consider manufacturing equipment for sale
again, which would open a new line of revenue.





Introduction of complementary
services:We are continually adding new
services in order to meet customer demand. Most recently, we began drilling
equipment inspection services. Other areas management has identified as
potential growth avenues include vessel inspection and inspection of pipelines
in service. We are working to acquire pipe threading equipment which could be
attached to the inspection assembly line and provide additional service for a
very low increased cost to our customers.





Geographic expansion in the domestic
and international markets:We currently derive the majority of revenue
from the Houston, Texas market, where many of our clients are based. There are
several other markets that could be better served, such as in Louisiana where a
new plant in Abbeville, Louisiana is presently under construction in order to
serve the deep wells in the Gulf of Mexico. This plant is expected to be fully
operational in late 2008. Other expansions are being considered through the
opening of additional full-service, local plants. Furthermore, we maintain
relations with sales representatives in the Mexico and Saudi Arabia and the
Middle East markets that could be better utilized if we are able to locally
serve customers. Lastly, we have Canadian customers that utilize our services on
a limited basis, due to the high cost of shipping heavy pipes. To date, we have
not had the capital or human resources to establish plants in these potential
markets.





We
continue to seek other companies which can complement our pipe and inspection
business with the goal of securing these businesses through a combination of
cash and stock payments.  All of these expansion plans rely heavily on
raising capital through a public offering of additional stock which would be
used to fund our acquisitions.  Currently, we are in the process of
performing due diligence procedures on two of the companies.





We have a
customer base of approximately 50 accounts, and are continually expanding its
customer base to increase revenue growth. Currently, we serve customers that are
oil companies, steel mills, material suppliers,drilling companies, material
rental companies and engineering companies. Our customer relationships average
over ten years which provides us repeat business.





Critical
Accounting Policies





The
Company has identified the following accounting policies to be the critical
accounting policies of the Company:





Revenue
Recognition.  Revenue for inspection services is recognized
upon completion of the services rendered.  Revenue for the sales of
pipe is recognized when pipe is delivered and the customer takes ownership and
assumes the risks of loss, collection of the relevant receivable is probable,
persuasive evidence of an arrangement exists, and the sales price is fixed or
determinable.





Inventory.  Inventory
is stated at the lower of cost determined by the specific identification method
or market.  At September 30, 2008, inventory consisted of drilling
pipe available for sale.




-13-







Property and Equipment.Property and equipment are stated at cost.  Expenditures for
property and equipment and items that substantially increase the useful lives of
existing assets are capitalized at cost and depreciated. Routine expenditures
for repairs and maintenance are expensed as incurred.  The cost and
related accumulated depreciation of property and equipment disposed of are
eliminated from the accounts, and any resulting gain or loss is
recognized.  Depreciation is provided utilizing the straight-line
method over the estimated useful lives of the assets capitalized.





Valuation of Long-Lived
Assets.In the event facts and circumstances indicate that
carrying amounts of long-lived assets may be impaired, the Company evaluates the
recoverability of its long-lived assets using the estimated future undiscounted
cash flows associated with the asset compared to the asset’s carrying amount to
determine if a write-down is required, pursuant to the provisions of SFAS No.
144, Accounting or Disposal of
Long-Lived Assets, and related interpretations.  Any impairment
loss is measured as the difference between the carrying amount and the fair
value of the impaired asset.





Discussion
of Changes in Financial Condition from December 31, 2007 to September 30,
2008





At
September 30, 2008, total assets amounted to $13,996,117 compared to $10,791,672
at December 31, 2007, an increase of $3,204,445, or 29.7%.  The
increase is primarily due to an increase in cash and cash equivalents of
$854,937, an increase in inventory of $2,145,179, an increase in investments of
$117,996, and an increase of property and equipment of
$388,374.  These increases were partially offset by a decrease in the
Company’s deferred tax asset of $348,990.





Our
liabilities at September 30, 2008, totaled $11,854,288 compared to $9,818,279 at
December 31, 2007, an increase $2,036,009, or 20.7%.  The increase is
primarily due to an increase in accounts payable of $692,383, an increase in
income taxes payable of $364,555, an increase in customer deposits of $551,075,
and an increase in amounts due to affiliates of $298,004.





Total
stockholder’s equity increased from $973,393 at December 31, 2007, to $2,141,829
at September 30, 2008.  This increase was primarily due to the sale of
shares of our common stock and our net income generated for the nine months
ended September 30, 2008 of $1,911,354.





Cash
and Cash Equivalents





The
increase in cash and cash equivalents was primarily due to the Company’s overall
increase in sales during the past nine months and our ability to collect on
these sales and manage our trade receivable balance.  We also received
deposits of approximately $551,000 from customers for orders for pipe and other
services that are expected to be delivered in the fourth quarter of
2008.





Inventory





We began
purchasing drilling pipe for sale to customers in late, 2007.  This
was an opportunity for us to expand our services to our
customers.  Inventory of drilling pipe at September 30, 2008 was
$2,145,179 compared to $0 at December 31, 2007.  It is anticipated that the
Company will continue its efforts to expand its sales of drilling
pipe.


Property
and Equipment





The
increase in property and equipment is primarily due to the continued
construction of our Abbeville, Louisiana facility.  This facility,
which is expected to be operational in late 2008, is being developed in order to
serve the deep wells in the Gulf of Mexico.  Costs of construction of
this facility incurred during the nine months ended September 30, 2008, totaled
$555,381





Deferred
Tax Asset/Income Taxes Payable





Due to
the Company’s profitability for the nine months ended September 30, 2008, our
deferred tax asset associated with net operating losses has been reduced to a
balance of $20,065 at September 30, 2008.  The remaining balance is
associated with certain net operating losses recognized at the state level for
which there is not sufficient net income generated to fully offset the
balance.  In addition to reducing our deferred tax asset, we have
recorded income taxes payable for the estimated amount of income taxes
associated with our taxable income which exceeds available net operating loss
carryforwards.





Accounts
Payable





Accounts
payable at September 30, 2008 totaled $1,074,032 compared to $381,649 at
December 31, 2007, an increase of $692,383.  This increase is
primarily due to the purchases of drilling pipe during the past
quarter.




-14-





Common
Stock Outstanding





The
Company completed the sale of 100,000 shares of stock in a private placement
during the first quarter of 2008 by selling an additional 28,000 shares at $1.00
per share.





Discussion
of Results of Operations for the Three Months Ended September 30, 2008 compared
to the Three Months Ended September 30, 2007




Revenues





Our
revenue for the three months ended September 30, 2008, was $2,678,114 compared
to $1,051,041 for the three months ended September 30, 2007, an increase of
$1,627,073, or 154.8%.  The increase of is attributable primarily
to sales of drilling pipe during the three months ended September 30, 2008 in
comparison to sales for the three months ended September 30,
2007.  During 2007, we obtained agreements with three oilfield pipe
steel mills and began selling Oil Country Tubular exploration and drilling
pipe.





The
following table presents the composition of revenue for the three months
September 30, 2008 and 2007:





Revenue:
            
            2008
              Dollars
            
            Percentage
            
            2007
              Dollars
            
            Percentage
            
            Variance
              DollarsInspection
      Fees
            
            $
            874,273
            
            32.6%
            
            $
            927,422
            
            88.2%
            
            $
            (53,149
            )Sale
      of Pipe
            
            $
            1,527,741
            
            57.0%
            
            $
            71,772
            
            6.8%
            
            $
            1,455,969Storage
      Fees
            
            $
            92,423
            
            3.5%
            
            $
            15,640
            
            1.5%
            
            $
            76,783Other
      Income
            
            $
            183,677
            
            6.9%
            
            $
            36,207
            
            3.5%
            
            $
            147,470Total
      Revenue
            
            $
            2,678,114
            
            100.0%
            
            $
            1,051,041
            
            100.0%
            
            $
            1,627,073





Cost
of Revenue and Gross Profit





Our cost
of revenue for the three months ended September 30, 2008, was $2,360,132, or
88.1% of revenues, compared to $507,485, or 48.3% of revenues, for the three
months ended September 30, 2007.  The overall increase in our cost of
revenue is primarily due to our sales of oilfield drilling pipe.  We
initiated this aspect of our business in the third quarter of
2007.  The increase in cost of revenue as a percentage of revenues was
due to a valuation adjustment made to certain drilling pipe that was returned to
us after being sold in the second quarter of 2008.





During
the three months ended September 30, 2008, we agreed to take back from a
customer drilling pipe that had been sold in the second quarter of 2008 due to
incorrect specifications associated with the drilling pipe.  The sale
associated with the drilling pipe was reversed in the third quarter of 2008, and
the cost of the drilling pipe returned to us was added back into
inventory.  Upon further inspection of the drilling pipe returned to
us, we noted that a certain amount of the pipe was damaged or had other
defects.  As such, we reduced the recorded value of this drilling pipe
to its estimated market value.  This adjustment was recognized in our
cost of sales.





The
following table presents the composition of cost of revenue for the three months
ended September 30, 2008 and 2007:




Cost
      of Revenue:
              
              2008
                Dollars
              
              Percentage
              
              
              2007
                Dollars
              
              Percentage
              
              
              Variance
                DollarsLabor
      and Related Costs
              
              $
              313,548
              
              13.3
              %
              
              $
              227,536
              
              44.8
              %
              
              $
              86,012Materials
      and  Supplies
              
              $
              1,663,853
              
              70.5
              %
              
              $
              81,087
              
              16.0
              %
              
              $
              1,582,766Subcontract
      Labor
              
              $
              128,867
              
              5.5
              %
              
              $
              87,079
              
              17.2
              %
              
              $
              41,788Depreciation
              
              $
              80,391
              
              3.4
              %
              
              $
              --
              
              --
              %
              
              $
              80,391Other
              
              $
              173,473
              
              7.3
              %
              
              $
              111,783
              
              22.0
              %
              
              $
              61,690Total Cost of  Revenue
              
              $
              2,360,132
              
              100.0
              %
              
              $
              507,485
              
              100.0
              %
              
              $
              1,852,647




Due to
limitations with the pool of qualified individuals, we utilized the services of
subcontractors to assist us in providing timely and quality service to our
customers.  We will continue our efforts to attract, employ and retain
qualified individuals to serve the needs of our customers.





-15-







Operating
Expenses





For the
three months ended September 30, 2008, our operating expenses totaled $341,775,
as compared to $202,823, representing an increase of $138,952, or 68.5%.
 The largest component of our operating expenses for 2008 consists of
salaries and wages, rent, professional services, and office supplies and
expenses.  Salaries and wages for general and administrative personnel was
$156,660 for the three months ended September 30, 2008, compared to $46,723 for
the three months ended September 30, 2007, an increase of $109,937, or 235.3%.
 During the fourth quarter of 2007, we hired an office manager for our
headquarters in Lafayette, an in-house attorney to help manage our legal issues
associated with the various contracts and business agreements we incur as part
of our normal operations, an accounts receivable manager to oversee and manage
the timeliness of our billing and collections from our customers, and an
accounting manager to improve our customer billing, collection, and vendor
payment procedures.





Rent
expense totaled $54,141 for the three months ended September 30, 2008, as
compared to $49,240 for the three months ended September 30, 2007, an increase
of $4,901, or 10.0%.  Rent expense for both the three months ended
September 30, 2008, and for the three months ended September30, 2007, pertains
primarily to our rental of office space for our headquarters in Lafayette as
well as our rental of land and facilities for operating purposes.  The
increase is attributable to normal escalation provisions within our lease
agreements.





Professional
services expense increased from $6,823 for the three months ended September 30,
2007, to $32,641 for the three months ended September 30, 2008, an increase of
$25,818.  The increase is primarily a result of expenses we incurred
throughout the three and nine months ended September 30, 2008 for consulting
services pertaining to training and certification classes for our employees and
consulting services for our compliance with ISO standards, as well as an
increase in accounting fees associated with the growth of the Company over the
past several months.





Other
Income and Expense





Other
income and expense consists of investment income and interest expense,
respectively.  Investment income, which consists of interest,
dividends, realized gains and losses, and unrealized gains and losses, amounted
to a loss of $2,593 for the three months ended September 30, 2008, compared to
income of $10,751 for the three months ended September 30,
2007.  During the third quarter of 2008, we opened an investment
account which consists primarily of a fixed-income mutual fund.  In
accordance with Statement of Financial Accounting Standards No. 115, we have
classified our investment in this fixed-income mutual fund as “Trading” since it
is our intention to utilize this investment account as a source of liquidity
when needed, and to invest excess cash we may have in to a relatively low-risk
investment vehicle.  Accordingly, we have recorded our investments at
fair market value.  For the three months ended September 30, 2008, we
realized a loss of approximately $17,100 on the sales of investments during that
period.  This loss was offset by approximately $14,400 of interest,
dividends and unrealized gains generated from our investments.





Interest
expense totaled $24,460 for the three months ended September 30, 2008, as
compared to $33,095 for the three months ended September 30, 2007, a decrease of
$8,635, or 26.1%.  Interest expense pertains primarily to amounts due
to affiliates as well as to our notes payable with third parties, and the
decrease relates to the principal payments on those debts and
obligations.  It should be noted that our capital lease arrangements
concluded in 2007, and the Company exercised its bargain purchase options
available with those leases.  As such, there were no minimum lease
payments required for 2008.





Provision
for income taxes





For the
three months ended September 30, 2008, we reported an income tax benefit of
$6,949, compared to income tax expense of $159,630 for the three months ended
September 30, 2007.  The income tax benefit reported for the three
months ended September 30, 2008, is a result of our loss before income taxes of
$50,846.  The loss for the quarter is due primarily to the return of
inventory items that did not meet all of the specifications of the customer, and
the subsequent write-down in value of this inventory which occurred during the
three months ended September 30, 2008.






-16-




Discussion
of Results of Operations for the Three Months Ended September 30, 2008 compared
to the Three Months Ended September 30, 2007




Revenues





Our
revenue for the nine months ended September 30, 2008, was $7,861,390 compared to
$2,559,522 for the nine months ended September 30, 2007, an increase of
$5,301,868.  The increase of is attributable primarily to sales
of drilling pipe during the nine months ended September 30, 2008 in comparison
to sales for the nine months ended September 30, 2007.  During 2007,
we obtained agreements with three oilfield pipe steel mills and began selling
Oil Country Tubular exploration and drilling pipe.





The
following table presents the composition of revenue for the nine months
September 30, 2008 and 2007:





Revenue:
            
            2008
              Dollars
            
            Percentage
            
            2007
              Dollars
            
            Percentage
            
            Variance
              DollarsInspection
      Fees
            
            $
            2,715,110
            
            34.5%
            
            $
            2,349,908
            
            91.8%
            
            $
            365,202Sale
      of Pipe
            
            $
            4,522,398
            
            57.5%
            
            $
            71,772
            
            2.8%
            
            $
            4,450,626Storage
      Fees
            
            $
            222,767
            
            2.8%
            
            $
            36,661
            
            1.4%
            
            $
            186,106Other
      Income
            
            $
            401,115
            
            5.2%
            
            $
            101,181
            
            4.0%
            
            $
            299,934Total
      Revenue
            
            $
            7,861,390
            
            100.0%
            
            $
            2,559,522
            
            100.0%
            
            $
            5,301,868





Cost
of Revenue and Gross Profit





Our cost
of revenue for the nine months ended September 30, 2008, was $4,917,179, or
62.5% of revenues, compared to $1,171,556, or 45.8% of revenues, for the nine
months ended September 30, 2007.  The overall increase in our cost of
revenue is primarily due to our sales of oilfield drilling pipe.  We
initiated this aspect of our business in the third quarter of
2007.  The overall increase in cost of revenue as a percentage of
revenue for the nine months ended September 30, 2008 in comparison to the nine
months ended September 30, 2007 is attributable to the tighter margins
associated with our pipe sales.  However, as we continue to enhance
this aspect of our business, we anticipate an overall positive impact to our
profitability.





The
following table presents the composition of cost of revenue for the three months
ended September 30, 2008 and 2007:




Cost
      of Revenue:
            
            2008
              Dollars
            
            Percentage
            
            
            2007
              Dollars
            
            Percentage
            
            
            Variance
              DollarsLabor
      and Related Costs
            
            $
            688,109
            
            14.0
            %
            
            $
            644,620
            
            55.0
            %
            
            $
            43,489Materials
      and  Supplies
            
            $
            3,202,735
            
            65.1
            %
            
            $
            140,323
            
            12.0
            %
            
            $
            3,062,412Subcontract
      Labor
            
            $
            389,724
            
            7.9
            %
            
            $
            190,084
            
            16.2
            %
            
            $
            199,640Depreciation
            
            $
            244,826
            
            5.0
            %
            
            $
            16,400
            
            1.4
            %
            
            $
            228,426Other
            
            $
            391,785
            
            8.0
            %
            
            $
            180,129
            
            15.4
            %
            
            $
            211,656Total Cost of 
      Revenue
            
            $
            4,917,179
            
            100.0
            %
            
            $
            1,171,556
            
            100.0
            %
            
            $
            3,745,623





Due to
limitations with the pool of qualified individuals, we utilized the services of
subcontractors to assist us in providing timely and quality service to our
customers. We will continue our efforts to attract, employ and retain
qualified individuals to serve the needs of our customers.





Operating
Expenses





For the
nine months ended September 30, 2008, our operating expenses totaled $1,014,052,
as compared to $540,365, representing an increase of $473,687, or 87.7%.
 The largest component of our operating expenses for 2008 consists of
salaries and wages, rent, professional services, and office supplies and
expenses.  Salaries and wages for general and administrative personnel was
$430,574 for the nine months ended September 30, 2008, compared to $101,852 for
the three months ended September 30, 2007, an increase of $328,722, or 322.7%.
 During the fourth quarter of 2007, we hired an office manager for our
headquarters in Lafayette, an in-house attorney to help manage our legal issues
associated with the various contracts and business agreements we incur as part
of our normal operations, an accounts receivable manager to oversee and manage
the timeliness of our billing and collections from our customers, and an
accounting manager to improve our customer billing, collection, and vendor
payment procedures.  The impact of those staffing increases are fully
reflective in salaries and wages expense for the nine months ended September 30,
2008, while only partially reflective in salaries and wages expense for the nine
months ended September 30, 2007.






-17-





Rent
expense totaled $167,672 for the nine months ended September 30, 2008, as
compared to $150,404 for the nine months ended September 30, 2007, an increase
of $17,268, or 11.5%.  Rent expense for both the nine months ended
September30, 2008, and for the nine months ended September30, 2007, pertains
primarily to our rental of office space for our headquarters in Lafayette as
well as our rental of land and facilities for operating purposes.  The
increase is attributable to normal escalation provisions within our lease
agreements.





Professional
services expense increased from $25,096 for the nine months ended September 30,
2007, to $102,849 for the nine months ended September 30, 2008, an increase of
$77,753.  The increase is primarily a result of expenses we incurred
throughout the nine months ended September 30, 2008 for consulting services
pertaining to training and certification classes for our employees and
consulting services for our compliance with ISO standards, as well as an
increase in accounting fees associated with the growth of the Company over the
past several months.





Office
supplies and expenses totaled $61,540 for the nine months ended September 30,
2008, compared to $49,738 for the nine months ended September 30, 2007, an
increase of $11,802, or 23.7%.  This increase is attributable
primarily to the increase in general and administrative staff discussed
previously.





Other
Income and Expense





Other
income and expense consists of investment income and interest expense,
respectively.  Investment income, which consists of interest,
dividends, realized gains and losses, and unrealized gains and losses, amounted
to income of $6,461 for the nine months ended September 30, 2008, compared to
income of $32,136 for the nine months ended September 30,
2007.  During the third quarter of 2008, we opened an investment
account which consists primarily of a fixed-income mutual fund.  In
accordance with Statement of Financial Accounting Standards No. 115, we have
classified our investment in this fixed-income mutual fund as “Trading” since it
is our intention to utilize this investment account as a source of liquidity
when needed, and to invest excess cash we may have in to a relatively low-risk
investment vehicle.  Accordingly, we have recorded our investments at
fair market value.  For the nine months ended September 30, 2008, we
realized a loss of approximately $17,100 on the sales of investments during that
period.  This loss was offset by approximately $23,550 of interest,
dividends and unrealized gains generated from our investments.





Interest
expense totaled $71,474 for the nine months ended September 30, 2008, as
compared to $100,752 for the nine months ended September 30, 2007, a decrease of
$29,278, or 29.1%.  Interest expense pertains primarily to amounts due
to affiliates as well as to our notes payable with third parties, and the
decrease relates to the principal payments on those debts and obligations during
the fourth quarter of 2007 and during the nine months ended September 30,
2008.  It should be noted that our capital lease arrangements
concluded in 2007, and the Company exercised its bargain purchase options
available with those leases. As such, there were no minimum lease payments
required for 2008.





Provision
for income taxes





For the
nine months ended September 30, 2008, income tax expense was $724,710, compared
to $390,595 for the nine months ended September 30, 2007.  The overall
increase in income tax expense is attributable to our enhanced profitability for
the nine months ended September 30, 2008, as compared to the nine months ended
September 30, 2007.





Capital
Resources and Liquidity




As of
September 30, 2008 we had $1,292,934 in cash and cash equivalents, and had an
investment account with a fair value of $117,996.  Our cash outflows
have consisted primarily of expenses associated with our operations, and the
purchase of drilling pipe for sale.  These outflows have been offset
by the timely inflows of cash from our customers regarding sales that have been
made.  Cash outflows for investing purposes have consisted primarily
of the development of our Abbeville, Louisiana facility, and the acquisition of
equipment and other technology to better serve our
customers.  Currently, we have been able to utilize our relationships
with affiliated entities to stabilize our liquidity needs.





We
believe we can satisfy our cash requirements for the next twelve months with our
current cash and expected revenues. However, completion of our plan of operation
is subject to attaining adequate revenue.  We cannot assure investors that
adequate revenues will be generated. In the absence of our projected revenues,
we may be unable to proceed with our plan of operations. Even without adequate
revenues within the next twelve months, we still anticipate being able to
continue with our present activities, but we may require financing to
potentially achieve our growth goals.





In the
event we are not successful in reaching our initial revenue targets, additional
funds may be required, and we may not be able to proceed with our business plan
for the development and marketing of our core services.  Should this
occur, we would likely seek additional financing to support the continued
operation of our business.





Item
3.  Quantitative and Qualitative Disclosures About Market Risk





The
Company is subject to certain market risks, including changes in interest rates
and currency exchange rates.  The Company does not undertake any specific
actions to limit those exposures.






-18-





Item
4T. Controls and Procedures





a)
 Evaluation of Disclosure
Controls. George Sfeir, our Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of our disclosure controls and procedures
as of the end of our third fiscal quarter 2008 pursuant to Rule 13a-15(b) of the
Securities and Exchange Act.  Disclosure controls and procedures are
controls and other procedures that are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms.  Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
as appropriate to allow timely decisions regarding required disclosure. Based on
his evaluation, Mr. Sfeir concluded that our disclosure controls and procedures
were effective as of September 30, 2008.





It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system are met.  In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future events.
 Because of these and other inherent limitations of control systems, there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.





(b)  Changes in internal control over
financial reporting.  There have been no changes in our
internal control over financial reporting that occurred during the last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. Our management team will
continue to evaluate our internal control over financial reporting in 2008 as we
implement our Sarbanes Oxley Act testing.








-19-






PART
II - OTHER INFORMATION




Item
1. Legal Proceedings.




Currently
we are not aware of any litigation pending or threatened by or against the
Company.




Item
1A. Risk Factors.





None.




Item
2. Unregistered Sales of Equity Securities and Use of Proceeds




None.




Item
3. Defaults Upon Senior Securities.




None




Item
4. Submission of Matters to a Vote of Security Holders.




None.




Item
5. Other Information.




None




Item
6. Exhibits and Reports of Form 8-K.




(a)           Exhibits




31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002




32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002




(b)           Reports
of Form 8-K




None.




-20-








SIGNATURES




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




ENERGY
      & TECHNOLOGY CORP.Date:
      November 18, 2008
            By:
            /s/
      George M. SfeirGeorge
      M. SfeirPresident,
      Chief Executive Officer,
              Principal
      Accounting Officer,
              and
      Director











-21-