General

We have a patented process which can help companies within the energy industry reach deep energy reserves by using their existing drilling rigs, platforms and equipment, thus save the customers money.

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 and gas and industry related companies, a website and through the use of a marketing company on a limited basis. 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 new technology that has been internationally patented including three issued patents in the U.S.A., one in China, and one pending in Canada and another is pending patent in Europe. The new inspection technology is needed in order to reach deep energy reserves. Our expandable liners inspection technology helps the oil and 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 now operational in order to serve the deep wells in the Gulf of Mexico. Other expansions are being considered through the opening of additional full-service, local plants. Furthermore, we maintain relations with sales agents 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 and we are working on training and raising the capital needed. Mr. Steve Piper previously worked for U.S. Steel as a threading technician and a manager, has more than 20 years experience in this field. Mr. Piper has been hired by our company to organize and manage Highland Energy Threading LLC.

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 over 60 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, 2009, inventory consisted of 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. 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, 2008 to September 30, 2009

At September 30, 2009, total assets amounted to $20,809,624 compared to $20,047,298 at December 31, 2008, an increase of $762,326, or 3.8%. The increase is primarily due to an increase in cash and cash equivalents of $1,076,438, which is partially offset by a decrease in our deferred tax asset of $170,622 and a decrease in property and equipment, net, of $268,073.

Our liabilities at September 30, 2009, totaled $17,383,635 compared to $17,587,249 at December 31, 2008, a decrease of $203,614, or 1.2%. The decrease is primarily due to a decrease in accounts payable of $561,315. This decrease was partially offset by an increase in income taxes payable of $325,580.

Total stockholder's equity increased from $2,460,049 at December 31, 2008, to $3,425,989 at September 30, 2009. This increase was due to net income generated during the nine months ended September 30, 2009 of $965,940.

Accounts Receivable

Accounts receivable increased approximately $120,798, or 7.2%, from December 31, 2008 to September 30, 2009. The increase in accounts receivable is primarily due to the impact the current national and world wide economic conditions have had on many of our customers. Customers are taking longer to pay invoices for product and services provided by us. We will continue our efforts to manage our receivables so that payments are received timely. Approximately 30.4% of the balance of trade receivables at September 30, 2009 were outstanding for 60 days or less.

Property and Equipment

During the nine months ended September 30, 2009, we purchased approximately $359,538 of property and equipment for our facilities. This amount was offset by approximately $627,611 of depreciation expense recognized during the nine months ended September 30, 2009. These transactions resulted in decrease in our property and equipment, net, of approximately $268,073.

Deferred Tax Asset/Income Taxes Payable

Due to the Company's profitability for the nine months ended September 30, 2009, our deferred tax asset associated with net operating losses has been eliminated. 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.

Accounts Payable

Accounts payable at September 30, 2009 totaled $4,846,066 compared to $5,407,381, at December 31, 2008, a decrease of $561,315. This decrease is due primarily to payments made during the nine months ended September 30, 2009 to our suppliers and the reduction in purchases of pipe inventory over the past nine months.

Accrued Rent

The Company leases property for its Houston facility on a month-to-month basis at a rate of $12,500 per month. The lessor of the property has agreed not to demand payment for the outstanding balance until we are able to enhance our capital position, either through the issuance and sale of common stock or through internally generated growth.

Discussion of Results of Operations for the Three months Ended September 30, 2009 compared to the Three months Ended September 30, 2008

Revenues

Our revenue for the three months ended September 30, 2009, was $1,504,473 compared to $2,678,114 for the three months ended September 30, 2008, a decrease of $1,173,641, or 43.8%. The decrease is attributable primarily to the decrease in pipe sales of $1,527,741 and was partially offset by an increase in storage fees and pipe inspection fees. During late 2008, we placed in service additional inspection equipment to enable us to meet the overall increased demand for pipe inspection services. In addition to our inspection services, we provide logistics coordination and storage of tubular goods at our Houston facility for customers and suppliers.

The following table presents the composition of revenue for the three months ending September 30, 2009 and 2008:

                       2009                         2008                       Variance
Revenue:              Dollars      Percentage     Dollars      Percentage      Dollars

 Inspection Fees   $   1,017,768       $67.6%   $    874,273        32.6%   $      143,495
 Storage Fees      $     300,428        20.0%   $     92,423         3.5%   $      208,005
 Pipe Sales        $           -         0.0%   $  1,527,741        57.0%   $  (1,527,741)
 Other Income      $     186,277        12.4%   $    183,677         6.9%   $        2,600
Total Revenue      $   1,504,473       100.0%   $  2,678,114       100.0%   $  (1,173,641)

Cost of Revenue and Gross Profit

Our cost of revenue for the three months ended September 30, 2009, was $766,662, or 50.9% of revenues, compared to $2,360,132, or 88.1% of revenues, for the three months ended September 30, 2008. The overall decrease in our cost of revenue is due to our decreased cost of pipe sold because we sold no pipe in 2009. The decrease in cost of revenue as a percentage of revenues was due to the lower markup on pipe sales in the prior year period, as well as due to an adjustment made during the three months ended September 30, 2008 to the value of certain pipe inventory which was damaged or had other defects. This decrease in cost of pipe sold was offset by increases in depreciation, maintenance, and insurance. The increase in maintenance was due to roof repairs required on the Abbeville shop. The insurance increased because of the increase in sales and payroll. The increase in depreciation and amortization expense for the three months ended September 30, 2009 compared to the three months ended September 30, 2008 is primarily due to equipment purchased and placed in service in the second half of 2008 and first quarter of 2009 as we continue the expansion of our Abbeville, Louisiana and Houston, Texas facilities.

The following table presents the composition of cost of revenue for the three months ended September 30, 2009 and 2008:

                          2009                      2008                        Variance
Cost of Revenue:        Dollars     Percentage     Dollars     Percentage        Dollars

Labor and Related         263,452                $   313,548                 $      (50,096)
Costs                                    34.4%                      13.3%
Subcontract Labor         132,714        17.3%       128,867         5.5%              3,847
Depreciation and          177,419                     63,458                         113,961
Amortization                             23.1%                       2.7%
Maintenance                83,389        10.9%        54,486         2.3%             28,903
Materials and Supplies     27,583         3.6%     1,663,853        70.5%        (1,636,270)
Insurance                  51,686         6.7%        31,820         1.3%             19,866
Other                      30,419         4.0%       104,100         4.4%           (73,681)
Total Cost of  Revenue $  766,662       100.0%   $ 2,360,132       100.0%      $ (1,593,470)

Operating Expenses

For the three months ended September 30, 2009, our operating expenses totaled $525,600, as compared to $341,775 for the three months ended September 30, 2008, representing an increase of $183,825, or 53.8%. The largest component of our operating expenses consists of salaries and wages. Rent, professional services, utilities, office supplies and expenses, and depreciation all increased from September 30, 2008 to September 30, 2009. Salaries and wages for general and administrative personnel was $213,991 for the three months ended September 30, 2009, compared to $156,660 for the three months ended September 30, 2008, an increase of $57,331, or 36.6%. During the second half of 2008, we hired a new salesman to concentrate on tubular sales and began paying our founder, President, and CEO a conservative salary.

Rent expense totaled $78,130 for the three months ended September 30, 2009, as compared to $54,141 for the three months ended September 30, 2008, an increase of $23,989, or 44.3%. Rent expense for both the three months ended September 30, 2009 and September 30, 2008, 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 cost of additional land used at our Houston, Texas facility to enable the company to store more tubular goods.

Professional services expense increased from $32,641 for the three months ended September 30, 2008, to $44,439 for the three months ended September 30, 2009, an increase of $11,798, or 36.1%. The increase is primarily a result of an increase in legal and 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, gains or losses on sale of assets, and interest expense, respectively.

Interest expense totaled $23,746 for the three months ended September 30, 2009, as compared to $24,460 for the three months ended September 30, 2008, a decrease of $714, or 2.9%. Interest expense pertains primarily to amounts due to affiliates as well as to our notes payable with third parties, and the increase relates to the financing of new vehicles.

Provision for income taxes

For the three months ended September 30, 2009, we reported an income tax expense of $70,131 compared to an income tax benefit of $6,949 for the three months ended September 30, 2008. This is due to having income before taxes of $192,561 for the three months ended September 30, 2009, compared to a loss before a provision for taxes of $50,846 for the three months ended September 30, 2008. This loss is due primarily to the write-down in value of inventory deemed to be damaged or to have other defects.

Discussion of Results of Operations for the Nine months Ended September 30, 2009 compared to the Nine months Ended September 30, 2008

Revenues

Our revenue for the nine months ended September 30, 2009, was $6,188,136 compared to $7,861,390 for the nine months ended September 30, 2008, a decrease of $1,673,254, or 21.3%. The decrease is attributable primarily to the reduction in pipe sales in the amount of $4,522,398 brought on by the current economy which resulted in low drilling activity and the complete lack of pipe sales in 2009, partially offset by increased inspection fees and other income in the amount of $2,849.144. During late 2008, we placed in service additional inspection equipment to enable us to meet the overall increased demand for pipe inspection services. In addition to our inspection services, we provide hauling and storage of tubular goods at our Houston facility for customers and suppliers. During the nine months ended September 30, 2009, we received significant quantities of tubular goods from one of our primary vendors to store at our Houston facility. This resulted in an increase in storage fee revenue as well in the amount we charged for the hauling and handling of these tubular goods, which is included in other income.

The following table presents the composition of revenue for the nine months September 30, 2009 and 2008:

                      2009                         2008                        Variance
Revenue:             Dollars     Percentage       Dollars     Percentage       Dollars

 Inspection Fees   $ 4,307,573        69.6%     $ 2,715,110        34.6%     $  1,592,463
 Storage Fees      $   841,229        13.6%     $   222,767         2.8%     $    618,462
 Pipe Sales        $       -           0.0%     $ 4,522,398        57.5%     $ (4,522,398 )
 Other Income      $ 1,039,334        16.8%     $   401,115         5.1%     $    638,219
Total Revenue      $ 6,188,136       100.0%     $ 7,861,390       100.0%     $ (1,673,254 )

Cost of Revenue and Gross Profit

Our cost of revenue for the nine months ended September 30, 2009, was $2,981,794, or 48.2% of revenues, compared to $4,917.179, or 62.6% of revenues, for the nine months ended September 30, 2008. The overall decrease in our cost of revenue is primarily due to our decreased costs of supplies and pipe sold in the amount of $3,084,025 partially offset by increases in labor, depreciation, and other costs in the amount of $1,148,640, including costs for hauling and fuel for moving customers' pipe onto our yard for storage. The decrease in cost of revenue as a percentage of revenues was due to the higher markup on these services which are performed as a convenience to our customers and suppliers of tubular goods as opposed to the markup on pipe. In addition to these decreases, labor and related costs increased by $514,172, or 47.7 %. The increase is primarily attributable to the overall increase in volume of inspection services, as well as the need for additional personnel, including subcontract labor, to handle and store the amount of tubular goods received during the nine months ended September 30, 2009. The increase in depreciation and amortization expense for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 is primarily due to equipment purchased and placed in service in the second half of 2008 and first quarter of 2009.

The following table presents the composition of cost of revenue for the nine months ended September 30, 2009 and 2008:

                            2009                          2008                        Variance
Cost of Revenue:           Dollars     Percentage        Dollars     Percentage        Dollars

Labor and Related        $ 1,050,902                   $   688,109                  $     362,793
Costs                                        35.2%                        14.0%
Subcontract Labor            541,103         18.1%         389,724         7.9%           151,379
Depreciation and             517,595                       244,826                        272,769
amortization                                 17.4%                         5.0%
Maintenance                  240,244          8.1%         150,686         3.1%            89,558
Materials and Supplies       118,710          4.0%       3,202,735        65.1%        (3,084,025 )
Insurance                    125,551          4.2%          77,184         1.6%            48,367
Other                        387,689         13.0%         163,915         3.3%           223,774
Total Cost of  Revenue   $ 2,981,794        100.0%     $ 4,917,179       100.0%     $  (1,935,385 )

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, 2009, our operating expenses totaled $1,611,628, as compared to $1,014,052 in 2008, representing an decrease of $597,576, or 58.9%. The largest component of our operating expenses for 2009 consists of salaries and wages, rent, professional services, and office supplies and expenses. Salaries and wages for general and administrative personnel was $683,005 for the nine months ended September 30, 2009, compared to $430,574 for the nine months ended September 30, 2008, an increase of $252,431, or 58.6%. During the second half of 2008, we hired a new salesman to concentrate on tubular sales and began paying our founder, President, and CEO a regular salary.

Rent expense totaled $227,326 for the nine months ended September 30, 2009, as compared to $167,672 for the nine months ended September 30, 2008, an increase of $59,654, or 35.6%. Rent expense for both the nine months ended September 30, 2009, and for the nine months ended September 30, 2008, 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 cost of additional land used at our Houston, Texas facility.

Professional services expense increased from $102,849 for the nine months ended September 30, 2008, to $195,158 for the nine months ended September 30, 2009, an increase of $92,309. The increase is primarily a result of expenses we incurred throughout the nine months ended September 30, 2009 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 gain of $6,414 for the nine months ended September 30, 2009, compared to income of $6,461 for the nine months ended September 30, 2008. The decrease is due primarily to the lower yields being earned on our invested cash balances.

Interest expense totaled $72,873 for the nine months ended September 30, 2009, as compared to $71,474 for the nine months ended September 30, 2008, an increase of $2.0%. 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.

Provision for income taxes

For the nine months ended September 30, 2009, we reported an income tax expense of $562,665 compared to income tax expense of $724,710 for the nine months ended September 30, 2008, a decrease of $162,045 or 22.4%, which is the result of the declining sales of pipe and lower profit for 2009.

Comparative financial information for the nine months ended September 30:

                                        SEPT. 30,       SEPT. 30,       SEPT.30,        SEPT. 30,       SEPT. 30,
                                          2009            2008            2007            2006            2005

Revenues, for the first quarter        $ 6,188,436     $ 7,861,390     $ 2,559,522     $ 1,945,371     $ 1,497,878
Cost of Revenues                         2,981,794       4,917,179       1,143,257         820,231         687,011

Gross Profit                             3,206,642       2,944,211       1,416,265       1,125,140         810,867

Operating Expenses
   General & Administrative Expenses     1,480,022         956,570         511,501         487,124         551,643
   Depreciation                            131,606          57,482          54,663          66,735          69,237

     Total Operating Expenses            1,611,628       1,014,052         566,164         553,859         620,880

Income from Operations                   1,595,014       1,930,159         850,101         571,281         189,987

Other Income (Expense)                      66,409         (65,013 )       (71,116 )       (81,429 )       (89,336 )

Income Before Income Taxes               1,528,605       1,865,146         778,985         489,852         100,651

Provision for Income Taxes                 562,665         724,710         390,595         255,634          36,234

Net Income                             $   965,940     $ 1,140,436     $   388,390     $   234,218     $    64,417

Capital Resources and Liquidity

As of September 30, 2009 we had $1,679,713 in cash and cash equivalents. Our cash outflows have consisted primarily of expenses associated with our operations. 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.