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 Quarter Ended ~~September~~March 3031, ~~2009~~2010

¨ o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____

_______________

Commission File Number 1-13817

Boots & Coots, Inc.

(Exact name of registrant as specified in its charter)

Delaware	11-2908692
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7908 N. Sam Houston Parkway W., 5th Floor
Houston, Texas	77064
(Address of principal executive offices)	(Zip Code)

(281) 931-8884

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ o 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated Filer ¨o Accelerated Filer x Non-accelerated Filer ¨o (Do not check if a smaller reporting company) Smaller reporting company ¨o

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

The number of shares of the Registrant's Common Stock, par value $.00001 per share, outstanding at ~~November~~May 65, ~~2009~~2010, was 8081,~~045~~848,~~703~~413.

BOOTS & COOTS, INC.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

(Unaudited)

		Page
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1716
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2723
Item 4.	Controls and Procedures	2824
PART II OTHER INFORMATION	~~PART II OTHER INFORMATION~~
Item 1.	Legal Proceedings	2824
Item 1A.	Risk Factors	2825
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3027
Item 3.	Defaults Upon Senior Securities	3127
Item 4.	~~Submissions~~(Removed ofand ~~Matters to a Vote of Security Holders~~Reserved)	3127
Item 5.	Other Information	3127
Item 6.	Exhibits	3127

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BOOTS & COOTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(000’s except share and per share amounts)

ASSETS
	September 30, 2009			December 31, 2008
	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	6,336		$	6,220
Restricted cash		323			—
Receivables, net		65,936			70,940
Inventory		3,319			2,746
Prepaid expenses and other current assets		11,682			10,801
Total current assets		87,596			90,707
PROPERTY AND EQUIPMENT, net		81,813			80,469
GOODWILL		14,313			9,150
INTANGIBLE ASSETS, net		7,741			3,960
OTHER ASSETS		3,126			687
Total assets	$	194,589		$	184,973
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	6,930		$	5,523
Accounts payable		17,170			19,988
Income tax payable		3,513			5,649
Accrued liabilities		14,470			19,378
Total current liabilities		42,083			50,538
LONG-TERM DEBT, net of current maturities		35,580			5,009
RELATED PARTY LONG-TERM DEBT		3,000			21,166
DEFERRED TAXES		6,203			5,799
OTHER LIABILITIES		1,152			700
Total liabilities		88,018			83,212
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock ($.00001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively)		—			—
Common stock ($.00001 par value, 125,000,000 shares authorized, 80,047,000 and 77,075,000 shares issued and outstanding at September 30, 2009 and December 31, 2008)		1			1
Additional paid-in capital		129,431			128,108
Accumulated other comprehensive loss		(1,234	)		(1,234	)
Accumulated deficit		(21,627	)		(25,114	)
Total stockholders' equity		106,571			101,761
Total liabilities and stockholders' equity	$	194,589		$	184,973

ASSETS

	March 31, 2010			December 31, 2009
	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	6,794		$	7,357
Restricted cash		323			323
Receivables, net		75,523			70,471
Inventory		4,005			3,569
Prepaid expenses and other current assets		8,109			10,928
Total current assets		94,754			92,648

PROPERTY AND EQUIPMENT, net		81,492			80,289
GOODWILL		14,313			14,313
INTANGIBLE ASSETS, net		7,258			7,500
OTHER ASSETS		2,757			2,616
Total assets	$	200,574		$	197,366

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current maturities of long-term debt	$	6,932		$	6,931
Accounts payable		22,952			17,857
Income tax payable		6,390			3,587
Accrued compensation and benefits		3,663			6,004
Accrued taxes, other than income tax		4,110			5,003
Accrued liabilities		6,611			6,262
Total current liabilities		50,658			45,644

LONG-TERM DEBT, net of current maturities		32,316			32,359
RELATED PARTY LONG-TERM DEBT		3,000			3,000
DEFERRED TAXES		3,017			5,638
OTHER LIABILITIES		605			1,108
Total liabilities		89,596			87,749

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock ($.00001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively)		—			—
Common stock ($.00001 par value, 125,000,000 shares authorized, 81,604,000 and 80,046,000 shares issued and outstanding at March 31, 2010 and December 31, 2009)		1			1
Additional paid-in capital		130,621			129,955
Accumulated other comprehensive loss		(1,234	)		(1,234	)
Accumulated deficit		(18,410	)		(19,105	)
Total stockholders' equity		110,978			109,617
Total liabilities and stockholders' equity	$	200,574		$	197,366

See accompanying notes to condensed consolidated financial statements.

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BOOTS & COOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(000’s except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2009			2008			2009		2008
	2010			2009
REVENUES	$	4053,~~317~~311		$	5654,~~452~~662		$	~~142,027~~	$	~~153,371~~
COST OF SALES, excluding depreciation and amortization		2637,~~132~~413			36,~~158~~886			~~94,357~~		~~95,369~~
OPERATING EXPENSES		56,~~537~~198			78,~~681~~232			~~21,604~~		~~20,821~~
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		23,~~017~~225			2,~~381~~897			~~7,432~~		~~7,714~~
FOREIGN CURRENCY TRANSLATION		(10	)		55			185		155
DEPRECIATION AND AMORTIZATION		3,414			2,831
DEPRECIATION AND AMORTIZATION		3,270			2,383			9,223		6,657
OPERATING INCOME		3,061			3,816
OPERATING INCOME		3,371			7,794			9,226		22,655
INTEREST EXPENSE		776			961
INTEREST EXPENSE		960			694			2,895		2,005
FOREIGN CURRENCY TRANSLATION		1,173			(28	)
OTHER(INCOME) EXPENSE, net		214			(640	)		89		(2	)
INCOME BEFORE INCOME TAXES		21,~~390~~108			72,~~106~~843			~~6,242~~		~~20,652~~
INCOME TAX EXPENSE		~~1,568~~413			~~1,658~~897			~~2,755~~		~~3,974~~
NET INCOME		~~822~~695			51,~~448~~946			~~3,487~~		~~16,678~~
Basic Earnings per Common Share:	$	0.01		$	0.0703		$	~~0.05~~	$	~~0.22~~
Weighted Average Common Shares Outstanding – Basic		77,~~202~~654,000			76,~~203~~651,000			~~76,895,000~~		~~75,577,000~~
Diluted Earnings per Common Share:	$	0.01		$	0.0703		$	~~0.04~~	$	~~0.21~~
Weighted Average Common Shares Outstanding – Diluted		7880,~~700~~167,000			7877,~~859~~752,000			~~78,219,000~~		~~78,041,000~~

See accompanying notes to condensed consolidated financial statements.

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BOOTS & COOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

~~Nine~~ Three Months Ended ~~September~~March 3031, ~~2009~~2010

(Unaudited)

(000’s)

	Preferred Stock				Common Stock				Additional Paid - in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
												Accumulated
	Preferred Stock				Common Stock				Additional Paid - in			Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Equity
BALANCES, January 1, 2009		—	$	—		77,075	$	1	$	128,108		$	(1,234	)	$	(25,114	)	$	101,761
BALANCES, January 1, 2010		—	$	—		80,046	$	1	$	129,955		$	(1,234	)	$	(19,105	)	$	109,617
Stock based compensation		—		—		21,~~758~~236		—		~~1,179~~515			—			—			~~1,179~~515
Stock option exercises		—		—		~~214~~322		—		~~245~~343			—			—			~~245~~343
Excess tax benefit		—		—		—		—		(101	)		—			—			(101	)
Excess tax expense for options		—		—		—		—		(192	)		—			—			(192	)
Net income		—		—		—		—		—			—			~~3,487~~695			~~3,487~~695
BALANCES, September 30, 2009		—	$	—		80,047	$	1	$	129,431		$	(1,234	)	$	(21,627	)	$	106,571
BALANCES, March 31, 2010		—	$	—		81,604	$	1	$	130,621		$	(1,234	)	$	(18,410	)	$	110,978

See accompanying notes to condensed consolidated financial statements.

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BOOTS & COOTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(000’s)

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2009			2008
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	~~3,487~~695		$	161,~~678~~946
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in)operating activities:
Depreciation and amortization		93,~~223~~414			62,~~657~~831
Deferred tax expense (credit)		1(2,~~053~~621	)		~~(681~~803	)
Stock-based compensation		~~1,179~~515			~~1,018~~375
Excess tax benefit from stock options exercised		(101	)		—
Excess tax expense from stock options exercised		192			—
Bad debt provision, net		9283			~~229~~10
Gain on sale/disposal of assets		(~~647~~3	)		(~~256~~22	)
Changes in operating assets and liabilities, net of business acquisitions:
Receivables		(5,~~378~~135	)		(213,~~760~~418	)
Inventory		(~~573~~436	)		(~~1,376~~348	)
Prepaid expenses and other current assets		(12,~~222~~819	)		~~(1,495~~8	)
Other assets		(~~2,438~~141	)		~~744~~(2,829	)
Accounts payable and accrued liabilities		~~(10~~4,~~236~~319	)		~~16,759~~(359	)
Net cash provided by operating activities		5,195			16,517
Net cash provided by (used in) operating activities		3,701			(1,003	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquired, net of cash received		~~(6,668~~—	)		—(6,668	)
Property and equipment additions		(134,~~077~~380	)		(226,~~387~~052	)
Proceeds from insurance recovery		3,432			—
Proceeds from sale of property and equipment		8			43
Proceeds from sale of property and equipment		424			350
Net cash used in investing activities		(4,372	)		(12,677	)
Net cash used in investing activities		(15,889	)		(22,037	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of related party debt		~~(21,166~~—	)		—(21,166	)
Payments of term loan		(71,~~367~~720	)		(13,~~455~~927	)
Revolving credit net borrowings		41,~~957~~690			~~5,477~~394
Principal payments under capital lease obligations		(3713	)		—(10	)
Term loan borrowings		~~34,400~~—			—34,400
Purchase of treasury stock		—			(37	)
Increase in restricted cash		—			(381	)
Increase in restricted cash		(323	)		—
Stock options exercised		343			—
Stock options exercised		245			1,121
Excess tax expense from stock options exercised		(192	)		—
Excess tax benefit from stock options exercised		101			—
Net cash provided by financing activities		108			9,310
Net cash provided by financing activities		10,810			5,106
Net (decrease) in cash and cash equivalents		(563	)		(4,370	)
Net increase(decrease) in cash and cash equivalents		116			(414	)
CASH AND CASH EQUIVALENTS, beginning of period		7,357			6,220
CASH AND CASH EQUIVALENTS, beginning of period		6,220			6,501
CASH AND CASH EQUIVALENTS, end of period	$	6,794		$	1,850
CASH AND CASH EQUIVALENTS, end of period	$	6,336		$	6,087
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest	$	~~2,285~~687		$	~~2,079~~645
Cash paid for income taxes		~~4,419~~225			~~4,456~~761
NON-CASH INVESTING AND FINANCING ACTIVITIES
Long-term notes issued for acquisition of business		~~3,000~~−			—3,000

See accompanying notes to condensed consolidated financial statements.

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BOOTS & COOTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Nine~~ Three Months Ended ~~September~~March 3031, ~~2009~~2010

(Unaudited)

A. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying condensed consolidated financial statements include all adjustments, including normal recurring accruals, which, in the opinion of management, are necessary to make the condensed consolidated financial statements not misleading. The unaudited condensed consolidated financial statements and notes thereto and the other financial information contained in this report should be read in conjunction with the audited financial statements and notes in our annual report on Form 10-K for the year ended December 31, ~~2008~~2009, and our reports filed previously with the Securities and Exchange Commission (“SEC”). The results of operations for the three months ~~and nine months~~ ended ~~September~~March 3031, ~~2009~~2010 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the prior period consolidated financial statements to conform to current period presentation. The name of the Company was changed to “Boots & Coots, Inc.” from “Boots & Coots International Well Control, Inc.” upon approval by a majority stockholder vote at our annual meeting of stockholders on May 21, 2009.

The carrying values of financial instruments, including cash, accounts receivable, accounts payable and other accrued liabilities, approximate their fair values due to their short-term maturities. We use available market rates to estimate the fair value of debt which approximated the carrying value at ~~September~~March 3031, ~~2009~~ 2010.

B. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING STANDARDS

Adopted

~~On September~~Effective January 301, ~~2009~~2010, the Company adopted changes issued by the ~~Financial Accounting~~FASB ~~Standards~~on ~~Board~~January 21, ~~(FASB)~~2010, to ~~the~~disclosure ~~authoritative~~requirements ~~hierarchy~~for offair ~~GAAP~~value measurements. ~~These changes~~Specifically, ~~establish~~ the ~~FASB~~changes ~~Accounting~~require ~~Standards~~a ~~CodificationTM (Codification)~~reporting asentity ~~the source of authoritative accounting principles recognized by the FASB~~ to bedisclose ~~applied~~separately ~~by nongovernmental entities in~~ the ~~preparation~~amounts of ~~financial~~ ~~statements~~significant transfers in ~~conformity with GAAP. Rules~~ and ~~interpretive~~out ~~releases~~ of ~~the~~ ~~Securities~~Level 1 and ~~Exchange~~Level ~~Commission~~2 ~~(SEC)~~fair ~~under~~value ~~authority~~measurements ofand ~~federal securities~~describe ~~laws~~the ~~are~~reasons ~~also sources of authoritative GAAP~~ for ~~SEC~~the ~~registrants~~transfers. The ~~FASB~~ ~~will~~changes noalso ~~longer~~clarify ~~issue~~existing ~~new~~disclosure ~~standards~~requirements inrelated ~~the~~to ~~form~~how ofassets ~~Statements,~~and ~~FASB~~liabilities ~~Staff Positions,~~should ~~or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not~~ be ~~authoritative~~ ingrouped ~~their~~by ~~own~~class ~~right~~and asvaluation ~~they~~techniques ~~will~~used ~~only~~for ~~serve~~recurring ~~to update the Codification. These changes~~ and ~~the~~nonrecurring ~~Codification~~fair ~~itself~~value ~~do not change GAAP~~measurements. ~~Other~~ ~~than~~The ~~the manner in which new accounting guidance is referenced, the~~ adoption of these changes had no impact on the Consolidated Financial Statements.

On Effective January 1, ~~2009~~2010, the Company adopted changes issued by the FASB toon ~~fair value~~February 24, ~~accounting~~2010, ~~and reporting as it relates~~ to ~~nonfinancial~~accounting ~~assets~~for and ~~nonfinancial~~ ~~liabilities~~disclosure ~~that~~of ~~are~~events ~~not~~that ~~recognized~~occur orafter ~~disclosed~~the atbalance ~~fair~~sheet ~~value~~date ~~in the~~but before financial statements onare atissued ~~least~~or anavailable ~~annual~~to ~~basis.~~be ~~These changes define fair value~~issued, ~~establish~~otherwise aknown ~~framework~~as ~~for~~“subsequent ~~measuring~~events.” ~~fair value in GAAP~~Specifically, ~~and~~these ~~expand disclosures~~changes ~~about~~clarified ~~fair~~that ~~value~~an ~~measurements.~~entity ~~This~~that ~~guidance~~is ~~applies~~required to ~~other~~file ~~GAAP that require~~ or ~~permit~~furnish ~~fair~~its ~~value~~financial ~~measurements~~statements ~~and is to be applied prospectively~~ with ~~limited~~the ~~exceptions.~~SEC ~~The~~is ~~adoption~~not ofrequired ~~these changes, as it relates~~ to ~~nonfinancial~~disclose ~~assets~~the ~~and~~date ~~nonfinancial~~through ~~liabilities,~~which ~~had~~subsequent noevents ~~impact~~have ~~on the~~been ~~Financial Statements~~evaluated. ~~These~~Other ~~provisions~~than ~~will~~the beelimination ~~applied at such time a fair value measurement~~ of adisclosing ~~nonfinancial~~the ~~asset~~date orthrough ~~nonfinancial~~which ~~liability~~management ishas ~~required, which~~performed ~~may~~its ~~result~~evaluation infor asubsequent ~~fair~~events ~~value~~(see ~~that~~Note isM), ~~materially~~the ~~different~~adoption ~~than~~of ~~would~~these ~~have been~~changes ~~calculated~~had ~~prior~~no toimpact on the ~~adoption~~Consolidated ofFinancial ~~these changes~~Statements.

Issued

In January 2010, the FASB issued changes to disclosure requirements for fair value measurements. Specifically, the changes require a reporting entity to disclose, in the reconciliation of fair value measurements using significant unobservable inputs (Level 3), separate information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). These changes become effective for the Company beginning January 1, 2011. Other than the additional disclosure requirements, management has determined these changes will not have an impact on the Consolidated Financial Statements.

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Effective January 1, 2009, the Company adopted changes issued by the FASB on April 1, 2009 to accounting for business combinations. These changes apply to all assets acquired and liabilities assumed in a business combination that arise from certain contingencies and requires (i) an acquirer to recognize at fair value, at the acquisition date, an asset acquired or liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period otherwise the asset or liability should be recognized at the acquisition date if certain defined criteria are met; (ii) contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be recognized initially at fair value; (iii) subsequent measurements of assets and liabilities arising from contingencies be based on a systematic and rational method depending on their nature and contingent consideration arrangements be measured subsequently; and (iv) disclosures of the amounts and measurement basis of such assets and liabilities and the nature of the contingencies. These changes were applied to the acquisition completed on February 10, 2009 (see Note D). Overall the adoption of this change did not have a material impact on the Company’s financial position or results of operations.

On January 1, 2009, the Company adopted changes issued by the FASB to consolidation accounting and reporting. These changes establish accounting and reporting for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance defines a noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. These changes require, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value.The adoption of this change did not have a material impact on the Company’s results from operations or financial position.

On January 1, 2009, the Company adopted changes issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented (see Note I). The adoption of this change did not have a material impact on the Company’s results from operations or financial position.

On June 30, 2009, the Company adopted changes issued by the FASB to fair value accounting. These changes provide additional guidance for estimating fair value when the volume and level of activity for an asset or liability have significantly decreased and includes guidance for identifying circumstances that indicate a transaction is not orderly. This guidance is necessary to maintain the overall objective of fair value measurements, which is that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The adoption of these changes did not have a material impact on the Company’s results from operations or financial position.

On June 30, 2009, the Company adopted changes issued by the FASB to fair value disclosures of financial instruments. These changes require a publicly traded company to include disclosures about the fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods. Such disclosures include the fair value of all financial instruments, for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position; the related carrying amount of these financial instruments; and the method(s) and significant assumptions used to estimate the fair value. The adoption of these changes did not have a material impact on the Company’s results from operations or financial position.

On June 30, 2009, the Company adopted changes issued by the FASB to accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued, otherwise known as “subsequent events.” Specifically, these changes set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of these changes had no impact on the financial statements as management already followed a similar approach prior to the adoption of this new guidance. We have evaluated subsequent events after the balance sheet date of September 30, 2009 to November 9, 2009 which is the date the financial statements were issued.

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Issued

In October 2009, the FASB issued changes to the accounting for revenue recognition under multiple-deliverable revenue arrangements. These changes address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, this guidance significantly expands required disclosures related to a vendor’s multiple-deliverable revenue arrangements. These changes are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and early adoption is permitted. A company may elect, but will not be required, to adopt these changes retrospectively for all prior periods. Management is currently evaluating the requirements of these changes and has not yet determined the impact on the Company’s condensed consolidated financial statements.

C. DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

	September 30, 2009			December 31, 2008
	March 31, 2010			December 31, 2009
	(unaudited)
Receivables, net:		(000’s)
	(000’s)
Trade	$	45,952		$	52,007
Receivables, net:
Unbilled Revenue		21,620			19,298
Trade	$	50,350		$	45,830
Federal income tax receivable		—			1,215
Unbilled Revenue		25,269			24,499
Other		~~617~~516			~~805~~671
Allowance for doubtful accounts		(~~2,253~~612	)		(~~2,385~~529	)
	$	6575,~~936~~523		$	70,~~940~~471

	September 30, 2009		December 31, 2008
	March 31, 2010		December 31, 2009
	(unaudited)
	(000’s)	~~(000’s)~~
Prepaid expenses and other current assets:
Prepaid taxes	$	42,~~104~~611	$	4,~~604~~342
Prepaid insurance		31,~~293~~999		2,~~010~~578
Other		43,~~285~~499		4,~~187~~008
	$	118,~~682~~109	$	10,~~801~~928

	September 30, 2009			December 31, 2008
	March 31, 2010			December 31, 2009
	(unaudited)
	(000’s)	~~(000’s)~~
Property and equipment, net:
Land	$	571		$	571
Building and leasehold improvements		45,~~802~~109			34,~~579~~818
Equipment		9498,~~536~~011			7695,~~771~~559
Furniture, fixtures and office		3,~~049~~737			23,~~701~~053
Vehicles		3,~~674~~625			3,~~912~~634
Capital leases		201			~~177~~201
Construction in progress		23,~~213~~304			112,~~811~~491
Total property and equipment		~~109~~114,~~046~~558			99110,~~522~~327
Less: Accumulated depreciation		(2733,~~233~~066	)		(1930,~~053~~038	)
	$	81,~~813~~492		$	80,~~469~~289

	March 31, 2010		December 31, 2009
	(unaudited)
	(000’s)
Accrued liabilities:
Accrued insurance	$	824	$	845
Other		5,787		5,417
	$	6,611	$	6,262

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	September 30, 2009		December 31, 2008
	(unaudited)
		(000’s)
Accrued liabilities:
Accrued compensation and benefits	$	2,810	$	9,325
Accrued insurance		834		1,092
Accrued taxes, other than foreign income tax		4,873		4,278
Other		5,953		4,683
	$	14,470	$	19,378

D. BUSINESS ACQUISITIONS AND GOODWILL

John Wright Company Acquisition

On February 10, 2009, we acquired John Wright Company (JWC) for $9.7 million, net of cash acquired. JWC provides a suite of relief well drilling and risk management services to the oil and gas industry worldwide. The transaction was effective for accounting and financial purposes as of February 10, 2009.

We used the acquisition method to account for our acquisition of JWC. Under the acquisition method of accounting, the assets acquired and liabilities assumed from JWC were recorded at the date of acquisition at their respective fair values.

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The purchase price exceeded the fair value of acquired assets and assumed liabilities of $0.1 million, net of cash, resulting in a recognition of goodwill of approximately $5.1 million and intangible assets of approximately $4.5 million. The total purchase price less cash acquired of $0.3 million was $9.7 million and consisted of a promissory note issued to John W. Wright for $3.0 million and cash of $7.0 million. The operating results of JWC are included in the consolidated financial statements subsequent to the February 10, 2009 effective date.

The ~~preliminary~~ fair values of the assets acquired and liabilities assumed effective February 10, 2009 are as follows (in thousands):

Current assets (excluding cash)	$	119
Goodwill		5,163
Intangible Assets		4,456
Total assets acquired		9,738

Total liabilities assumed		65
Net assets acquired	$	9,673

The intangible assets relate to customer relationships, non-compete agreement, trade name, process diagram and proprietary software, the ~~preliminary~~ value of which has been recorded. The ~~final~~remaining ~~evaluation and adjustment to~~ goodwill ~~will~~ ~~be completed within one year from the acquisition date, and the remaining goodwill~~ is ~~expected to be~~ supported by the synergisms of our integrating the Company’s technologies into our Safeguard program which is currently our fastest growing service line and which is in our Pressure Control segment. ~~Acquisition costs of $89,000 are included in selling, general and administrative expenses for the nine months ended September 30, 2009.~~

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The following unaudited pro forma financial information presents the combined results of operations of the Company and JWC as if the acquisition had occurred as of the beginning of the periods presented. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisition at the date indicated. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined company.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2009

2008

2009

2008

2010

2009

(000’s)

Pro forma (000’s)

~~Pro forma (000’s)~~

Revenue

4053,~~317~~311

5654,~~834~~898

~~142,263~~

~~155,605~~

Operating Income

3,~~371~~061

73,~~699~~913

~~9,205~~

~~23,121~~

Net Income

~~822~~695

52,~~277~~043

~~3,466~~

~~16,930~~

Basic Earnings Per Share

0.01

0.0703

~~0.05~~

~~0.22~~

Diluted Earnings Per Share

0.01

0.0703

~~0.04~~

~~0.22~~

Basic Shares Outstanding

77,~~202~~654

76,~~203~~651

~~76,895~~

~~75,577~~

Diluted Shares Outstanding

7880,~~700~~167

7877,~~859~~752

~~78,219~~

~~78,041~~

The carrying amount of goodwill at ~~September 30~~March 31, ~~2009~~2010 of $14,313,000 consists of $5,163,000 from the John Wright Company acquisition, $4,824,000 from our acquisition of StassCo Pressure Control, LLC (StassCo) in 2007 and $4,326,000 from our acquisition of the hydraulic well control business (HWC) of Oil States International, Inc. in 2006.

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E. INTANGIBLE ASSETS

Intangible assets were recognized in conjunction with the StassCo acquisition on July 31, 2007 and the John Wright Company acquisition on February 10, 2009. There were no intangible assets prior to these acquisitions.

	September 30, 2009
December 31, 2009
	(Unaudited) (000’s)
	Gross Carrying Amount		Accumulated Amortization		Net
	(in thousands)
Intangible assets
Customer relationships	$	4,021	$	~~627~~707	$	3,~~394~~314
Non-compete agreements		1,677		~~585~~673		1,~~092~~004
Proprietary software		1,507		6489		1,~~443~~418
Trade name		1,336		86119		1,~~250~~217
Process diagram		600		3853		~~562~~547
	$	9,141	$	1,~~400~~641	$	7,~~741~~500

Amortization expense on intangible assets for the three months and the nine months ended September 30, 2009 was (in thousands) $241 and $674, respectively. Total amortization expense related to current intangible assets is expected to be (in thousands) $916, $966, $966, $779 and $731 for the years ended December 31, 2009, 2010, 2011, 2012 and 2013, respectively. Amortization expense related to intangible assets for the three months and nine months ended September, 30, 2008 was $128, and $384, respectively.

March 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net
	(in thousands)
Intangible assets
Customer relationships	$	4,021	$	787	$	3,234
Non-compete agreements		1,677		762		915
Proprietary software		1,507		114		1,393
Trade name		1,336		152		1,184
Process diagram		600		68		532
	$	9,141	$	1,883	$	7,258

11Amortization expense on intangible assets was (in thousands) $242 and $128 for the three months ended March 31, 2010 and 2009, respectively . Total amortization expense related to current intangible assets is expected to be (in thousands) $966, $966, $779, $731 and $626 for the years ended December 31, 2010, 2011, 2012, 2013 and 2014, respectively.

~~Table~~F. ofLONG-TERM ~~Contents~~DEBT AND RELATED PARTY DEBT

F. LONG-TERM AND RELATED PARTY DEBT

Long-term and related party debt and notes payable consisted of the following:

	September 30, 2009			December 31, 2008
	March 31, 2010			December 31, 2009
	(Unaudited)
	(000’s)	~~(000’s)~~
U.S. revolving credit facility, with available commitments up to $20.0 million, a borrowing base of $16.4 million adjusted for $1.1 million outstanding under letters of credit and guarantees, leaving $3.9 million available to be drawn under the facility and an average interest rate of 7.04% as of September 30, 2009, and a borrowing base of $10.3 million and an average interest rate of 8.1% for the year ended December 31, 2008 (1)	$	11,389		$	6,432
U.S. revolving credit facility, with available commitments up to $20.0 million, a borrowing base of $20.0 million adjusted for $4.9 million outstanding under letters of credit and guarantees, leaving $3.5 million available to be drawn under the facility and an average interest rate of 7.75% for the three months ended March 31, 2010, and a borrowing base of $16.6 million and an average interest rate of 7.22% for the year ended December 31, 2009	$	11,591		$	9,901
U.S. term credit facility with initial borrowings of $34.4 million, payable over 36 months and average interest rate of 5.54% as of September 30, 2009 and credit facility with initial borrowings of $9.7 million payable over 60 months and average interest rate of 5.6% for the year ended December 31, 2008 (1)		30,960			3,927
U.S. term credit facility with initial borrowings of $34.4 million, payable over 36 months and average interest rate of 5.75% for the three months ended March 31, 2010 and an average interest rate of 5.59% for the year ended December 31, 2009		27,520			29,240
Related party debt (2)		3,000			21,166
Related party debt		3,000			3,000
Capital lease obligations, with interest rates ranging from 4.2% to 6.0%		~~161~~137			~~173~~149
Total debt		4542,~~510~~248			3142,~~698~~290
Less: current maturities		(6,~~930~~932	)		(56,~~523~~931	)
Total long-term and related party debt	$	3835,~~580~~316		$	2635,~~175~~359

~~(1) Loan information provided as of December 31, 2008 is related to the previous credit facility paid in full on February~~ 10~~, 2009.~~

~~(2)~~Table ~~See~~of ~~Note G~~Contents

~~In conjunction~~On ~~with~~February ~~the acquisition of HWC on March 3~~10, ~~2006~~2009, we entered into a ~~Credit~~ ~~Agreement~~new $54.4 million syndicated credit agreement with Wells Fargo Bank, National Association, ~~which~~Royal ~~established a~~Bank of Canada and Bank of America, N.A. (the “Credit Agreement”). The Credit Agreement replaced our existing term and revolving credit ~~facility~~facilities ~~capacity~~at ~~totaling~~that ~~$10~~time.3 ~~million,~~The ~~subject~~Credit toAgreement ~~an initial~~provides ~~borrowing~~for ~~base~~a term loan in the principal amount of $634.04 million, and a ~~term~~revolving credit ~~facility~~line ~~totaling~~in the principal amount of up to $~~9.7~~ 20 million. The term loan ~~balance~~facility ~~outstanding~~requires onregularly ~~December~~scheduled ~~31,~~quarterly ~~2008~~payments ~~was $3~~of principal and interest.9 Quarterly ~~million~~principal payments on the term ~~credit~~ facility ~~and~~are $61.472 million and commenced on June 30, 2009. Amounts repaid under the ~~revolving credit~~term ~~facility~~loan cannot be re-borrowed. ~~This~~The ~~line~~term ~~was~~loan ~~replaced~~and ~~with~~the arevolving ~~new~~credit ~~facility~~line ~~described below~~each mature on February 10, 2012.

Interest under the Credit Agreement accrues at a base rate (which is the greater of the Federal Funds Rate plus 1.50%, Wells Fargo’s prime rate, or the daily one-month London Interbank Offered Rate plus 1.50%) plus a margin ranging from 4.25% to 4.75% per annum or, at our option, at a Eurodollar base rate plus a margin ranging from 5.25% to 5.75% per annum. We will also pay a commitment fee on the unused portion of the revolving credit line ranging from 1.30% to 1.40% per annum. The commitment fee and the margin applicable to advances under the Credit Agreement increase within the applicable range if the ratio of our debt to adjusted EBITDA rises above 1.50.

The Credit Agreement is unconditionally guaranteed by all of our current and future domestic subsidiaries (collectively, the “Guarantors”) and secured by substantially all of our assets and those of the Guarantors, including a pledge of all of the capital stock of our direct and indirect domestic subsidiaries and 66% of the capital stock of our first-tier foreign subsidiaries. We have not entered into any interest rate hedges with respect to the Credit Agreement but may elect do so in the future.

12The Credit Agreement also requires compliance with certain financial covenants, including, commencing with the quarter ending March 31, 2009, (1) the maintenance of a minimum tangible net worth of not less than 85% of our tangible net worth as of March 31, 2009, plus an amount equal to 50% of consolidated net income for each succeeding fiscal quarter plus 100% of future net proceeds from the sale of equity securities, (2) a maximum ratio of funded debt to adjusted EBITDA for the preceding four fiscal quarters of 2.25 to 1.00, and (3) a minimum ratio of adjusted EBITDA to fixed charges of 1.50 to 1.00. We are in compliance with the covenants as of March 31, 2010.

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The Credit Agreement also requires compliance with certain financial covenants, including, commencing with the quarter ending March 31, 2009, (1) the maintenance of a minimum tangible net worth of not less than 85% of our tangible net worth as of March 31, 2009, plus an amount equal to 50% of consolidated net income for each succeeding fiscal quarter plus 100% of future net proceeds from the sale of equity securities, (2) a maximum ratio of funded debt to adjusted EBITDA for the preceding four fiscal quarters of 2.25 to 1.00, and (3) a minimum ratio of adjusted EBITDA to fixed charges of 1.50 to 1.00. We are in compliance with the covenants as of September 30, 2009.

G. RELATED PARTY LONG-TERM DEBT

A related party note of $3 million in unsecured subordinated debt was issued to John W. Wright in connection with the John Wright Company acquisition on February 10, 2009. The note bears interest at a rate of 8% per annum, and requires a one-time principal payment on February 10, 2014. Interest is accrued monthly and payable semi-annually on February 15 and August 15. The interest expense on the note was $6159,000 and $~~154~~33,000 for the three ~~month and nine~~ months ended ~~September~~March 3031, 2010, and 2009, respectively. In addition to this debt, John Wright entered into an employment agreement with the Company.

A related party note of $15 million in unsecured subordinated debt was issued to Oil States Energy Services, Inc. in connection with the HWC acquisition, and was adjusted upward to $21.2 million during the quarter ended June 30, 2006 to reflect a $6.2 million adjustment for working capital acquired. The note bore interest at a rate of 10% per annum, and required a one-time principal payment on September 9, 2010. Interest was accrued monthly and was payable quarterly. The interest expense on the note was ~~$229,000~~zero and $~~529~~229,000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009, respectively. This note was paid in full on February 10, 2009 with proceeds from the new $54.4 million syndicated credit agreement.

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H. COMMITMENTS AND CONTINGENCIES

Litigation

We are involved in or threatened with various legal proceedings from time to time arising in the ordinary course of business. We do not believe that any liabilities with respect to these proceedings will have a material adverse effect on our operations or financial position.

~~The Company has~~Expro ~~been~~Americas, ~~engaged~~LLC, sued Boots & Coots and several of our employees in ~~litigation~~the 281st Judicial District of Harris County, Texas in August, 2007, claiming misappropriation of trade secrets, tortious interference with ~~Expro. The~~contracts ~~case~~and ~~was~~employment ~~tried~~ relationships, conspiracy and violations of the Texas Theft liability Act relating to Boots & Coots’ hiring of a ~~jury~~number of the plaintiff’s former employees. Trial in the case was held on August ~~and~~18, ~~September~~2009. The jury ~~verdict~~found ~~included~~against ~~findings~~Boots ~~that were~~& ~~favorable~~Coots toon ~~the~~misappropriation ~~Company~~of trade secrets and ~~findings~~intentional ~~that~~interference ~~were~~with ~~not~~contractual ~~favorable~~relations relating to ~~the Company.~~ two Expro ~~moved~~employees, ~~for~~although ~~entry~~it ofalso ~~judgment~~found onthat ~~the~~Boots ~~jury's~~& ~~verdict~~Coots ~~and proposed~~did ~~award~~not knowingly participate in breach of $2fiduciary duty.9 On ~~million~~December 11, ~~and~~2009, the ~~Company~~court ~~has~~entered ~~challenged~~a judgment against us and one employee indemnified by us in the ~~unfavorable findings~~amount of $3,000,000 plus $351,781 pre-judgment interest and costs of court. The ~~Court~~total ~~has~~judgment ~~thus~~bears ~~far~~interest ~~not~~at ~~entered~~5% ~~judgment~~compounded on an annual basis. The Company ~~retains~~has ataken ~~pending~~appropriate ~~counterclaim~~steps ~~against~~to ~~Expro,~~file onan ~~which~~appeal of the ~~Court~~trial ~~has~~court's ~~not yet ruled~~judgment. ~~Management~~ No amount has been ~~and~~recorded ~~remains~~in ~~confident that~~ the Company’s ~~will ultimately~~financial ~~prevail,~~statements ~~whether~~for at this ~~stage~~judgment orin onaccordance ~~appeal. Management understands~~with ~~that~~the itrequirements ~~would~~under ~~not~~“Accounting befor ~~appropriate~~Contingencies”, tobased ~~comment~~upon ~~further~~the onCompany’s ~~the~~assessment ~~matter~~of ~~at this~~the ~~time,~~likely asoutcome of the ~~matter~~appeal. isThe ~~yet~~anticipated ~~pending~~time ~~and~~frame for the ~~parties~~appeal ~~are~~to ~~waiting~~be onheard is within the ~~Court's~~ ~~decision~~next two years.

13On April 15, 2010, Ed Van Cott filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, current members of Boots & Coots’ Board of Directors, including its Chief Executive Officer (the “Individual Defendants”), Halliburton and Merger Sub (the “Van Cott I Suit”). On April 16, 2010, David Contreras filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Contreras Suit”). On April 16, 2010 Edgar L. Van Cott and J. David Schoepf filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Van Cott II Suit”). On April 16, 2010, Charles Bryce filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots and the Individual Defendants (the “Bryce Suit”). On April 19, 2010, Dennis Palkon filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Palkon Suit”) On April 20, 2010, Dennis Alweiss filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots and the Individual Defendants (the “Alweiss Suit”; the Van Cott I Suit, Contreras Suit, Van Cott II Suit, Bryce Suit and Palkon Suit are collectively referred to as the “Harris County Class Actions”). On April 21, 2010, Ed Van Cott filed an amended petition in the Van Cott I Suit. On April 26, 2010, a motion to consolidate the Harris County Class Actions and to appoint interim class counsel was filed in the Bryce Suit. On April 27, 2010, a motion to consolidate the Harris County Class Actions and to appoint co-interim class counsel and liaison counsel was filed in the Van Cott I Suit. On April 28, 2010, Herbert Silverberg filed a purported class action lawsuit in the Court of Chancery of the State of Delaware against Boots & Coots and the Individual Defendants (the “Silverberg Suit”). The Harris County Class Actions and the Silverberg Suit are collectively referred to as the “Class Actions”.

Each of the Class Actions has been brought by a purported stockholder of Boots & Coots and seeks certification of a class of all holders of Boots & Coots’ common stock. The Harris County Class Actions allege, among other things, (1) the Individual Defendants have breached and continue to breach their fiduciary duties to the plaintiffs and members of the proposed class, (2) the Merger is unfair to the public stockholders of Boots & Coots as it underestimates the true value of Boots & Coots, (3) the Individual Defendants are pursuing a course of conduct that does not maximize the value of Boots & Coots, and (4) Boots & Coots and, to the extent a party thereto, Halliburton aided and abetted the breaches of duties by the Individual Defendants. The petitions associated with the Class Actions seek, among other things, an injunction prohibiting consummation of the Merger, attorneys’ fees and expenses and, in the case of the Van Cott II Suit, rescission or damages in the event the Merger is consummated. The Silverberg Suit is a derivative action alleging, among other things, that the Individual Defendants breached their fiduciary duties to the plaintiffs and members of the proposed class in approving certain restricted stock grants to members of the board of directors and that seeks, among other things, to obtain the return of those grants by the Individual Defendants.

We believe that all of the putative shareholder Class Actions are without merit and intend to vigorously defend against such claims.

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Employment Contracts

We have employment contracts with certain executives and other key employees with contract terms that include lump sum payments of up to two ~~years~~and ofone-half ~~compensation including~~times an employee’s salary and bonus, continuation of benefits for up to two and ~~incentive~~one-half ~~pay~~years, the full vesting of equity awards and payment to cover certain tax liabilities upon termination of employment under certain circumstances.

I. EARNINGS PER SHARE

Basic and diluted income per common share is computed by dividing net income attributable to common stockholders by the weighted average common shares outstanding. The weighted average number of shares used to compute basic and diluted earnings per share for the three months ~~and nine months~~ ended ~~September~~ 30March 31, ~~2009~~2010 and ~~2008~~2009 are illustrated ~~below (in thousands):~~

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
	(Unaudited)				(Unaudited)
Numerator: For basic and diluted earnings per share: Net income attributable to common stockholders	$	822	$	5,448	$	3,487	$	16,678
Denominator: For basic earnings per share- weighted-average shares		77,202		76,203		76,895		75,577
Effect of dilutive securities: Stock options and stock appreciation rights(1)		1,498		2,656		1,324		2,464
Denominator: For diluted earnings per share – weighted-average shares		78,700		78,859		78,219		78,041

below (in thousands):

(1) Excludes the effect of outstanding stock options, restricted shares, and warrants that have an anti-dilutive effect on earnings per share for the three months and nine months ended September 30, 2009 and September 30, 2008.

	Three Months Ended March 31,
	2010		2009
	(Unaudited)
Numerator: For basic and diluted earnings per share: Net income attributable to common Stockholders	$	695	$	1,946
Denominator: For basic earnings per share- weighted-average shares		77,654		76,651
Effect of dilutive securities: Stock options and stock appreciation rights(1)		2,513		1,101
Denominator: For diluted earnings per share – weighted-average shares		80,167		77,752

~~The exercise~~(1) ~~price~~Excludes the effect of ~~our~~outstanding stock options, and ~~appreciation~~restricted ~~rights~~shares ~~varies~~that ~~from~~have ~~$0.67~~an ~~to $3.00 per share. The maximum number of potentially~~ anti-dilutive ~~securities~~ ateffect ~~September~~on ~~30,~~earnings ~~2009,~~per ~~and~~share ~~2008~~for ~~included:~~the ~~(1)~~three ~~4,595,000~~months ~~and~~ended ~~4,719,850 common~~March ~~shares~~31, ~~respectively,~~2010 ~~issuable upon exercise of stock options~~ and ~~appreciation~~ ~~rights,~~March ~~and (2) zero and 163~~31,~~500~~ ~~common shares, respectively, issuable upon exercise of stock purchase warrants~~2009.

The exercise price of our stock options and appreciation rights varies from $0.67 to $2.58 per share. The maximum number of potentially dilutive securities at March 31, 2010, and 2009 included 3,920,000 and 4,886,850 common shares, respectively, issuable upon exercise of stock options and appreciation rights.

J. EMPLOYEE “STOCK-BASED” COMPENSATION

We ~~used~~ use the Black-Scholes option pricing model to estimate the fair value of options on the date of grant. ~~The following assumptions were applied in determining stock-based employee compensation:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2009

2008

2009

2008

Risk-free interest rate

―

3.23%

―

3.23%

Expected dividend yield

―

Expected option life

―

4.11 yrs

―

4.11 yrs

Expected volatility

―

53.3%

―

53.3%

Weighted average fair value of options granted at market value

―

$1.38

―

$1.38

Forfeiture rate

―

6.67%

―

6.67%

For the three months period ended March 31, 2010 and 2009, there were no stock options granted.

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For the three and nine months period ended September 30, 2009, there were no stock options granted.

K. BUSINESS SEGMENT INFORMATION

Segments:

We operate in three business segments: Pressure Control, Well Intervention and Equipment Services. Intercompany transfers between segments were not material. Our accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. While cost of sales expenses are variable based upon the type of revenue generated, the majority of our operating expenses represent fixed costs for base labor charges, rent and utilities. For purposes of this presentation, operating expenses and depreciation and amortization have been charged to each segment based upon specific identification of expenses and a pro rata allocation of remaining non-segment specific expenses are assigned between segments based upon relative revenues. Selling, general and administrative and corporate expenses have been allocated between segments in proportion to their relative revenue. Business segment operating data from continuing operations is presented for purposes of management discussion and analysis of operating results.

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The Pressure Control segment consists of personnel and services provided during critical well events and for prevention services and project management. These services also include snubbing and pressure control services that are provided during a response to a critical well event to minimize response time and mitigate damage while maximizing safety. These services primarily utilize existing personnel to maximize utilization with only slight increases in fixed operating costs. The prevention and project management services are designed to reduce the number and severity of critical well events offered through our prevention and risk management programs, including training, contingency planning, well plan reviews, audits, inspection services and engineering services.

Our Well Intervention segment consists of services that are designed to enhance production for oil and gas operators. This segment includes services performed by hydraulic workover and snubbing units that are used to enhance production of oil and gas wells. These units are used for underbalanced drilling, workover, well completions and plugging and abandonment services.

The Equipment Services segment includes our pressure control equipment rental and service business, which began as an expansion of the Company’s existing services in 2007. We cross-sell pressure control equipment, rentals and services to customers of our Pressure Control and Well Intervention businesses, which has driven this segment growth to date.

Information concerning segment operations for the three months ~~and nine months~~ ended ~~September~~ 30March 31, ~~2009~~2010 and ~~2008~~2009 is presented below. Certain reclassifications have been made to the prior periods to conform to the current presentation.

	Pressure Control		Well Intervention			Equipment Services		Consolidated
	(Unaudited) (000’s)
	(Unaudited)
Three Months Ended September 30, 2009:
	(000’s)
Operating Revenues	$	14,860	$	18,743		$	6,714	$	40,317
Three Months Ended March 31, 2010:
Operating Income(Loss)(1)(2)		2,991		(1,088	)		1,468		3,371
Operating Revenues	$	22,558	$	23,328		$	7,425	$	53,311
Identifiable Operating Assets(3)(5)		47,970		112,654			33,965		194,589
Operating Income(Loss)(1)(2)		2,054		585			422		3,061
Capital Expenditures		530		151			1,119		1,800
Identifiable Operating Assets(3)(5)		49,338		113,889			37,347		200,574
Depreciation and Amortization(1)		161		2,200			909		3,270
Capital Expenditures		69		1,745			2,566		4,380
Three Months Ended September 30, 2008:
Depreciation and Amortization(1)		181		2,241			992		3,414
Operating Revenues	$	28,270	$	23,589		$	4,593	$	56,452
Three Months Ended March 31, 2009:
Operating Income(1)(2)		7,089		375			330		7,794
Operating Revenues	$	27,034	$	20,469		$	7,159	$	54,662
Identifiable Operating Assets(4)(5)		40,637		114,385			20,671		175,693
Operating Income(1)(2)		2,803		(1,124	)		2,137		3,816
Capital Expenditures		16		6,503			3,496		10,015
Identifiable Operating Assets(4)(5)		56,336		115,545			28,625		200,506
Depreciation and Amortization(1)		178		1,800			405		2,383
Capital Expenditures		202		2,883			2,967		6,052
Depreciation and Amortization(1)		146		2,066			619		2,831

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	Pressure Control		Well Intervention			Equipment Services		Consolidated
	(Unaudited) (000’s)
Nine Months Ended September 30, 2009:
Operating Revenues	$	64,481	$	57,827		$	19,719	$	142,027
Operating Income(Loss)(1)(2)		8,007		(2,934	)		4,153		9,226
Identifiable Operating Assets(3)(5)		47,970		112,654			33,965		194,589
Capital Expenditures		766		4,806			7,505		13,077
Depreciation and Amortization(1)		468		6,412			2,343		9,223
Nine Months Ended September 30, 2008:
Operating Revenues	$	65,300	$	73,597		$	14,474	$	153,371
Operating Income(1)(2)		15,714		4,617			2,324		22,655
Identifiable Operating Assets(4)(5)		40,637		114,385			20,671		175,693
Capital Expenditures		380		13,793			8,214		22,387
Depreciation and Amortization(1)		818		4,879			960		6,657

(1)

Operating expenses and depreciation and amortization have been charged to each segment based upon specific identification of expenses and the remaining non-segment specific expenses have been allocated pro-rata between segments in proportion to their relative revenues.

(2) Selling, general and administrative expenses have been allocated pro-rata between segments based upon relative revenues ~~and includes foreign exchange translation gains and losses~~.

(3) At ~~September~~March 3031, ~~2009~~2010

(4) At ~~September~~March 3031, ~~2008~~2009

(5)

Identifiable Operating Assets have been assigned to each segment based upon specific identification of assets and the remaining non-segment specific assets have been allocated pro-rata between segments in proportion to their relative revenues.

~~L. INCOME TAXES~~14

Effective January 1, 2007, we adopted FASB changes which are intended to clarify the accounting for income taxes by prescribing a minimum recognition threshold for a tax position before being recognized in the financial statements. The change also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. In accordance with the requirements of the change, the Company evaluated all tax years still subject to potential audit under state, federal and foreign income tax law in reaching its accounting conclusions. In accordance with the guidance, we have recorded gross unrecognized tax benefits as of September 30, 2009 totaling $0.5 million and related interest and penalties of $0.4 million in other noncurrent liabilities on the condensed consolidated balance sheet. Of this amount, $0.9 million would affect the effective tax rate if subsequently recognized. We classify interest and penalties associated with income tax positions within income tax expense. The interest and penalty component of the unrecognized tax benefits as of September 30, 2009 was $0.4 million.

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L. INCOME TAXES

Effective January 1, 2007, we adopted FASB changes which are intended to clarify the accounting for income taxes by prescribing a minimum recognition threshold for a tax position before being recognized in the financial statements. The change also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. In accordance with the requirements of the change, the Company evaluated all tax years still subject to potential audit under state, federal and foreign income tax law in reaching its accounting conclusions. In accordance with the guidance, we have recorded gross unrecognized tax benefits as of March 31, 2010 totaling $0.5 million and related interest and penalties of $0.5 million in other noncurrent liabilities on the condensed consolidated balance sheet. Of this amount, $1.0 million would affect the effective tax rate if subsequently recognized. We classify interest and penalties associated with income tax positions within income tax expense.

We have open years for income tax audit purposes in our major taxing jurisdictions according to statutes as follows:

Jurisdiction		Open Years
Federal		2006 and forward
State		2005 and forward
Venezuela		2005 and forward
Congo		2005 and forward
Algeria		2005 and forward
Libya		2008 and forward

We have determined that as a result of the acquisition of HWC we experienced a change of control pursuant to limitations set forth in Section 382 of the IRS rules and regulations. As a result, we are limited to utilizing approximately $2.1 million of U.S. net operating losses (“NOL’s”) to offset taxable income generated by us during the tax year ended December 31, ~~2009~~2010 and expect similar dollar limits in future years until our U.S. NOL’s are either completely used or expire.

In each period, we assess the likelihood that deferred taxes will be recovered from existing deferred tax liabilities or future taxable income in each jurisdiction. To the extent that we believe that we do not meet the test that recovery is “more likely than not,” we established a valuation allowance. We have recorded valuation allowances for certain net deferred tax assets since management believes it is more likely than not that these particular assets will not be realized. We have determined that a portion of deferred tax assets related to the ~~U.S.~~Venzuela ~~NOL’s and foreign tax credits~~ will be realized~~. Accordingly~~ and accordingly, in the first quarter ~~2009~~2010, $0.78 million of ~~valuation~~ ~~allowance related to the U.S. NOL was released, which represents one year of our NOL limitation ($2.1 million). Additionally, in the third quarter 2009, $1.2 million of~~ valuation allowance ~~related to foreign tax credit~~ was released.

M. SUBSEQUENT EVENTS

On April 9, 2010, we entered into a definitive merger agreement with Halliburton and a direct, wholly-owned subsidiary of Halliburton pursuant to which, on the terms and subject to the conditions set forth in the merger agreement, we will merge with and into such subsidiary. Under the merger agreement, Boots & Coots stockholders will receive consideration valued at approximately $3.00 per share for each share of Boots & Coots common stock, par value $0.00001 per share, comprised of $1.73 in cash and $1.27 in shares of Halliburton common stock, par value $2.50 per share, subject to adjustment to achieve the intended tax consequences of the merger and subject to an election feature. See note H for litigation related to the merger agreement.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking information. Forward-looking information is based on projections, assumptions and estimates, not historical information. Some statements in this Form 10-Q are forward-looking and may be identified as such through the use of words like “may,” “may not,” “believes,” “do not believe,” “expects,” “do not expect,” “do not anticipate,” and other similar expressions. We may also provide oral or written forward-looking information on other materials we release to the public. Forward-looking information involves risks and uncertainties and reflects our best judgment based on current information. Actual events and our results of operations may differ materially from expectations because of inaccurate assumptions we make or by known or unknown risks and uncertainties. As a result, no forward-looking information can be guaranteed.

While it is not possible to identify all factors, the risks and uncertainties that could cause actual results to differ from our forward-looking statements include those contained in this 10-Q, and our Forms 10-Q, 8-K and 10-K filed with the United States Securities and Exchange Commission (SEC). We do not assume any responsibility to publicly update any of our forward-looking statements regardless of whether factors change as a result of new information, future events or for any other reason.

Overview

We provide a suite of integrated pressure control and related services to onshore and offshore oil and gas exploration and development companies, principally in North America, South America, North Africa, West Africa, the Middle East and Asia, including training, contingency planning, well plan reviews, audits, inspection services, engineering services, pressure control equipment rental services, hydraulic snubbing workovers, well completions and plugging and abandonment services.

17On April 9, 2010, we entered into a definitive merger agreement with Halliburton Company, a Delaware corporation (“Halliburton”), and Gradient, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Halliburton (“Merger Sub”). The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, Boots & Coots will merge with and into Merger Sub, with Merger Sub surviving as a direct, wholly-owned subsidiary of Halliburton (the “merger”). The merger agreement and the merger have been approved by the boards of directors of Boots & Coots and Halliburton. Under the merger agreement, Boots & Coots stockholders will receive consideration valued at approximately $3.00 per share for each share of Boots & Coots common stock, par value $0.00001 per share, comprised of $1.73 in cash and $1.27 in shares of Halliburton common stock, par value $2.50 per share, subject to adjustment to achieve the intended tax consequences of the merger and subject to an election feature. Completion of the merger remains subject to certain conditions, including the adoption of the merger agreement by our stockholders. To date, early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 was granted by the Federal Trade Commission on April 29, 2010. We currently expect to complete the merger in the second quarter of 2010, however, no assurance can be given as to when, or if, the merger will occur.

~~Table~~On July 31, 2007, we acquired Rock Springs, Wyoming-based StassCo Pressure Control, LLC (StassCo), in a transaction that was effective for accounting and financial purposes as of ~~Contents~~August 1, 2007. StassCo operates four hydraulic rig assist units in the Cheyenne Basin, Wyoming, and its presence in the Rockies fit our strategy to expand North America land operations.

~~On March 3,~~We ~~2006,~~added weour ~~acquired~~pressure ~~the hydraulic well~~ control ~~business~~equipment ~~(HWC)~~rental ofservice ~~Oil States~~line ~~International,~~to ~~Inc. As~~our asuite ~~result~~ of ~~the~~pressure ~~acquisition,~~control ~~we acquired~~services during the ~~ability~~fourth toquarter ~~provide~~of ~~hydraulic~~2007. Our ~~units~~pressure ~~for emergency well~~ control ~~situations~~ ~~and~~equipment ~~various well intervention solutions involving workovers, well drilling, well completions~~ and ~~plugging~~operating ~~and~~personnel ~~abandonment~~are ~~services.~~utilized ~~Hydraulic units~~primarily ~~may~~during bethe ~~used~~drilling ~~for both routine~~ and ~~emergency~~completion ~~well~~phases ~~control~~of ~~situations in the~~ oil and gas ~~industry~~wells. AWe ~~hydraulic~~are ~~unit~~currently isoperating athis ~~specially~~business ~~designed~~in ~~rig~~our ~~used for~~North ~~moving~~America ~~tubulars~~regions, inclassified ~~and~~as ~~out~~the Gulf of aMexico, ~~wellbore~~the ~~using~~Mid-Continent ~~hydraulic~~and ~~pressure.~~Southeast, ~~These units~~regions ~~may~~of ~~also~~North beAmerica ~~used~~and ~~for~~our ~~snubbing~~Middle ~~operations~~East tointernational ~~service wells under pressure~~region. ~~When~~ We aplan ~~unit~~to isexpand ~~snubbing,~~the itservice isline ~~pushing~~into ~~pipe~~other oroperating ~~tubulars~~areas ~~into~~where ~~the~~we ~~wellbore against~~provide ~~wellbore~~pressure ~~pressures~~control services.

On July 31, 2007, we acquired Rock Springs, Wyoming-based StassCo Pressure Control, LLC (StassCo), and the transaction was effective for accounting and financial purposes as of August 1, 2007. StassCo operates four hydraulic rig assist units in the Cheyenne Basin, Wyoming, and its presence in the Rockies is a key to our strategy to expand North America land operations.

We added our pressure control equipment rental service line to our suite of pressure control services during the fourth quarter of 2007. Our pressure control equipment and operating personnel are utilized primarily during the drilling and completion phases of oil and gas wells. We are currently operating this business in our North America regions, classified as the Gulf of Mexico, Mid Continent and Southeast and our Middle East international region. We plan to expand into other operating areas where we provide pressure control services.

On February 10, 2009, we purchased John Wright Company (JWC) for approximately $10 million in a combination of cash and subordinated debt. Based in Houston, JWC provides a suite of relief well drilling and risk management services to the oil and gas industry worldwide. We are integrating the company’s proprietary technology into our Safeguard program, which is currently our fastest growing service line.

Demand for services depends on factors beyond our control, including the volume and type of drilling and workover activity, which is substantially influenced by fluctuations in oil and natural gas prices. Wars, acts of terrorism and other unpredictable factors may affect demand for our services on a regional basis. Demand for our emergency well control, or critical well event, services is volatile and inherently unpredictable. As a result we expect to experience large fluctuations in our revenues from these services. Non-critical services, included in our well intervention segment, while subject to typical industry volatility associated with commodity prices, drilling activity levels and the like, provide more stable revenues and our strategy continues to be to expand these product and service offerings while focusing on our core strength of pressure control services.16

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Demand for our services depends on factors beyond our control, including the volume and type of drilling and workover activity, which is substantially influenced by fluctuations in oil and natural gas prices. Wars, acts of terrorism and other unpredictable factors may affect demand for our services on a regional basis. Demand for our emergency well control, or critical well event, services is volatile and inherently unpredictable. As a result we expect to experience large fluctuations in our revenues from these services. Non-critical services, included in our well intervention segment, while subject to typical industry volatility associated with commodity prices, drilling activity levels and the like, provide more stable revenues and our strategy continues to be to expand these product and service offerings while focusing on our core strength of pressure control services.

Segment Information

Our operating segments are our service lines, which we aggregate into three reporting segments. These reporting segments are pressure control, well intervention and equipment services.

Intercompany transfers between segments were not material. Our accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. While cost of sales expenses are variable based upon the type of revenue generated, most of our operating expenses represent fixed costs for base labor charges, rent and utilities. For purposes of this presentation, operating expenses and depreciation and amortization have been charged to each segment based upon specific identification of expenses and a pro rata allocation of remaining non-segment specific expenses are assigned between segments based upon relative revenues. Selling, general and administrative and corporate expenses have been allocated between segments in proportion to their relative revenue. Business segment operating data from continuing operations is presented for purposes of management discussion and analysis of operating results.

The Pressure Control segment consists of personnel and services provided during a critical well event. These services also include snubbing and pressure control services provided during a response which are designed to minimize response time and mitigate damage while maximizing safety. These services primarily utilize existing personnel to maximize utilization with only slight increases in fixed operating costs. This segment also includes services that are designed to reduce the number and severity of critical well events offered through our prevention and risk management programs, including training, contingency planning, well plan reviews, audits, inspection services and engineering services.

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Results of operations

Information concerning operations in different business segments for the three months ~~and nine months~~ ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009 is presented below. Certain reclassifications have been made to the prior periods to conform to the current presentation.

	Three Months Ended September 30,					Nine Months Ended September 30,
	(Unaudited) (000’s)
	2009			2008		2009			2008
Revenues
Pressure Control	$	14,860		$	28,270	$	64,481		$	65,300
Well Intervention		18,743			23,589		57,827			73,597
Equipment Services		6,714			4,593		19,719			14,474
	$	40,317		$	56,452	$	142,027		$	153,371
Cost of Sales
Pressure Control	$	8,571		$	15,963	$	42,858		$	35,458
Well Intervention		14,510			17,165		42,663			51,171
Equipment Services		3,051			3,030		8,836			8,740
	$	26,132		$	36,158	$	94,357		$	95,369
Operating Expenses(1)
Pressure Control	$	2,393		$	3,848	$	9,766		$	10,082
Well Intervention		2,193			3,199		8,478			9,027
Equipment Services		951			634		3,360			1,712
	$	5,537		$	7,681	$	21,604		$	20,821
Selling, General and Administrative Expenses(2)
Pressure Control	$	744		$	1,192	$	3,382		$	3,228
Well Intervention		928			1,050		3,208			3,903
Equipment Services		335			194		1,027			738
	$	2,007		$	2,436	$	7,617		$	7,869
Depreciation and Amortization(1)
Pressure Control	$	161		$	178	$	468		$	818
Well Intervention		2,200			1,800		6,412			4,879
Equipment Services		909			405		2,343			960
	$	3,270		$	2,383	$	9,223		$	6,657
Operating Income (Loss)
Pressure Control	$	2,991		$	7,089	$	8,007		$	15,714
Well Intervention		(1,088	)		375		(2,934	)		4,617
Equipment Services		1,468			330		4,153			2,324
	$	3,371		$	7,794	$	9,226		$	22,655

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	Three Months Ended March 31, (Unaudited) (000’s)
	2010		2009
Revenues
Pressure Control	$	22,558	$	27,034
Well Intervention		23,328		20,469
Equipment Services		7,425		7,159
	$	53,311	$	54,662
Cost of Sales
Pressure Control	$	16,864	$	18,788
Well Intervention		16,035		15,273
Equipment Services		4,514		2,825
	$	37,413	$	36,886
Operating Expenses(1)
Pressure Control	$	2,094	$	3,864
Well Intervention		3,056		3,169
Equipment Services		1,048		1,199
	$	6,198	$	8,232
Selling, General and Administrative Expenses(2)
Pressure Control	$	1,365	$	1,433
Well Intervention		1,411		1,085
Equipment Services		449		379
	$	3,225	$	2,897
Depreciation and Amortization(1)
Pressure Control	$	181	$	146
Well Intervention		2,241		2,066
Equipment Services		992		619
	$	3,414	$	2,831
Operating Income (Loss)
Pressure Control	$	2,054	$	2,803
Well Intervention		585		(1,124	)
Equipment Services		422		2,137
	$	3,061	$	3,816

_________________________________

(1)

(2) Selling, general and administrative expenses have been allocated pro-rata between segments based upon relative revenues ~~and includes foreign exchange translation gains and losses~~.

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Comparison of the Three Months Ended ~~September~~March 3031, ~~2009~~2010 with the Three Months Ended ~~September~~ 30March 31, ~~2008~~2009

Revenues

Pressure Control revenues were $1422,~~860~~558,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $2827,~~270~~034,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, representing a decrease of $134,~~410~~476,000, or 4716.46% in the current quarter. The decrease is primarily due to revenue from a non-recurring ~~third~~2009 ~~quarter 2008~~ international project ~~totaling~~and ~~$17~~a reduction in current year response revenue,~~982,000,~~ offset by an increase in revenue from Safeguard contracts and other prevention and risk management projects ~~and~~in anLibya, ~~increase~~Algeria inand ~~response~~North ~~revenue~~America.

Well Intervention revenues were $1823,~~743~~328,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $2320,~~589~~469,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, representing ~~a decrease~~an increase of $42,~~846~~859,000, or 2014.50%, in the current quarter. The ~~decrease~~ increase was primarily due to ~~the~~increased ~~lower~~performance ~~utilization rates in Venezuela~~ and ~~the Middle~~utilization ~~East as well as a slowdown~~ in ~~the~~ North ~~American~~Africa ~~regions of the Gulf of Mexico~~ and ~~Rocky Mountains that were partially offset by improved results in the Northeast and Southeast regions. In addition, the decreases where partially offset by the increased revenue in~~ North ~~Africa and Algeria~~America.

Equipment service revenues were $67,~~714~~425,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $47,~~593~~159,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, an increase of $2266,~~121,~~000, or 463.27%, in the current quarter. This increase is primarily ~~due~~driven toby ~~domestic~~the ~~and~~capital ~~international~~investments ~~expansion~~made ofin our equipment rental and services business.

Cost of Sales

Pressure Control cost of sales was $816,~~571~~864,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $1518,~~963~~788,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, a decrease of $71,~~392~~924,000, or 4610.32%, in the current quarter. For the quarter ended ~~September~~ 30March 31, ~~2009~~2010, cost of sales represented 5774.78% of revenues compared to 56 69.5% of revenues for the quarter ended ~~September~~March 3031, ~~2008~~2009. The ~~decrease~~increase in cost as a percentage of revenue was primarily due to current year reclassification of payroll related expenses for certain employees for worked performed relatecd to cost of sales israther ~~generally~~than ~~attributable~~operating expenses in order to better align those expenses with the ~~decrease~~related inrevenue generating services. The current year cost of sales as a percentage of revenue also increased due to the costs and low margin associated with the start up phase of a new ONGC project.

Well Intervention cost of sales was $1416,~~510~~035,000 for the quarter ended ~~September~~March 3031, ~~2009~~ 2010, compared to $1715,~~165~~273,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, ~~a decrease~~an increase of $2762,~~655,~~000, or ~~15.~~5.0%, in the current quarter. For the quarter ended ~~September~~March 3031, ~~2009~~2010, cost of sales represented 7768.47% of revenues compared to 7274.86% of revenues for the quarter ended ~~September 30~~March 31, ~~2008~~ 2009. The decrease inas ~~cost~~a percentage of ~~sales~~revenue iswas generally attributable to the ~~decrease~~ higher utilization rates that resulted in fixed and semi-fixed costs being spread over a larger revenue base.

Equipment Services cost of sales was $34,~~051~~514,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $32,~~030~~825,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, an increase of $211,689,000, or 059.78%, in the current quarter. For the quarter ended ~~September~~ 30March 31, ~~2009~~2010, cost of sales was 4560.48% of revenue compared to 6639.05% of revenue for the quarter ended ~~September~~March 3031, ~~2008~~2009. The increases, in both dollars and as a percentage of revenue, ~~decrease~~were ~~was~~ primarily due to ~~lower~~increases ~~related~~in ~~third~~staffing, ~~party~~facilities ~~costs~~and repairs and maintenance resulting in ~~2009~~higher fixed field, shop costs, field sales and field administration in ~~relation~~ support of our efforts to ~~2008~~expand this business.

Operating Expenses

Consolidated operating expenses were $56,~~537~~198,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $78,~~681~~232,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, a decrease of $2,~~144~~034,000, or 2724.97%, in the current quarter. During the current quarter, operating expenses represented 1311.76% of revenues compared to 1315.61% of revenues in the prior year quarter. The decrease in operating expense is primarily due to ~~decreases~~current inyear ~~bonus~~reclassification ~~accruals~~of ~~and~~payroll anrelated ~~increase~~expenses for certain employees for work performed related to cost of sales rather than operating expenses in order to better align those expenses with the ~~gain~~related ~~on disposal~~revenue ofgenerating ~~assets~~services.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) ~~and foreign currency translation expenses~~ were $23,~~007~~225,000 for the quarter ended ~~September~~March 3031, ~~2009~~2010, compared to $2,~~436~~897,000 for the quarter ended ~~September~~March 3031, ~~2008~~2009, aan ~~decrease~~increase of $~~429~~328,000, or 17 11.63%, in the current quarter. ~~During the current quarter, SG&A and foreign currency translation expenses represented 5.0% of revenues compared to 4.3% of revenues in the prior year quarter.~~ The ~~decrease~~increase in total SG&A expense was primarily due to ~~decreases~~increases in ~~bonus~~professional ~~accruals,~~fees ~~and~~related ~~advertising~~to ~~and customer~~our ~~relations~~propsed ~~expenses~~merger ~~which~~with ~~were~~Halliburton ~~partially~~that ~~offset~~we byannounced anon ~~increase~~April ~~in professional~~9, ~~fees~~2010.

Depreciation and Amortization

Depreciation and amortization expense increased by $~~887~~583,000 in the quarter ended ~~September 30~~March 31, ~~2009~~2010 compared to the quarter ended ~~September~~March 3031, ~~2008~~2009, primarily due to ~~the depreciation~~an increase in depreciation of $~~752~~469,000 resulting from an increase in capitalized ~~assets~~ ~~since September 30, 2008~~assets. Amortization of intangible assets related to our acquisition of StassCo Pressure Control LLC in August 2007 and John Wright Company in first quarter 2009 was $~~240~~242,000 for the ~~quarter~~ three months ended ~~September~~March 3031, ~~2009~~2010 and $~~105~~128,000 for the quarter ended ~~September~~March 3031, ~~2008~~ 2009. The intangible assets related to StassCo ~~purchase~~consist ~~consists~~ of customer relationships being amortized over a 13 year period and management non-compete agreements being amortized over 5.5 and 3.5 year periods. Intangible assets related to the John Wright purchase consists of trade name, non-compete agreement, proprietary software, process diagrams and customer relationships being amortized over 10, 5, 15, 10, and 10 years, respectively.

Interest Expense

Interest expense ~~increased~~decreased by $~~266~~185,000, or 3819.3%, compared to the prior year quarter ~~and includes~~which anincluded ~~increase~~a ofwrite ~~$148,000~~off inof ~~amortization~~the ofremaining deferred financing charges ~~resulting~~ from the credit facility that was replaced by a new syndicated credit agreement ~~we entered into~~ in February 2009. The remaining ~~increase~~decrease was ~~primarily~~due to a ~~result~~lower composite interest rate resulting from the February 2009 repayment of ~~higher borrowings~~the ~~due~~$21.2 million subordinated debt to ~~acquisition~~Oil ~~and~~States ~~working~~Energy ~~capital~~Services, ~~requirements~~Inc., inwhich ~~the~~accrued ~~current year~~interest ~~quarter~~at a rate of 10% per annum.

Other Expense, Net and Foreign Currency Translation

Other expense, net increased by $271,165,000 in the quarter ended ~~September~~March 3031, ~~2009~~ 2010 compared to the prior year quarter primarily due to the devaluation of the Venezuelan Bolivar Fuerte currency for which we recorded a ~~reduction~~foreign inexchange ~~interest income~~loss of $1,172,000. We historically had remeasured our net Bolívar Fuerte denominated monetary asset position at the official, fixed exchange rate of 2.15 Bolívar Fuerte to United States dollar. In January 2010, the Venezuelan government announced a devaluation of the Bolívar Fuerte under a new two-exchange rate system with a 2.6 Bolívar Fuerte to United States dollar rate for essential products and a 4.3 Bolívar Fuerte to United States dollar rate for non-essential products. We are now utilizing the 4.3 Bolívar Fuerte to United States dollar exchange rate.

Income Tax Expense

Income taxes for the quarter ended ~~September~~March 3031, ~~2009~~2010 totaled $1413,~~568,~~000, or 6537.63% of pre-tax income compared to the quarter ended ~~September~~March 3031, ~~2008~~2009 which totaled $1897,~~658,~~000, or 2331.36% of pre-tax income. The Company’s estimated annual effective tax rate reflects, among other items, our best estimates of operating results and foreign currency exchange rates. A change in the mix of pretax income from these various jurisdictions can have a significant impact on the Company’s effective tax rate. ~~Our~~For the quarter ended March 31, 2010, our effective tax rate was ~~adversely~~ also unfavorably impacted by ~~consolidating~~the ~~certain~~devaluation of of the Venezuelan Bolivar Fuerte currency. In addition to the first quarter foreign ~~losses~~exchange loss, we also recorded $657,000 additional tax expense for ~~reported~~local ~~earnings without~~Venezuelan ~~being~~income ~~able~~tax topurposes ~~correspondingly~~as ~~consolidate~~a ~~such~~result ~~losses~~of a taxable gain on our net United States dollar-denominated monetary asset position in ~~calculating book~~the ~~tax~~country.

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Comparison of the Nine Months Ended September 30, 2009 with the Nine Months Ended September 30, 2008

Revenues

Pressure Control revenues were $64,481,000 for the nine months ended September 30, 2009, compared to $65,300,000 for the nine months ended September 30, 2008, representing a decrease of $819,000, or 1.3%, in the current period. The decrease was primarily due to a decrease in response revenue offset by an increase in international revenue from prevention and risk management projects.

Well Intervention revenues were $57,827,000 for the nine months ended September 30, 2009, compared to $73,597,000 for the nine months ended September 30, 2008, representing a decrease of $15,770,000, or 21.4%, in the current period. The decrease was primarily due to the one time project in Bangladesh that was included in the revenue for the prior year period, the suspension of operations in Venezuela during the first quarter and for most of the second quarter of 2009, reduced business in the Middle East, the loss of a tender in Egypt and a slowdown in the North American regions of the Rocky Mountains, Mid-Continent and Gulf of Mexico that were partially offset by improved results in the Northeast and Southeast regions. In addition, the current year first nine months had revenue increases in Algeria as well as revenue from the commencement of operations in North Africa.

Equipment service revenues were $19,719,000 for the nine months ended September 30, 2009, compared to $14,474,000 for the nine months ended September 30, 2008, an increase of $5,245,000, or 36.2%, in the current period. This increase is due to the expansion of our equipment rental and services business.

Cost of Sales

Pressure Control cost of sales was $42,858,000 for the nine months ended September 30, 2009, compared to $35,458,000 for the nine months ended September 30, 2008, an increase of $7,400,000, or 20.9%, in the current period. For the nine months ended September 30, 2009, cost of sales represented 66.5% of revenues compared to 54.3% of revenues for the nine months ended September 30, 2008. The increase in cost of sales is generally attributable to a higher proportion of lower margin revenue with related third party costs in 2009 in relation to 2008 as well as reduced emergency response activity in the current nine month period.

Well Intervention cost of sales was $42,663,000 for the nine months ended September 30, 2009, compared to $51,171,000 for the nine months ended September 30, 2008, a decrease of $8,508,000, or 16.6%, in the current period. For the nine months ended September 30, 2009, cost of sales represented 73.8% of revenues compared to 69.5% of revenues for the nine months ended September 30, 2008. The decrease in cost of sales is generally attributable to the decrease in revenues, while the increase in cost of sales as a percentage of revenue is primarily due to carrying costs associated with our operations in Venezuela during our suspension of operations there.

Equipment Services cost of sales was $8,836,000 for the nine months ended September 30, 2009, compared to $8,740,000 for the nine months ended September 30, 2008, an increase of $96,000, or 1.1%, in the current period. For the nine months ended September 30, 2009, cost of sales was 44.8% of revenue compared to 60.4% of revenue for the nine months ended September 30, 2008. The increase in cost of sales is generally attributable to increased revenues, while the cost of sales percentage of revenue decrease was primarily due to a lower proportion of revenue with related third party costs in 2009 in relation to 2008.

Operating Expenses

Consolidated operating expenses were $21,604,000 for the nine months ended September 30, 2009, compared to $20,821,000 for the nine months ended September 30, 2008, an increase of $783,000, or 3.8%, in the current period. During the current year first nine month period, operating expenses represented 15.2% of revenues compared to 13.6% of revenues in the prior year first nine months. The increase in operating expenses was primarily due to increases in salaries and benefits, liability insurance and facility rental associated with increased staffing in our Business Development group as we expand our capacity to pursue opportunities to grow our geographic presence and product offerings. Also included in the increase are start up expenses associated with new facilities in Libya for Pressure Control and Well Intervention and in the US for our Equipment Services business. In addition, increases occurred in support services in order to maintain ongoing operational growth. The increases were offset by decreases in bonus accruals.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) and foreign currency translation expenses were $7,617,000 for the nine months ended September 30, 2009, compared to $7,869,000 for the nine months ended September 30, 2008, a decrease of $252,000, or 3.2%, in the current period. During the nine months ended September 30, 2009, SG&A and foreign currency translation expenses represented 5.4% of revenues compared to 5.1% of revenues in the prior year first nine months. The decrease in total SG&A expense was primarily due to decreases in bonus accruals, and advertising and customer relations expenses which were partially offset by an increase in professional fees.

Depreciation and Amortization

Depreciation and amortization expense increased by $2,566,000 in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008, primarily due to the depreciation increase of $2,296,000 resulting from an increase in capitalized assets since September 30, 2008. Amortization of intangible assets related to our acquisitions of StassCo Pressure Control LLC in August 2007 and the John Wright Company in February 2009 was $674,000 for the nine months ended September 30, 2009 and $403,000 in 2008. The intangible assets related to StassCo purchase consists of customer relationships being amortized over a 13 year period and management non-compete agreements being amortized over 5.5 and 3.5 year periods. Intangible assets related to the John Wright purchase consists of trade name, non-compete agreement, proprietary software, process diagrams and customer relationships being amortized over 10, 5, 15, 10, and 10 years, respectively.

Interest Expense

Interest expense increased by $890,000, or 44.4%, in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. This includes $542,000 for the increase in amortization of deferred financing charges resulting from the new syndicated credit agreement we entered into in February 2009 and the required write off of $146,000 of the remaining deferred financing charges related to the previous loan. The remaining increase was primarily a result of higher borrowings in the current year period.

Other(Income)Expense, Net

Other expense, net increased by $91,000 in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 due to a reduction in interest income.

Income Tax Expense

Income taxes for the nine months ended September 30, 2009 totaled $2,755,000, or 44.1% of pre-tax income compared to the nine months ended September 30, 2008 which totaled $3,974,000, or 19.2% of pre-tax income. The Company’s estimated annual effective tax rate reflects, among other items, our best estimates of operating results and foreign currency exchange rates. A change in the mix of pretax income from these various jurisdictions can have a significant impact on the Company’s effective tax rate. Our effective tax rate was adversely impacted by consolidating certain foreign losses for reported earnings without being able to correspondingly consolidate such losses in calculating book tax.

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Liquidity and Capital Resources

Liquidity

At ~~September~~ 30March 31, ~~2009~~2010, we had working capital of $4544,~~513~~096,000 compared to $4047,~~169~~004,000 at December 31, ~~2008~~2009. Our cash balance at ~~September~~March 3031, ~~2009~~ 2010 was $6,~~336~~794,000 compared to $67,~~220~~357,000 at December 31, ~~2008~~2009. We ended the quarter with stockholders’ equity of $~~106~~110,~~571~~978,000 which increased $41,~~810~~361,000 when compared to $~~101~~109,~~761~~617,000 at December 31, ~~2008~~2009 primarily due to our net income of $3695,~~487,~~000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~ 2010.

Our primary liquidity needs are to fund working capital, capital expenditures such as expanding our equipment services fleet of equipment and replacing support equipment for our hydraulic workover and snubbing service line, debt service and acquisitions. Our primary sources of liquidity are cash, cash flows from operations and borrowings under the revolving credit facility.

In the first ~~nine~~quarter ~~months~~ of ~~2009~~2010, we generated cash from operating activities of $53,~~195~~701,000 compared to cash used for operating activities of $161,~~517~~003,000 during the first ~~nine~~quarter ~~months~~ of ~~2008~~2009. Cash was provided by operations primarily through net income of $3695,~~487,~~000, non-cash charges of $111,~~446~~583,000, an increase in accounts payable and ~~decreases~~ accrued liabilities of $4,319,000 and a decrease in ~~receivables~~prepaid expenses and other assets of $52,~~378~~678,000. Non-cash charges were comprised primarily of $93,~~223~~414,000 of depreciation and amortization, ~~deferred~~excess tax expense from stock options of $1192,~~053,~~000, stock-based compensation of $1515,~~179,~~000, and bad debt provision of $9283,000, all of which were offset by a ~~reduction~~deferred ~~due to excess~~ tax ~~benefit~~ ~~from~~credit ~~stock~~of ~~options exercised~~$2,621,000. These positive cash flows were offset by ~~decreases in accounts payable and accrued liabilities of $10,236,000,~~ increases in ~~other~~receivables ~~assets~~ of $25,~~438~~135,000, ~~increases in prepaid expenses~~ and ~~other current assets of $1,222,000, increases in~~ inventory of ~~$573,000, and a gain on sale/disposal~~ of ~~assets of~~ $~~647~~436,000. Receivables ~~decreased~~increased due to the ~~timing~~increase ofin ~~collections~~revenue ~~in the~~producing ~~first~~activity ~~nine~~late ~~months,~~in ~~primarily~~the ~~from~~first ~~our~~quarter ~~foreign~~of ~~customers~~2010. Accounts payable and accrued liabilities ~~decreased primarily due to reductions in accrued compensation and foreign income taxes. Other assets~~ increased primarily ~~due~~for ~~to deferred financing charges related to~~ the ~~new~~same ~~credit agreement and due to prepaid agent commissions~~reason. Prepaid expenses and other current assets ~~increased~~ decreased primarily due to ana ~~increase~~reduction in prepaid ~~insurance, and inventory increased as a result of supporting future operations~~taxes.

Cash used in investing activities during the ~~nine~~quarters ~~months~~ ended ~~September 30~~March 31, ~~2009~~2010 and ~~2008~~2009 ~~was~~ were $154,~~889~~372,000 and $2212,~~037~~677,000, respectively. Capital expenditures, including capitalized interest, totaled $134,~~077~~380,000 and $226,~~387~~052,000 during the ~~nine~~ ~~months~~quarter ended ~~September 30~~March 31, ~~2009~~2010 and ~~2008~~2009, respectively. Capital expenditures in ~~2009~~2010 consisted of purchases of assets for our hydraulic workover and snubbing services and our rental equipment services, ~~the acquisition of the abrasive jet cutting systems and the acquisition of John Wright Company (JWC),~~ while our ~~2008~~2009 capital expenditures ~~were~~ ~~primarily~~consisted of purchases of assets for our hydraulic workover and snubbing services and our rental equipment services~~. During~~, the ~~three~~acquisition ~~months ended September 30, 2009, we realized insurance proceeds~~ of ~~$4,170,000~~abrasive onjet ~~a claim~~cutting ~~related~~systems ~~to one of our hydraulic workover units and portions of its auxiliary equipment and inventory that fell~~ from a ~~third~~subsidiary ~~party freight vessel into the sea off the coast~~ of ~~Libya. The~~Halliburton ~~insurance proceeds were used~~ for ~~replacement~~$420,000 ~~of equipment~~ and ~~inventory. This~~the ~~claim~~acquisition ~~resulted in a gain on disposal~~ of ~~assets~~John ~~totaling~~Wright ~~$347,000~~Company ~~in the current quarter~~(JWC).

On February 10, 2009, we acquired Houston based John Wright Company (JWC) for cash consideration of $6,668,000, net of cash acquired, and issued a promissory note to John. W. Wright for $3,000,000. This transaction was funded utilizing cash obtained under our new credit facility.

We increased our net cash by $10108,~~810,~~000 due to financing activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010, primarily as a result of stock options exercised during the quarter. We generated net cash of $9,310,000 from financing activities during the three months ended March 31, 2009 primarily as a result of the new credit facility entered into on February 10, 2009, which generated proceeds of $9,701,000, net of paydown of $3,927,000 on ~~our~~ the previous credit facility and ~~repayment of all~~ $21,166,000 ofon related party debt. ~~We generated net cash of $5,106,000 from financing activities during the nine months ended September 30, 2008 primarily as a result of borrowings under our revolving credit facility of $5,477,000.~~

On ~~September~~ 30March 31, ~~2009~~2010, we had cash of $31,~~964~~075,000 denominated in Bolivares Fuertes and residing in a Venezuelan bank. On ~~September~~March 3031, ~~2009~~2010, included in our accounts receivable were Venezuela trade accounts receivables owing from the country’s national oil companies of $1512,~~060~~947,000, including $53,~~342~~280,000 denominated in Bolivares Fuertes and $9,~~718~~667,000 denominated in U.S. Dollars. The table below shows the amounts of Venezuela trade accounts receivables as of March 31, 2009 in relation to the amounts of those same receivables uncollected as of June 30, 2009, September 30, 2009 and November 6, 2009.

24As of March 31, 2010, we had net working capital exposure in Venezuela of $9,321,000, including $835,000 denominated in Bolivares Fuertes and $8,486,000 denominated in U.S. Dollars. Our international operations give rise to exposure to market risks from changes in foreign currency exchange rates to the extent that transactions are not denominated in U.S. Dollars. We typically endeavor to denominate our contracts in U.S. Dollars to mitigate exposure to fluctuations in foreign currencies, and we partially do this in Venezuela. Our net working capital exposure in Venezuela is down from a high of $12,243,000 in 2009.

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	March 31, 2009 Venezuela Receivable Balances and Subsequent Collections (in thousands)
	March 31, 2009		June 30, 2009		September 30, 2009		November 6, 2009
Bolivares Fuertes	$	10,740	$	9,135	$	2,935	$	2,930
U.S Dollar denominated settled in Bolivares Fuertes		6,218		4,973		4,156		3,845
U.S Dollar denominated settled in U.S. Dollars		4,035		4,005		4,005		3,054
Total	$	20,993	$	18,113	$	11,096	$	9,829

The Venezuelan government implemented a foreign currency control regime on February 5, 2003. This has resulted in currency controls that restrict the conversion of the Venezuelan currency, the Bolivar Fuerte, to U.S. Dollars. The Company has registered with the control board (CADIVI) in order to have a portion of total receivables in U.S dollar payments made directly to a United States bank account. Venezuela is considered a highly inflationary economy, andmanagement continues to monitor the situation closely.

AsEffective ~~of September~~January 301, ~~2009~~2006, weand ~~had~~related ~~net~~to ~~working~~our ~~capital~~acquisition ~~exposure~~of the hydraulic well control business of ~~$12,243,000~~Oil ~~including $2~~States,~~015,000~~ ~~denominated~~we changed our functional currency in ~~Bolivares~~Venezuela ~~Fuertes~~from ~~and~~the ~~$10,228,000~~Venezuelan ~~denominated~~Bolivar inFuerte to the U.S. ~~Dollars~~ Dollar. This ~~Our~~change ~~international~~allowed ~~operations~~us ~~give~~to ~~rise~~have toone ~~exposure~~consistent tofunctional ~~market~~currency ~~risks~~after ~~from changes~~the acquisition. Accumulated other comprehensive loss reported in the consolidated statements of stockholders’ equity before January 1, 2006 totaled $1,234,000 and consisted solely of the cumulative foreign currency ~~exchange~~translation ~~rates~~adjustment in Venezuela prior to changing our functional currency. The currency translation adjustment recorded up through the ~~extent~~date ~~that~~of ~~transactions~~the ~~are not~~change ~~denominated~~in functional currency will only be adjusted in Uthe event of a full or partial disposition of our investment in Venezuela.S The Security and Exchange Commission Regulation Committee’s International Practices Task Force’s Center for Audit Quality has deemed Venezuela’s currency as hyperinflationary effective January 1, 2010. Effective ~~Dollars~~January 11, 2010, the Venezuelan government devalued its currency and moved to a two-tier exchange structure. The official exchange rate moved from 2.15 to 2.60 for essential goods and to 4.30 for non-essential goods and services. WeThe ~~typically~~unfavorable ~~endeavor~~impact of the devaluation to ~~denominate our~~the ~~contracts~~Company’s inresults Ufor the quarter ended March 31, 2010 was $1,172,000 on account of the exchange rate movement from 2.S15 to 4.30. The ~~Dollars~~future results of our Venezuelan operations will be affected by many factors, including our ability to ~~mitigate~~take ~~exposure~~actions to ~~fluctuations~~mitigate inthe ~~foreign currencies~~effect of the devaluation, further actions of the Venezuelan government, and wegeneral ~~partially~~economic doconditions ~~this~~such inas ~~Venezuela~~continued inflation and future customer payments and spending.

The Venezuelan government implemented a foreign currency control regime on February 5, 2003. This has resulted in currency controls that restrict the conversion of the Venezuelan currency, the Bolivar Fuerte, to U.S. Dollars. The Company has registered with the control board (CADIVI) in order to have a portion of total receivables in U.S dollar payments made directly to a United States bank account. Venezuela is also on the U.S. government’s “watch list” for highly inflationary economies. Management continues to monitor the situation closely.

Effective January 1, 2006, and related to our acquisition of the hydraulic well control business of Oil States, we changed our functional currency in Venezuela from the Venezuelan Bolivar Fuerte to the U.S. Dollar. This change allowed us to have one consistent functional currency after the acquisition. Accumulated other comprehensive loss reported in the consolidated statements of stockholders’ equity before January 1, 2006 totaled $1.2 million and consisted solely of the cumulative foreign currency translation adjustment in Venezuela prior to changing our functional currency. The currency translation adjustment recorded up through the date of the change in functional currency will only be adjusted in the event of a full or partial disposition of our investment in Venezuela. The Security and Exchange Commission Regulation Committee's International Practices Task Force's Center for Audit Quality has deemed Venezuela's currency as a hyperinflationary effective January 1, 2010. This will have no impact on our financial statements.

Disclosure of on and off balance sheet debts and commitments

Our known contractual obligations at ~~September 30~~March 31, ~~2009~~2010 are reflected in the table below.

Future commitments (000’s)
Description	TOTAL		Less than 1 year		1-3 years		3-5 years		After 5 years
Long and short term debt and notes payable
Term loan	$	3027,~~960~~520	$	6,880	$	2420,~~080~~640	$	—	$	—
Revolving credit facility	$	11,~~389~~591	$	—	$	11,~~389~~591	$	—	$	—
Subordinated debt	$	3,000	$	—	$	—3,000	$	~~3,000~~—	$	—
Capital lease payments (including interest)	$	~~176~~146	$	60	$	~~111~~86	$	5—	$	—
Future minimum leasepayments	$	8,429	$	2,050	$	3,019	$	1,590	$	1,770
Future minimum lease Payments	$	7,907	$	2,326	$	2,686	$	1,428	$	1,467
Total commitments	$	5350,~~954~~164	$	89,~~990~~266	$	38,~~599~~003	$	41,~~595~~428	$	1,~~770~~467

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Credit Facilities/Capital Resources

On ~~March 3~~February 10, ~~2006~~2009, we entered into a ~~Credit~~new ~~Agreement~~$54.4 million syndicated credit agreement with Wells Fargo Bank, National Association, ~~which~~Royal ~~established~~Bank aof Canada and Bank of America, N.A. (the “Credit Agreement”). The Credit Agreement replaced our existing term and revolving credit ~~facility~~facilities. ~~capacity~~The ~~totaling~~ Credit Agreement provides for a term loan in the principal amount of $1034.34 million, and a ~~term~~revolving credit line in the principal amount of up to $20 million. The term loan facility ~~totaling~~requires regularly scheduled quarterly payments of principal and interest. Quarterly principal payments on the term facility are $91.7 72 million and commenced June 30, 2009. Amounts repaid under the term loan cannot be re-borrowed. The term loan and the revolving credit line each mature on February 10, 2012. The loan balance outstanding on ~~December~~March 31, ~~2008~~ 2010 was $327.95 million on the term credit facility and $611.46 million on the revolving credit facility. ~~This~~ The ~~line~~revolving credit facility borrowing base was ~~replaced~~$20.0 ~~with~~million aat ~~new facility~~March ~~described~~31, ~~below~~2010, adjusted for $4.9 million outstanding under letters of credit and guarantees, leaving $3.5 million available to be drawn under the facility.

On February 10, 2009, we entered into a new $54.4 million syndicated credit agreement with Wells Fargo Bank, National Association, Royal Bank of Canada and Bank of America, N.A. (the “Credit Agreement”). The Credit Agreement replaced our existing term and revolving credit facilities. The Credit Agreement provides for a term loan in the principal amount of $34.4 million and a revolving credit line in the principal amount of up to $20 million. The term loan facility requires regularly scheduled quarterly payments of principal and interest. Quarterly principal payments on the term facility are $1.72 million and commence June 30, 2009. Amounts repaid under the term loan cannot be re-borrowed. The term loan and the revolving credit line each mature on February 10, 2012. The loan balance outstanding on September 30, 2009 was $31.0 million on the term credit facility and $11.4 million on the revolving credit facility. The revolving credit facility borrowing base was $16.4 million at September 30, 2009, adjusted for $1.1 million outstanding under letters of credit and guarantees, leaving $3.9 million available to be drawn under the facility.22

Interest under the Credit Agreement accrues at a base rate (which is the greatest of the Federal Funds Rate plus 1.50%, Wells Fargo’s prime rate, or the daily one-month London Interbank Offered Rate plus 1.50%) plus a margin ranging from 4.25% to 4.75% per annum or, at our option, at a Eurodollar base rate plus a margin ranging from 5.25% to 5.75% per annum. We will also pay a commitment fee on the unused portion of the revolving credit line ranging from 1.30% to 1.40% per annum. The commitment fee and the margin applicable to advances under the Credit Agreement increase within the applicable range if the ratio of our debt to adjusted EBITDA rises above 1.50. The interest rate applicable to borrowings under the revolving credit facility and the term credit facility at September 30, 2009 was 7.75% and 5.75%, respectively.

The Credit Agreement contains covenants that limit our ability and the Guarantors ability to, among other things, incur or guarantee additional indebtedness; create liens; pay dividends on or repurchase stock; make certain types of investments; sell stock of our subsidiaries; restrict dividends or other payments from our subsidiaries; enter into transactions with affiliates; sell assets; merge with other companies; and spend in excess of $30 million per year on capital expenditures. The Credit Agreement also requires compliance with certain financial covenants, including, (1) the maintenance of a minimum tangible net worth of not less than 85% of our tangible net worth as of March 31, 2009, plus an amount equal to 50% of consolidated net income for each succeeding fiscal quarter plus 100% of future net proceeds from the sale of equity securities, (2) a maximum ratio of funded debt to adjusted EBITDA for the preceding four fiscal quarters of 2.25 to 1.00, and (3) a minimum ratio of adjusted EBITDA to fixed charges of 1.50 to 1.00. We are in compliance with these covenants as of September 30, 2009 and expect to be in compliance for the next twelve months.

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The Credit Agreement contains covenants that limit our ability and the Guarantors ability to, among other things, incur or guarantee additional indebtedness; create liens; pay dividends on or repurchase stock; make certain types of investments; sell stock of our subsidiaries; restrict dividends or other payments from our subsidiaries; enter into transactions with affiliates; sell assets; merge with other companies; and spend in excess of $30 million per year on capital expenditures. The Credit Agreement also requires compliance with certain financial covenants, including, (1) the maintenance of a minimum tangible net worth of not less than 85% of our tangible net worth as of March 31, 2009, plus an amount equal to 50% of consolidated net income for each succeeding fiscal quarter plus 100% of future net proceeds from the sale of equity securities, (2) a maximum ratio of funded debt to adjusted EBITDA for the preceding four fiscal quarters of 2.25 to 1.00, and (3) a minimum ratio of adjusted EBITDA to fixed charges of 1.50 to 1.00. We are in compliance with these covenants as of March 31, 2010 and expect to be in compliance for the next twelve months.

We utilized initial borrowings of approximately $40 million under the Credit Agreement to repay all amounts outstanding under our existing credit facilities, repay all of the $21.2 million of senior subordinated notes held by Oil States International and to fund our purchase of John Wright Company. We believe that cash on hand, cash from operations and amounts available under our credit facilities will be sufficient to meet our liquidity needs in the coming twelve months.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We derive a substantial portion of our revenues from our international operations. For the first ~~nine~~three months of ~~2009~~2010, approximately 6861% of our total revenues were generated internationally. Due to the unpredictable nature of the critical well events that drive our response segment revenues and fluctuations in regional demand for our well intervention segment products and services, the percentage of our revenues that are derived from a particular country, geographic region or business segment can be expected to vary significantly from quarter to quarter. Although most transactions are denominated in U. S. Dollars, the foreign currency risks that we are subject to may vary from quarter to quarter depending upon the countries in which we are then operating and the payment terms under the contractual arrangements we have with our customers.

During the first ~~nine~~three months of ~~2009~~2010, work in Venezuela and Algeria contributed 87% and 20 19% of our consolidated revenues, respectively, which was collectively up down slightly from the prior year period when revenues from these countries represented 1113% and 1316%, respectively, of total consolidated revenues. Remaining foreign revenues for the first ~~nine~~three months of ~~2009~~ 2010 were primarily generated in the Republic of Congo, Egypt, India, and Libya, with ~~only~~both India and Libya representing over 1011% of total international revenues for the period.

During the first quarter of 2009, we suspended operations in Venezuela pending payment on certain outstanding receivables from the country’s national oil companies. The Company resumed operations in the second quarter as partial payment was received. Effective June 2009, for that portion of all future services to be settled in U.S. Dollars, revenue will be recognized as it is earned and cash is collected. As of September 30, 2009 this deferred revenue totaled $982,000. The current accounts receivable to be settled in U.S. Dollars totaled approximately $4.0 million at September 30, 2009. During the three months ended September 30, 2009, the Company has collected payment on Bolivares Fuertes receivables totaling $7.1 million, on Bolivares Fuertes receivables denominated in U.S. Dollars totaling $1.5 million, and no U.S. Dollar denominated receivables settled in U.S Dollars. Since the end of the first quarter and as of November 6, 2009, the Company has collected payment on Bolivars Fuertes receivables totaling $8.7 million, on U.S. Dollar denominated receivables settled in Bolivares Fuertes totaling $3.1 million, and on U.S. Dollar denominated receivables settled in U.S. Dollars totaling $1 million. The Company continues efforts to collect accounts receivable and unbilled revenue. Management is closely monitoring the situation, expects to continue to maintain and operate its facilities in Venezuela, and does not believe a reserve is necessary for current uncollected receivables. For more information regarding our foreign currency risks, see “Liquidity and Capital Resources – Liquidity”.23

Our debt consists of both fixed-interest and variable-interest rate debt; consequently, our earnings and cash flows, as well as the fair values of our fixed-rate debt instruments, are subject to interest-rate risk.

We have a term loan and a revolving line of credit that are subject to movements in interest rates. As of September 30, 2009, we had floating rate obligations totaling approximately $42.3 million. See “Liquidity and Capital Resources – Credit Facilities/Capital Resources” for more information. These floating rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates. If the floating interest rate was to increase by 10% from the September 30, 2009 levels, our interest expense would increase by a total of approximately $234,000 annually.

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During the first quarter of 2009, we suspended operations in Venezuela pending payment on certain outstanding receivables from the country’s national oil companies. The Company resumed operations in the second quarter as partial payment was received. Effective June 2009, for that portion of all future services to be settled in U.S. Dollars, revenue will be recognized as it is earned and cash is collected. As of March 31, 2010 this deferred revenue totaled $1,151,000. The current accounts receivable to be settled in U.S. Dollars totaled approximately $3.7 million at March 31, 2010. During the three months ended March 31, 2010, the Company has collected payment on Bolivares Fuertes receivables totaling $0.8 million, on Bolivares Fuertes receivables denominated in U.S. Dollars totaling $1.2 million, and on U.S. Dollar denominated receivables settled in U.S Dollars totaling $1.0 million. The Company continues efforts to collect accounts receivable and unbilled revenue. Management is closely monitoring the situation, expects to continue to maintain and operate its facilities in Venezuela, and does not believe a reserve is necessary for current uncollected receivables. For more information regarding our foreign currency risks, see “Liquidity and Capital Resources – Liquidity”.

We have a term loan and a revolving line of credit that are subject to movements in interest rates. As of March 31, 2010, we had floating rate obligations totaling approximately $39.1 million. See “Liquidity and Capital Resources – Credit Facilities/Capital Resources” for more information. These floating rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates. If the floating interest rate was to increase by 10% from the March 31, 2010 levels, our interest expense would increase by a total of approximately $197,000 annually.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as of ~~September~~March 3031, ~~2009~~ 2010. Our Chief Executive Officer and Chief Financial Officer concluded, based upon their evaluation, that our disclosure controls and procedures are effective to ensure that the information required to be disclosed in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

~~There~~During ~~has been~~the noquarter ~~change~~ended inMarch ~~our~~31, 2010, the Company installed new accounting software. The new accounting software contains automated internal control ~~over~~features ~~financial~~that ~~reporting~~will ~~(as~~permit ~~defined~~the ~~in Rule~~Company ~~13a-15(f)~~to ~~under~~migrate away from certain manual internal control processes required by the ~~Exchange~~older ~~Act)~~system. There ~~that~~were no other changes in the Company’s internal controls over financial reporting which occurred during ~~our~~the ~~last fiscal~~ quarter ending March 31, 2010 that ~~has~~have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal ~~control~~controls over financial reporting.

PART II

Item 1. Legal Proceedings

We are involved in or threatened with various legal proceedings from time to time arising in the ordinary course of business. ~~Other~~We ~~than as described herein, we~~ do not believe that any liabilities with respect to these proceedings will have a material adverse effect on our operations or financial position.

The Company has been engaged in litigation with Expro. The case was tried to a jury in August and September. The jury verdict included findings that were favorable to the Company and findings that were not favorable to the Company. Expro moved for entry of judgment on the jury's verdict and proposed award of $2.9 million, and the Company has challenged the unfavorable findings. The Court has thus far not entered judgment. The Company retains a pending counterclaim against Expro, on which the Court has not yet ruled. Management has been and remains confident that the Company will ultimately prevail, whether at this stage or on appeal. Management understands that it would not be appropriate to comment further on the matter at this time, as the matter is yet pending and the parties are waiting on the Court's decision. 24

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Expro Americas, LLC, sued Boots & Coots and several of our employees in the 281st Judicial District of Harris County, Texas in August, 2007, claiming misappropriation of trade secrets, tortious interference with contracts and employment relationships, conspiracy and violations of the Texas Theft liability Act relating to Boots & Coots’ hiring of a number of the plaintiff’s former employees. Trial in the case was held on August 18, 2009. The jury found against Boots & Coots on misappropriation of trade secrets and intentional interference with contractual relations relating to two Expro employees, although it also found that Boots & Coots did not knowingly participate in breach of fiduciary duty. On December 11, 2009, the court entered a judgment against us and one employee indemnified by us in the amount of $3,000,000 plus $351,781 pre-judgment interest and costs of court. The total judgment bears interest at 5% compounded on an annual basis. The Company has taken appropriate steps to file an appeal of the trial court's judgment. No amount has been recorded in the Company’s financial statements for this judgment in accordance with the requirements under “Accounting for Contingencies”, based upon the Company’s assessment of the likely outcome of the appeal. The anticipated time frame for the appeal to be heard is within the next two years.

On April 15, 2010, Ed Van Cott filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, current members of Boots & Coots’ Board of Directors, including its Chief Executive Officer (the “Individual Defendants”), Halliburton and Merger Sub (the “Van Cott I Suit”). On April 16, 2010, David Contreras filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Contreras Suit”). On April 16, 2010 Edgar L. Van Cott and J. David Schoepf filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Van Cott II Suit”). On April 16, 2010, Charles Bryce filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots and the Individual Defendants (the “Bryce Suit”). On April 19, 2010, Dennis Palkon filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots, the Individual Defendants, Halliburton and Merger Sub (the “Palkon Suit”) On April 20, 2010, Dennis Alweiss filed a purported class action lawsuit in the District Court of Harris County, Texas against Boots & Coots and the Individual Defendants (the “Alweiss Suit”; the Van Cott I Suit, Contreras Suit, Van Cott II Suit, Bryce Suit and Palkon Suit are collectively referred to as the “Harris County Class Actions”). On April 21, 2010, Ed Van Cott filed an amended petition in the Van Cott I Suit. On April 26, 2010, a motion to consolidate the Harris County Class Actions and to appoint interim class counsel was filed in the Bryce Suit. On April 27, 2010, a motion to consolidate the Harris County Class Actions and to appoint co-interim class counsel and liaison counsel was filed in the Van Cott I Suit. On April 28, 2010, Herbert Silverberg filed a purported class action lawsuit in the Court of Chancery of the State of Delaware against Boots & Coots and the Individual Defendants (the “Silverberg Suit”). The Harris County Class Actions and the Silverberg Suit are collectively referred to as the “Class Actions”.

We believe that all of the putative shareholder Class Actions are without merit and intend to vigorously defend against such claims.

Item 1A. Risk Factors

Our business is subject to many risks. We describe the risks and factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock under “Risk Factors” in Item 1A of our Annual Report on Form 10-K filed with the U.S. Securities and Exchange ~~Commission,~~ ~~supplemented by the additional risk factors described below~~Commission. This information should be considered carefully together with the other information in this report and other reports and materials we file with the U.S. Securities and Exchange Commission.

~~Disruptions in the political and economic conditions of the foreign countries in which we operate expose us to risks that may have a material adverse effect on our business.~~25

We derive a significant portion of our revenue from our operations outside of the United States, which exposes us to risks inherent in doing business in each of the countries in which we transact business. Our international operations accounted for approximately 78% of our consolidated revenues during the year ended December 31, 2008 and 68% for the nine months ended September 30, 2009. Our operations in Venezuela and Algeria accounted for approximately 11% and 13%, and 8% and 20%, respectively, of our consolidated revenues during the year ended December 31, 2008 and the nine months ended September 30, 2009. We anticipate that our revenues from foreign operations will increase in the future due to our international presence in key oil and gas markets. Our international operations are subject to various risks peculiar to each country. With respect to any particular country, these risks may include:

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•Failure ~~expropriation~~to ~~and~~complete ~~nationalization~~our ofrecently ~~our~~announced ~~assets~~merger orwith ~~those~~Halliburton ofcould negatively impact our ~~customers~~stock inprice ~~that~~and ~~country;~~our future business and financial results.

•On ~~political~~April 9, 2010, we entered into a definitive merger agreement with Halliburton and ~~economic~~a ~~instability;~~direct, wholly-owned subsidiary of Halliburton pursuant to which, on the terms and subject to the conditions set forth in the merger agreement, we will merge with and into such subsidiary. If our proposed merger is not completed, our ongoing businesses may be adversely affected and, without realizing any of the benefits of having completed the merger, we would be subject to a number of risks, including the following:

•Ÿ ~~strikes~~we ormay ~~work~~experience ~~stoppages,~~negative ~~civil~~reactions ~~unrest,~~from ~~acts~~our ofcustomers ~~terrorism,~~and ~~force majeure, war or other armed conflict~~employees;

•Ÿ ~~natural~~the ~~disasters,~~current ~~including~~market ~~those~~price ~~related~~of our common stock may reflect a market assumption that the merger will occur and a failure to ~~earthquakes~~complete the merger could result in a negative perception by the stock market and ~~flooding~~a resulting decline in the market price of our common stock;

•Ÿ ~~inflation~~certain costs relating to the merger, including certain investment banking, financing, legal and accounting fees and expenses, must be paid even if the merger is not completed, and we may be required to pay a fee of $10.0 million or expense reimbursements up to $1.5 million to Halliburton if the merger agreement is terminated under specified circumstances; and

•Ÿ ~~currency~~there ~~fluctuations,~~may ~~devaluations,~~be ~~conversion~~substantial disruption to our business and ~~expropriation~~distraction ~~restrictions;~~of our management and employees from day-to-day operations because matters related to the merger (including integration planning) may require substantial commitments of time and resources, which could otherwise have been devoted to other opportunities that could have been beneficial to us.

•There ~~confiscatory~~can ~~taxation~~be orno ~~other~~assurance ~~adverse~~that ~~tax~~the ~~policies;~~risks described above will not materialize, and if any of them do, they may materially adversely affect our business, financial results and stock price.

•We ~~governmental~~may ~~activities~~have ~~that~~difficulty ~~limit~~attracting, ormotivating ~~disrupt~~and ~~markets,~~retaining ~~restrict~~officers orand ~~reduce~~other ~~payments,~~key oremployees ~~limit~~in ~~the~~light ~~movement~~ of ~~funds;~~our recently announced merger agreement with Halliburton.

•Uncertainty ~~governmental~~about ~~activities~~the ~~that~~effect of the proposed merger on our officers and employees may ~~result~~have inan adverse effect on us. This uncertainty may impair our ability to attract, retain and motivate key personnel during the ~~deprivation~~pendency of ~~contract~~the ~~rights;~~merger, as employees may experience uncertainty about their future roles with us and with Halliburton. If we are unable to attract, retain and motivate key personnel, we could face disruptions in our operations, loss of existing customers and loss of key information, expertise or know-how, which may adversely affect our business and financial results.

•Business ~~trade~~uncertainties and contractual restrictions ~~and~~while ~~economic~~the ~~embargoes~~proposed ~~imposed~~merger byis ~~the~~pending ~~United~~may ~~States~~have ~~and~~an ~~other~~adverse ~~countries~~effect on us.

~~Due~~Uncertainty to about the ~~unsettled~~effect ~~political~~of ~~conditions~~the inproposed ~~many~~merger ~~oil-producing~~on ~~areas~~suppliers, inpartners ~~which~~and ~~we operate,~~customers ~~including~~may ~~parts~~have ofan ~~Africa,~~adverse ~~South~~effect ~~America~~on ~~and~~us. These ~~the~~uncertainties ~~Middle~~may ~~East~~cause suppliers, ~~our revenue~~customers and ~~profits~~others ~~are~~that ~~subject~~deal with us to ~~increased~~defer ~~risk~~purchases ofor ~~the~~other ~~foregoing~~decisions ~~risks~~concerning us or seek to change existing business relationships with us. In addition, ~~which~~ the merger agreement restricts us from making certain acquisitions and taking other specified actions without Halliburton’s approval. These restrictions could ~~impact~~prevent us from pursuing certain business opportunities that may arise prior to the ~~supply~~completion ~~and~~of ~~pricing~~the ~~for~~merger. The ~~oil~~adverse ~~and~~effect ~~natural~~of ~~gas,~~such ~~disrupt~~disruptions ~~our operations,~~could ~~and~~be ~~increase~~exacerbated ~~our~~by ~~costs~~a ~~for~~delay ~~security~~in ~~worldwide~~the completion of the merger or termination of the merger agreement.

For instance, the Venezuelan National Assembly has approved a system governing how the state oil company, Petróleos de Venezuela, could gain operating control of oil producing projects. In 2007, the Venezuelan national oil company seized control of at least a 60% stake in oil production projects where foreign oil companies previously had a majority stake and operated the production project. These actions have created uncertainty in future business and investment activities among oil and natural gas companies and other business in Venezuela and have resulted in some companies withdrawing or curtailing activities in Venezuela. More recently, the Venezuela National Assembly enacted legislation that allows the Venezuelan government, directly or through its state oil company, to assume control over the operations and assets of certain oil service providers in exchange for reimbursement of the book value of the assets adjusted for certain liabilities. To the extent that these actions adversely affect our assets and operations or our customers' activities in this region, they may adversely affect our consolidated revenues, results of operations and liquidity.26

Additionally, in some jurisdictions we are subject to foreign governmental regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These regulations may adversely affect our ability to compete.

Our international business operations also include projects in countries where governmental corruption has been known to exist and where our competitors who are not subject to United States laws and regulations, such as the Foreign Corrupt Practices Act, can gain competitive advantages over us by securing business awards, licenses or other preferential treatment in those jurisdictions using methods that United States law and regulations prohibit us from using. For example, our non-U.S. competitors are not subject to the anti-bribery restrictions of the Foreign Corrupt Practices Act, which make it illegal to give anything of value to foreign officials or employees or agents of nationally owned oil companies in order to obtain or retain any business or other advantage. We may be subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses or other preferential treatment by making payment to government officials and others in positions of influence.

Violations of these laws could result in monetary and criminal penalties against us or our subsidiaries and could damage our reputation and, therefore, our ability to do business.

Our customers’ activity levels and spending for our products and services may be adversely impacted by the recent volatility of oil and natural gas prices and the current deterioration in the credit and capital markets.

Recently, commodity prices have been extremely volatile and have declined substantially. While current commodity prices are important contributors to positive cash flow for our customers, expectations about future prices and price volatility are generally more important for determining their future spending levels and demand for our products and services. Additionally, many of our customers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity. Recently, there has been a significant decline in the capital markets and the availability of credit. Additionally, many of our customers' equity values have substantially declined. The combination of a reduction of cash flow resulting from declines in commodity prices, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in our customers reducing capital expenditure budgets, curtailing operations or failing to meet their obligations as they come due. A material reduction in, or curtailment of, the operations or growth of our customer base as a whole, or any failure of our customers to meet or continue their contractual obligations to us could have a material adverse effect on our revenues and results of operations.

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Recent declines in oil and natural gas prices and global economic weakness have resulted in customers delaying payments on our invoices, which trend could adversely impact our liquidity, results of operations and financial condition.

In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject to our customers delaying or failing to pay our invoices. While historically our customer base has not presented significant credit risks, the economic recession and decrease in commodity prices has increased our exposure to the risks of nonpayment and nonperformance by our customers as a consequence of reductions in our customer’s cash flow from operations and limits on their access to capital. For example, we have seen an increased delay in receiving payment on our receivables from our national oil company customers in Venezuela, and, in response, we temporarily suspended operations in Venezuela pending payment, and we resumed operations in the second quarter as partial payment was received. If these customers, or any of our other significant customers, delay in paying us for a prolonged period or fail to pay us a significant amount of our outstanding receivables, it may have a material adverse effect on our liquidity, results of operations and financial condition. A more than temporary halt in our operations could result in our incurring impairment charges to the carrying values of our assets, further negatively impacting our results of operations and financial condition.

To the extent that our cash flows are affected by delays in, or failures by, our customers paying our receivables, we may have to obtain additional financing through borrowings under our credit facilities and the issuance of debt and/or equity securities. Our borrowing capacity under our credit facilities and our ability to satisfy the financial covenants contained in our credit facilities may be adversely impacted by declines in our asset values or results of operations, and we may not be able to obtain additional financing on acceptable terms.

Deterioration of the credit and capital markets may hinder or prevent our access to capital, making it more expensive and difficult for us to meet future capital needs.

Global financial markets and economic conditions have been, and continue to be, disrupted and volatile, which has caused a substantial deterioration in the credit and capital markets. In particular, the cost of raising money in the debt and equity capital markets has increased substantially while the availability of funds from those markets generally has diminished significantly. Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at maturity at all or on comparable terms to existing debt, and reduced and, in some cases, ceased to provide new funding to borrowers.

Due to these factors, we cannot be certain that funding from credit and capital markets will be available if needed and, to the extent required, on acceptable terms. If funding is not available when needed or on unfavorable terms, we may be unable to meet our obligations as they come due or may be required to reduce our capital expenditures and, therefore, be unable to expand our existing business, complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our revenues and results of operations.

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

None

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Item 3. Defaults Upon Senior Securities

None

Item 4. ~~Submissions of~~(Removed ~~Matters~~and ~~to a Vote of Security Holders~~Reserved)

None

Item 5. Other Information

None

Item 6. Exhibits

(a)

Exhibits

Exhibit No.		Document
*3.1		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Boots & Coots International Well Control, Inc.
*3.2		Second Amended and Restated Certificate of Incorporation of Boots & Coots, Inc.
*31.1		§302 Certification by Jerry Winchester
*31.2		§302 Certification by Cary Baetz
*32.1		§906 Certification by Jerry Winchester
*32.2		§906 Certification by Cary Baetz

*Filed herewith

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SIGNATURES

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

BOOTS & COOTS ~~INTERNATIONAL WELL CONTROL~~, INC. By: /s/ Jerry Winchester Jerry Winchester Chief Executive Officer By: /s/Cary Baetz Cary Baetz Chief Financial Officer

Date: ~~November~~May 96, ~~2009~~2010

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Filing Compare · Boots & Coots, Inc.