UNITED STATES SECURITIESSTATESSECURITIES AND EXCHANGE COMMISSION WASHINGTONCOMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2012 2014

Commission File No. 000-54417

Integrated Drilling Equipment Holdings Corp. (formerly Empeiria Acquisition Corp.)

(~~Exact~~formerly ~~name~~Empeiria ofAcquisition ~~registrant as specified in its charter~~Corp.)

Delaware	27-5079295
(State of incorporation)	(I.R.S. employer identification no.)

(Exact name of registrant as specified in its charter)

25311 I-45 North Woodpark Business Center, Bldg 6 Spring, Texas 77380 281-465-9393 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Delaware		27-5079295
(State of incorporation)		(I.R.S. employer identification no.)

Securities25311 registeredI-45 pursuantNorth toWoodpark Section 12(b)Business ofCenter, theBldg Act:6 Spring, Texas 77380 281-465-9393

~~None~~ (Address, including zip code, and telephone number, includingarea code, of registrant’s principal executive offices)

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

Title of ClassNone

~~Common~~Securities ~~Stock,~~registered ~~$0.0001~~pursuant ~~par~~to ~~value~~Section ~~per~~12(g) ~~share~~of the Act:

WarrantsTitle to purchase shares of Common StockClass

~~Units~~Common Stock, $0.0001 par value per shareWarrants to purchase shares of Common StockUnits, each comprised of one share of Common Stock and one Warrant

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every ~~Instruction~~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 þo No oþ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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.


Large accelerated filer o		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o NoNoþ þ

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates as of June 30, ~~2012~~2014 was approximately $~~59,760,000~~8.7 million.

The number of shares outstanding of the registrant’s common stock, $0.0001 par value, as of ~~April~~March 927, ~~2013~~2015 was $8,~~685~~809,~~700~~917.

~~Table of~~TABLE ~~Contents~~OF CONTENTS

		Page
PART I.
Item 1.	Business	2
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	30
Item 2.	Properties	30
Item 3.	Legal Proceedings	31
Item 4.	Mine Safety Disclosures	31
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6.	Selected Financial Data	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 8.	Consolidated Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	67
Item 9A.	Controls and Procedures	67
Item 9B.	Other Information	68
PART III.
Item 10.	Directors, Executive Officers, and Corporate Governance	68
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	75
Item 13.	Certain Relationships and Related Transactions, and Director Independence	78
Item 14.	Principal Accountant Fees and Services	82
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	83
SIGNATURES		88
EXHIBIT INDEX		84

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


	Page
PART I.
Item 1. Business		3
Item 1A. Risk Factors		15
Item 1B. Unresolved Staff Comments		30
Item 2. Properties		30
Item 3. Legal Proceedings		30
Item 4. Mine Safety Disclosures		31
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		32
Item 6. Selected Financial Data		35
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		44
Item 8. Consolidated Financial Statements and Supplementary Data		45
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		75
Item 9A. Controls and Procedures		75
Item 9B. Other Information		76
PART III.
Item 10. Directors, Executive Officers, and Corporate Governance		77
Item 11. Executive Compensation		82
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		85
Item 13. Certain Relationships and Related Transactions, and Director Independence		88
Item 14. Principal Accounting Fees and Services		93
PART IV.
Item 15. Exhibits and Financial Statement Schedules		95
EXHIBIT INDEX		96
SIGNATURES		101

~~This Annual Report on Form 10-K includes~~ ~~forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange~~i Act of 1934. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. These statements include any statements that are not statements of historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including:

·TABLE ~~Our~~OF ~~limited operating history and ability to generate consistent cash flows.~~CONTENTS

·CAUTIONARY OurNOTE abilityREGARDING toFORWARD-LOOKING maintain existing customers and timely deliver our backlog.STATEMENTS

·This ~~Our~~Annual ~~ability~~Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated by reference in this Annual Report on Form 10-K, including, but not limited to, ~~manage~~those ~~anticipated~~under ~~growth~~“Business” in Item 1, ~~develop~~“Risk ~~new~~Factors” ~~products~~in Item 1A, “Legal Proceedings” in Item 3, and ~~services~~“Management’s Discussion and ~~integrate~~Analysis of Financial Condition and Results of Operations” in Item 7, are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “potential,” “projects,” “could,” “forecast,” “foresee,” “scheduled,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. These statements are based on management’s belief and assumptions using currently available information, and expectations, as of the date hereof, are not guarantees of future ~~acquisitions~~performance and ~~joint~~involve ~~ventures~~certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide assurance that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements. Any differences could be caused by a number of factors, including, but not limited to:

·• ~~Trends~~Our inability ~~the~~to ~~oil~~obtain ~~and~~additional ~~gas~~financing ~~industry,~~and ~~including~~comply ~~changes~~with inrestrictive ~~oil~~covenants ~~and~~under ~~natural~~our ~~gas~~existing ~~prices~~ and ~~consolidation~~future indebt ~~this industry~~agreements.

·• ~~Intense~~Our ~~competition~~ability ~~and~~to ~~availability~~generate ~~and~~consistent ~~cost~~cash ~~of materials, equipment and supplies~~flows.

·• ~~Our~~Trends ~~ability~~in tothe ~~retain~~oil and ~~compete~~gas ~~for~~industry, ~~the~~including ~~services~~changes ofin ~~management~~oil and ~~highly-trained~~natural ~~technical~~gas orprices ~~trade~~and ~~personnel~~consolidation in this industry.

·• ~~Instability~~Our inability ~~international~~to ~~economic~~maintain ~~and~~existing ~~political~~customers ~~conditions~~ and ~~severe~~timely ~~weather~~deliver our backlog.

·• ~~Complying~~Our ~~with~~ability ~~U.S.~~to ~~laws~~manage ~~and~~growth, ~~regulations~~develop ~~while~~new ~~competing~~products ~~with~~and ~~foreign~~services ~~companies~~and ~~not~~integrate ~~subject~~future toacquisitions ~~these laws~~ and ~~regulations~~joint ventures.

·• ~~Losses~~Intense oncompetition ~~fixed-price~~and ~~contracts~~availability orand ~~loss~~cost of ~~any~~materials, ofequipment ~~our~~and ~~major customers~~supplies.

·• Our ability to ~~service~~retain ~~our~~and ~~debt~~compete for the services of management and ~~pay~~highly-trained ~~dividends~~technical or trade personnel.

·• ~~That~~Instability ~~the~~in ~~complexity~~international ofeconomic ~~percentage-of-completion accounting~~ and ~~the~~political ~~fact~~conditions ~~that~~and wesevere ~~may be required to recognize a charge against current earnings under these accounting rules~~weather.

·• ~~Our~~Complying ~~officers,~~with ~~directors~~U.S. laws and ~~principal~~regulations ~~stockholders,~~while ~~who~~competing ~~hold~~with aforeign ~~significant~~companies ~~percentage~~not ofsubject ~~our~~to ~~stock,~~such ~~may~~laws ~~have~~and ~~interests that are different or adverse to other stockholders~~regulations.

·• ~~Our~~Losses ~~ability~~on tofixed-price ~~obtain~~contracts ~~additional~~or ~~financing~~loss ~~and~~of ~~comply~~any ~~with~~of ~~restrictive covenants under~~ our ~~existing~~major ~~and future debt agreements~~customers.

·• ~~That~~Our weability ~~may~~to ~~issue~~service ~~additional~~our debt ~~securities~~and orpay ~~otherwise incur substantial indebtedness~~dividends.

·• ~~Impact~~The complexity of ~~litigation~~percentage-of-completion accounting and the ~~availability~~fact ~~and~~that ~~cost~~we ofmay ~~insurance~~be required to recognize a charge against current earnings under these accounting rules.

·• ~~Compliance~~Our ~~with~~officers, ~~environmental~~directors ~~laws~~ and ~~regulations~~principal stockholders, who hold a significant percentage of our stock, may have interests that are different or adverse to other stockholders.

·• ~~Increased~~That ~~burdens~~we ofmay ~~being~~issue aadditional ~~public~~debt ~~company,~~securities ~~including~~or ~~complying~~otherwise ~~with~~incur ~~the~~substantial ~~Sarbanes Oxley Act and the Dodd-Frank Act~~indebtedness.

·• ~~Lack~~Impact of anlitigation ~~active,~~and ~~liquid~~the ~~market~~availability ~~for~~and ~~our~~cost ~~common~~of ~~stock, which may impact our stock price~~insurance.

·• ~~Fluctuations~~Compliance inwith ~~our~~environmental ~~quarterly~~laws ~~operating~~and ~~reports~~regulations.

1• Increased burdens of being a public company, including complying with the Sarbanes Oxley Act and the Dodd-Frank Act.

·• ~~Impact~~Lack of ~~qualifying~~an asactive, aliquid ~~controlled~~market ~~company~~for ~~and~~our ~~smaller~~common ~~reporting~~stock, ~~company~~which may impact our stock price.

·• ~~Effect~~Fluctuations ~~of anti-takeover provisions~~ in our ~~charter~~quarterly ~~documents~~operating ~~and Delaware law~~reports.

~~· Our warrants may be amended or redeemed at a time that disadvantages warrant holders or our warrants may expire without any value.~~1

·TABLE ~~Dilutive~~OF ~~impact of registration rights granted to Empeiria Investors LLC, our sponsor, our officers and directors and other parties.~~CONTENTS

~~These~~• ~~risks~~Impact ~~and~~of ~~others~~qualifying ~~described~~as ~~under “Risk~~a ~~Factors”~~controlled ~~may~~company ~~not~~and besmaller ~~exhaustive~~reporting company.

By• ~~their~~Effect nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forwardanti-~~looking~~takeover ~~statements~~provisions ~~contained~~ in ~~this Annual Report on Form 10-K (this “report”). In addition, even if~~ our ~~results~~charter ofdocuments ~~operations, financial condition~~ and ~~liquidity,~~Delaware and developments in the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periodslaw.

~~These~~• ~~forward-looking~~Our ~~statements~~warrants ~~are subject~~may tobe ~~numerous~~amended ~~risks,~~or ~~uncertainties~~redeemed ~~and~~at ~~assumptions.~~a ~~The~~time ~~forward-looking~~that ~~events~~disadvantages ~~described~~warrant inholders ~~this~~or ~~report~~our ~~speak~~warrants ~~only~~may asexpire ~~of the~~without ~~date of such statement and might not occur in light of these risks, uncertainties and assumptions. Except as required by applicable law, we undertake no obligation and disclaim~~ any ~~obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise~~value.

~~Unless~~• ~~otherwise~~Dilutive ~~provided~~impact inof ~~this~~registration ~~report, references~~rights granted to ~~the~~Empeiria ~~“Company,”~~Investors ~~“we~~LLC,” ~~“us”~~our ~~and~~sponsor, “our” ~~refer~~officers toand ~~Integrated~~directors ~~Drilling Equipment Holdings Corp. (formerly Empeiria Acquisition Corp.)~~ and ~~its~~other ~~subsidiaries~~parties.

~~PART I~~These risks and others described under “Risk Factors” may not be exhaustive.

~~Item~~By 1their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. ~~Business~~We caution that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Annual Report on Form 10-K (this “report”). In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of future results or developments in subsequent periods.

~~General~~These forward-looking statements are subject to numerous risks, uncertainties and assumptions. The forward-looking events described in this report speak only as of the date of such statement and might not occur in light of these risks, uncertainties and assumptions. Except as required by applicable law, we undertake no obligation and disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

~~Empeiria~~Unless ~~Acquisition~~otherwise ~~Corp.~~provided ~~(“EAC”) was incorporated~~ in ~~Delaware~~this ~~in January 2011~~report, ~~for~~references to the ~~purpose of acquiring one or more operating businesses or assets (~~“~~initial business transaction~~Company,”). ~~On June 21, 2011,~~ “we ~~completed our initial public offering. On October 19~~,” ~~2012,~~“us” weand ~~entered into a merger agreement (the~~ “~~Merger Agreement~~our”) ~~with~~refer to Integrated Drilling Equipment ~~Company~~ Holdings ~~Inc~~Corp., ~~a Delaware corporation~~ (~~“IDE”),~~formerly ~~and~~Empeiria ~~Stephen~~Acquisition ~~Cope, in his capacity as representative of IDE’s stockholders (the “Representative”)~~Corp. On) ~~December 14,~~and ~~2012,~~its ~~we consummated our initial business transaction with IDE (the “Merger”)~~subsidiaries.

The Merger was accounted for under the purchase method of accounting as a reverse acquisition. Under this method of accounting, for accounting and financial purposes, we were treated as the acquired company, and IDE was treated as the acquiring company. Accordingly, historical information, including historical financial information and the historical description of our business, for periods and dates prior to December 14, 2012, include information for IDE only.2

OnTABLE ~~April~~OF ~~11, 2013, EAC changed its name to Integrated Drilling Equipment Holdings Corp.~~CONTENTS

2PART I.

WeItem maintain an Internet website at www.ide-rig.com on which we intend to make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the Commission. We also intend to provide access to the reports filed by our directors, executive officers and certain significant stockholders pursuant to Section 16 of the Securities Exchange Act of 1934 on our website. These materials are also available on the SEC’s website at www.sec.gov. Any materials we file with the Commission can be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. Information on the operation of the Public Reference Room is available by calling the Commission at 1-800-SEC-0330. Business

Our executive offices are located at 25311 I-45 North, Woodpark Business Center, Building 6, Spring, Texas 77380 and our telephone number at that location is (281) 465-9393.General

~~Recent~~Empeiria ~~Developments~~Acquisition Corp. (“EAC”) was incorporated in Delaware in January 2011, for the purpose of acquiring one or more operating businesses or assets. On June 21, 2011, we completed our initial public offering. On October 19, 2012, we entered into a merger agreement (the “Merger Agreement”) with Integrated Drilling Equipment Company Holdings Inc., a Delaware corporation (“IDE”), and Stephen Cope, in his capacity as representative of IDE’s stockholders (the “Representative”). On December 14, 2012, we consummated the merger with IDE (the “Merger”).

OnThe ~~October~~Merger ~~19,~~was ~~2012,~~accounted wefor ~~entered~~under ~~into~~ the ~~Merger~~ ~~Agreement.~~purchase ~~Pursuant~~method toof ~~the~~accounting ~~Merger~~as ~~Agreement,~~a onreverse ~~October 19,~~acquisition. ~~2012,~~Under wethis ~~commenced~~method aof ~~tender~~accounting, ~~offer~~for toaccounting ~~purchase~~and upfinancial ~~to 5~~purposes,~~520,000 shares~~ ofwe ~~our~~were ~~issued~~treated ~~and~~as ~~outstanding~~the ~~common~~acquired ~~stock~~company, ~~for~~and ~~$10.20~~IDE ~~per~~was ~~share~~treated (as the ~~“Offer”)~~acquiring company. ~~The~~Accordingly, ~~Offer~~historical ~~expired~~information, atincluding ~~5:00~~historical ~~p.m. on~~financial ~~December~~information ~~13,~~and ~~2012.~~the Wehistorical ~~purchased~~description ~~5,448,971 shares~~ of our ~~common~~business, ~~stock~~for ~~tendered~~periods inand ~~the~~dates ~~Offer~~prior ~~for~~to anDecember ~~aggregate~~14, ~~purchase~~2012, ~~price~~include ~~of $55.6~~information ~~million~~for IDE only.

On ~~December~~April 1411, ~~2012~~2013, weEAC ~~completed~~changed ~~the transactions~~its ~~contemplated~~name ~~by the Merger Agreement (the “Closing”). At Closing, we issued 4,825,671 shares of common stock and paid $20.0 million in cash~~ to ~~the~~Integrated ~~former~~Drilling ~~IDE~~Equipment ~~stockholders.~~Holdings ~~We are holding 750,000 additional shares on behalf of the former IDE stockholders to satisfy any indemnification claims we may have under the Merger Agreement~~Corp. Depending on the amount of the indemnification claims we may make, we will distribute the remaining 750,000 additional shares to the former IDE stockholders 18 months after December 14, 2012. The former IDE stockholders may also be entitled to receive:

·We maintain an ~~additional~~Internet ~~cash~~website ~~payment~~at ofwww.ide-rig.com upon which we intend to $make available, free of charge, our Annual Report on Form 10.0-K, ~~million~~Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, ~~equal~~and amendments to those reports, as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the ~~amount~~Securities Exchange Commission (“SEC”). We also intend to provide access to the reports filed by ~~which~~our ~~2013~~directors, ~~EBITDA~~executive ~~(as~~officers ~~defined~~and incertain significant stockholders pursuant to Section 16 of the ~~Merger~~Securities ~~Agreement)~~Exchange ~~exceeds~~Act ~~$30~~of 1934 on our website.0 ~~million~~These materials are also available on the SEC’s website at www.sec.gov. Any materials we file with the SEC can be read and copied at the SEC’s Public Reference Room at 100 F Street, ~~multiplied~~NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. Information on the operation of the Public Reference Room is available by 0calling the SEC at 1-800-SEC-0330.5 The information contained on our website does not constitute part of this Annual Report on Form 10-K nor shall it be deemed incorporated by reference into this Annual Report on Form 10-K.

·Our anexecutive ~~additional~~offices ~~5,250,000~~are ~~shares~~located ofat ~~common~~25311 ~~stock~~I-45 ~~that we hold~~North, ~~distributed~~Woodpark ~~ratably~~Business ~~if the Company’s stock price exceeds $12.00~~Center, ~~$13.50,~~Building ~~$15.00 and $17.00 respectively before December 14~~6, ~~2017~~Spring, orTexas if77380 aand ~~change~~our oftelephone ~~control~~number ~~transaction occurs following the Merger that values the Company’s common stock~~ at ~~more than the stock price thresholds. For example, if the Company’s stock price exceeds $13.50 per share or if a change of control transaction occurs following the Merger~~ that ~~values~~location ~~the~~is ~~shares~~(281) ~~at more than $13~~465-9393.50 ~~per share, the former IDE stockholders will receive 2,625,000 shares.~~

ForThe more information regarding the Merger, see “Certain Relationship and Related Transactions — Merger.”

InOn ~~connection~~October ~~with~~19, ~~the Closing~~2012, we entered into the ~~following~~Merger ~~financing~~Agreement. ~~transactions~~Pursuant to the Merger Agreement, on October 19, 2012, we commenced a tender offer to purchase up to 5,520,000 shares of our issued and outstanding common stock for $10.20 per share (the “Offer”). The Offer expired at 5:00 p.m. on December 13, 2012. We purchased 5,448,971 shares of our common stock tendered in the Offer for an aggregate purchase price of $55.6 million.

·On ADecember ~~new~~14, 2012, we completed the transactions contemplated by the Merger Agreement (the “Closing”). At Closing, we issued 4,825,671 shares of common stock and paid $20.0 million ~~four~~in ~~year~~cash ~~secured~~to ~~second-lien~~the ~~term~~former ~~loan~~IDE ~~facility~~stockholders. ~~with~~We ~~Elm~~are ~~Park~~holding ~~Credit~~750,000 ~~Opportunities~~additional ~~Fund~~shares on behalf of the former IDE stockholders to satisfy any indemnification claims we may have under the Merger Agreement. Depending on the amount of the indemnification claims we may make, Lwe will distribute the remaining 750,000 additional shares to the former IDE stockholders.P. ~~and~~The ~~Elm~~former ~~Park~~IDE ~~Credit~~stockholders ~~Opportunities~~may ~~Fund~~also ~~(Canada)~~be entitled to receive an additional 5,250,000 Lshares of common stock that we hold, distributed ratably if our stock price exceeds $12.P00, $13.50, as$15.00 ~~lenders~~and $17.00 respectively before December 14, ~~and~~2017, ~~Elm~~or ~~Park~~if ~~Capital~~a ~~Management~~change of control transaction occurs following the Merger that values the Company’s common stock at more than the stock price thresholds. For example, ~~LLC~~if our stock price exceeds $13.50 per share or if a change of control transaction occurs following the Merger that values the shares at more than $13.50 per share, asthe ~~administrative~~former ~~agent~~IDE stockholders will receive 2,625,000 shares.

·For Amore ~~$20.0~~information ~~million~~regarding ~~amended~~the ~~and restated revolving credit facility with PNC Bank~~Merger, ~~National~~see ~~Association~~“Certain ~~(which~~Relationship ~~amended~~ and ~~restated~~Related ~~IDE’s~~Transactions ~~prior~~— ~~facility)~~Merger.”

·In Aconnection ~~stock~~with ~~purchase~~the ~~agreement pursuant to which Empeiria Investors~~Closing, ~~LLC~~we ~~(our~~entered ~~“Sponsor”)~~into ~~purchased~~the anfollowing ~~aggregate~~financing oftransactions: ~~$2.5 million of our series A preferred stock (the “Preferred Stock”).~~

~~See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources” for more information regarding our financing transactions.~~3

OnTABLE ~~June 15,~~OF 2011, we completed a private placement of 390,000 units to our Sponsor (the “Placement Units”) for proceeds to us of $3.9 million. Each Placement Unit consisted of one share of common stock and one warrant to purchase one share of common stock at $11.50 per share (the “Placement Warrants”). On February 25, 2013, pursuant to the Placement Warrant Exchange Agreement, we exchanged our Sponsor’s Placement Warrants for 39,000 shares of common stock.CONTENTS

3• A new $20.0 million four year secured second-lien term loan facility with Elm Park Credit Opportunities Fund, L.P. and Elm Park Credit Opportunities Fund (Canada), L.P., as lenders, and Elm Park Capital Management, LLC, as administrative agent.

~~Business~~• ~~Overview~~A $20.0 million amended and restated revolving credit facility with PNC Bank, National Association (which amended and restated IDE’s prior facility).

~~Based~~• inA ~~Houston,~~stock ~~Texas,~~purchase weagreement ~~are~~pursuant anto ~~established manufacturer~~which ofEmpeiria ~~drilling~~Investors, ~~rigs~~LLC ~~and~~(our ~~rig~~“Sponsor”) ~~components~~purchased ~~and~~an ~~provider~~aggregate of ~~rig refurbishment and reconfiguration services to contract drilling companies worldwide~~$2.5 ~~Substantially~~million ~~all~~ of our ~~operations~~series ~~are~~A ~~conducted~~preferred ~~through~~stock ~~our~~(the ~~wholly~~“Preferred ~~owned subsidiary, IDE~~Stock”). ~~Our principal service and product offerings consist of:~~

·See ~~Constructing~~“Management’s ~~new~~Discussion ~~land~~and ~~rigs~~Analysis ~~based~~of onFinancial ~~our~~Condition ~~designs~~and orResults ~~customizing rigs to customers’ specifications. We believe we are one~~ of aOperations — ~~small~~Liquidity ~~number~~and ofCapital ~~vertically-integrated~~Resources” ~~land~~for ~~focused~~more ~~rig~~information ~~manufacturers~~regarding inour ~~the~~financing ~~United States~~transactions.

·Business Providing a range of extensive reconfiguration and refurbishment services for land rigs to repair and extend the useful life or to adapt rigs for different drilling environments (e.g., upgrade for horizontal/unconventional drilling, international use, cold weather use, etc.).Overview

·Based ~~Providing~~in ~~offshore~~Houston, Texas, we are an established manufacturer of drilling rigs, rig ~~upgrade~~control ~~packages~~systems, rig components and provider of rig refurbishment and reconfiguration services ~~and~~to ~~related~~contract ~~components~~drilling ~~for~~companies ~~existing~~worldwide. ~~offshore~~Substantially ~~platforms~~all of our operations are conducted through our wholly owned subsidiary, IDE which has been in business since 1981. Our principal service and product offerings consist of:

·• ~~Supplying,~~Constructing ~~through~~new land rigs based on our ~~IEC~~designs ~~division,~~or ~~integrated~~customizing ~~electrical~~rigs ~~systems~~to ~~and~~customers’ ~~control~~specifications. ~~systems~~We ~~for~~believe we are one of a ~~wide~~small ~~range~~number of vertically-integrated land ~~and~~focused ~~offshore~~rig ~~drilling~~manufacturers ~~rigs~~in the United States.

·• Providing ~~engineered~~a ~~hydraulic~~range ~~rig~~of ~~solutions,~~extensive ~~including~~reconfiguration ~~hydraulic~~and ~~power~~refurbishment ~~units~~services for land rigs to repair and ~~related~~extend ~~components~~the useful life or to adapt rigs for different drilling environments (e.g., upgrade for ~~all~~horizontal/unconventional ~~rig~~drilling, ~~functions~~international use, cold weather use, etc.).

~~Our~~• ~~customers~~Providing ~~are primarily land and~~ offshore ~~drilling~~ ~~contractors~~rig ~~that~~upgrade ~~operate globally. Our top customers include Nabors Industries~~packages, ~~Inc.,~~refurbishment ~~Trinidad~~services ~~Drilling~~and ~~Ltd.,~~related ~~Lewis~~components ~~Energy Group,~~for ~~Pioneer~~existing ~~Energy~~offshore ~~Services, Sidewinder Drilling, Union Drilling, Inc~~platforms.~~, and Tuscany International Drilling Inc.~~

~~Our~~• ~~primary manufacturing operations are based at three facilities in Houston~~Supplying, ~~Texas.~~through ~~The~~our ~~first~~IEC ~~facility~~Electrical isProducts ~~53,000 square feet~~ and ~~includes~~Services adivision ~~surrounding 30-acre rig yard used to manufacture and assemble new rigs as well as execute reconfiguration and refurbishment services. The second facility is approximately 50~~(“IEC”),~~000~~ ~~square~~automated ~~feet~~controls and ~~is used by our IEC Systems division to manufacture drilling rig~~ electrical ~~components and rig power~~ systems. ~~Our~~for ~~third~~a ~~facility~~wide isrange ~~12,000~~of ~~square~~land ~~feet~~ and isoffshore ~~used~~drilling ~~by our hydraulics group~~rigs. ~~We also maintain a spare parts warehouse from where we ship parts worldwide, 24 hours a day, seven days a week.~~

We• ~~manufacture~~Providing ~~the~~engineered ~~masts~~hydraulic ~~and~~rig ~~substructures of~~solutions, ~~our~~including ~~rigs~~hydraulic topower ~~conform~~units toand ~~the~~related ~~standards of the American Petroleum Institute (“API”). Additionally~~components, ~~our~~for ~~management~~all ~~systems conform~~rig ~~with international API standards as well as the standards of the International Organization for Standardization~~functions.

Our ~~products~~primary ~~and~~manufacturing ~~services~~operations are ~~sold~~based ~~and marketed~~at ~~primarily~~three facilities in ~~North~~Houston, ~~America~~Texas. The first facility is 53,000 square feet and includes a surrounding 30-acre rig yard used to manufacture and assemble new rigs as well as execute reconfiguration and refurbishment services. The second facility is approximately 50,000 square feet and is used by our ~~own~~IEC ~~sales~~division ~~teams~~to manufacture drilling rig electrical components and rig power systems. Our third facility is 12,000 square feet and is used by our hydraulics group. We also ~~use~~maintain ~~independent~~a ~~sales~~spare ~~representatives~~parts ~~for~~warehouse ~~international~~from ~~sales~~where we ship parts worldwide, 24 hours a day, seven days a week.

~~Products~~We manufacture the masts and ~~Services~~substructures of our rigs to conform to the standards of the American Petroleum Institute (“API”). Additionally, our management systems conform with international API standards as well as the standards of the International Organization for Standardization.

WeOur ~~are~~products aand ~~full~~services ~~service,~~are ~~vertically-integrated provider~~sold ~~of services~~ and ~~products~~marketed ~~covering~~primarily ~~virtually~~in ~~all~~North ~~aspects~~America ofby ~~the~~our ~~design,~~own ~~manufacture,~~sales ~~refurbishment,~~teams. ~~reconfiguration,~~We ~~assembly and~~also ~~testing~~use ~~and~~independent ~~field~~sales ~~servicing~~representatives offor ~~land-based~~international ~~drilling rigs, rig parts, and rig control systems~~sales.

~~Our range of services includes:~~4

·TABLE ~~Rig~~OF ~~refurbishment and reconfiguring~~CONTENTS

·Products Rig assembly and testingServices

·We ~~Rig~~are ~~field~~a full service, vertically-integrated provider of services and products covering virtually all aspects of the design, manufacture, refurbishment, reconfiguration, assembly and testing and field servicing of land-based and offshore drilling rigs, rig parts, and rig control systems.

·Our ~~Full~~range ~~rig~~of ~~electrical~~services ~~control~~includes: ~~system services~~

4• Rig refurbishment and reconfiguring

·• ~~Automation~~Rig assembly and testing

·• ~~Hydraulic~~Rig ~~systems~~field services

~~Our~~• ~~product~~Full ~~suite~~rig ~~consists~~electrical ~~of:~~control system services

·• ~~Complete drilling rig packages~~Automation

·• ~~Major~~Hydraulic ~~rig components~~systems

·Our ~~Rig~~product ~~subsystems~~suite ~~and~~consists ~~parts~~of:

·• ~~Rig~~Complete ~~electrical,~~drilling ~~control~~rig ~~systems, instrumentation, communication and automation~~packages

·• ~~Rig~~Major ~~fabrication~~rig components

·• ~~Hydraulic~~Rig ~~systems~~subsystems and parts

·• ~~Walking~~Rig electrical, control systems, instrumentation, communication and automation

~~Complete~~• ~~Drilling~~ Rig ~~Manufacturing~~fabrication

We• ~~manufacture~~Hydraulic complete land-based drilling rigs on a turnkey basis to meet specific customer specifications. Many of our rigs are custom-made to meet specific customer’s demands and are delivered in a fully-functional condition with all subsystems integrated and tested. We are vertically integrated, giving us the ability to manufacture and assemble the majority of the key components of a land rig. The following diagram illustrates the key components of a land drilling rig.systems

~~Components~~TABLE ~~manufactured~~OF ~~and services provided by us and our IEC and Hydraulics divisions include:~~CONTENTS

IDE IEC IDE Hydraulics · Rig Fabrication · Rig Power Systems · Hydraulic Power Units · Rig Construction / Rig Up · AC and DC Drive Systems and MCC · Other Rig Related Hydraulic Solutions · Testing and Commissioning · Electrical Rig Up · System Integration · Complete MudDrilling Systems · Engine Generators · Hydraulic System Design · Field Service · Automation · Testing · Controls/Sensors · Rig Up/SupportManufacturing

We ~~have~~manufacture complete land-based drilling rigs on a ~~broad~~turnkey ~~line~~basis to meet specific customer specifications. Many of our rigs are custom-made to meet specific customer’s demands and are delivered in a fully-functional condition with all subsystems integrated and tested. We are vertically integrated, giving us the ability to manufacture and assemble the majority of the key components of a land ~~drilling~~rig. ~~rigs as~~The ~~described~~following ~~below:~~diagram illustrates the key components of a land drilling rig.

[GRAPHIC MISSING]

~~SPARTA.~~©2007 ~~The~~by ~~fast-moving,~~Petroleum ~~self-erecting rig,~~Extension ~~brand-named~~Service ~~“SPARTA,”~~(PETEX®) isof ~~our new rig design targeting drilling in situations in which numerous wells are drilled in fast succession and in geographically remote regions.~~ The ~~SPARTA~~University is a 1,000 to 2,000 HP diesel-electric rig used for intermediate drilling depths at locations with limited or restricted local infrastructure. The SPARTA rig uses our hydraulics system to raise and lower the mast and rig floor without having to rely on heavy equipment. This is a self-contained drilling system developed in response to customer demand for rigs that require less support and are move-friendly. These rigs are ideal for conditions common in the rapidly growing North American shale oil and gas basins, where the local drilling support, such as roads, access, and heavy equipment, is insufficient for operators to move a rig. The SPARTA is designed to be transported in a limited number of ~~highway loads and can be configured as an exploration rig or a development rig~~Texas. ~~Through~~All ~~December 31,~~rights ~~2012, we have manufactured and delivered 11 SPARTA rigs for three customers, and we expect to complete four additional SPARTA rigs for delivery during the first half of 2013~~reserved.

~~SEDS.~~Components Our Standard, Self-Elevating Drilling System (“SEDS”) is a diesel-electric rig designed for conventional drilling sites, where rig moving equipment is readily available. This rig is based on established, proven designs and provides a cost-effective solution to conventional drilling applications due to its simplicity to rig up, disassemble, transport and operate. Our SEDS rigs can be manufactured ~~with a broad range of options, from 1,000 HP to 3,000 HP,~~ and ~~can~~services beprovided ~~designed~~by tous target drilling depths of up to 30,000 feet. The modular design can be custom-winterized to work in colder environments, such as the North American Rocky Mountains, or custom-fitted to work in warmer environments, such as the Middle East, Africa and South America. Through December 31, 2012, we had manufactured and delivered six highly customized SEDS rigs for two customers, and we expect to complete one more SEDS rigs for delivery during the first half of 2013. The SEDS design has also been modified for use as a helicopter rig, custom designed to be moved by helicopter from one remote drilling site to another in locations where access or infrastructure is limited. Target markets for our ~~helicopter rig,~~IDE ~~which can be manufactured with a broad range of options~~ and ~~powered~~IEC todivisions ~~target drilling depths from 8,500 feet to 20,000 feet,~~ include: ~~the Amazonas region in South America and Papua New Guinea in Asia.~~

~~Our~~IDE ~~rig~~Division(Drilling ~~designs~~Products ~~offer~~and ~~customers~~Services) aIEC ~~wide range~~Division(Electrical ofProducts ~~options~~and ~~when~~Services) ~~acquiring~~• aRig ~~rig.~~Fabrication A• ~~complete~~Rig ~~manufactured~~Power ~~rig~~Systems ~~can~~• ~~range~~Hydraulic inPower ~~price~~Units ~~from~~• ~~$12 million~~Rig toConstruction/Rig ~~over~~Up ~~$25 million, depending~~•AC onand ~~the~~DC ~~design~~Drive Systems and ~~the~~MCC ~~options~~• ~~selected.~~Other ~~Most~~Rig ~~complete~~Related ~~rigs~~Hydraulic ~~currently~~Solutions ~~manufactured~~• byTesting usand ~~sell~~Commissioning ~~for~~• ~~approximately~~Electrical ~~$15 million.~~Rig Up • System Integration • Complete Mud Systems • Engine Generators • Hydraulic System Design • Field Service • Automation • Testing • Controls/Sensors • Rig Up/Support

~~The~~We ~~following~~have ~~table~~a ~~sets~~broad ~~forth~~line ~~the number~~ of ~~refurbished rigs, rig~~land-~~ups~~based ~~and~~drilling ~~complete~~rigs rig packages completed and delivered by us along with variable frequency drive (“VFD”) and silicon-controlled rectifier (“SCR”) control systems built by our IEC division each year since 2003. Also shown are the annual changes in the average annual global land rig fleet as ~~estimated~~described bybelow: ~~Baker Hughes.~~

6SPARTA. The fast-moving, self-erecting rig, brand-named “SPARTA,” is our latest rig design targeting drilling in situations in which numerous wells are drilled in fast succession and in geographically remote regions. The SPARTA is a 1,000 to 2,000 HP diesel-electric rig used for intermediate drilling depths at locations with limited or restricted local infrastructure. The SPARTA rig uses our hydraulics system to raise

Year	Annual Change in Global Rig Fleet		Rigs Put Into Service By IDE(1)		VFD and SCR Control Systems Built by IEC Division
2003		525		—		8
2004		164		—		7
2005		396		—		8
2006		102		4		36
2007		72		12		14
2008		-242		4		28
2009		-272		13		5
2010		672		5		7
2011		241		4		14
2012		-249		22		16
Total		1,409		64		143

~~Sources:~~TABLE ~~Baker~~OF ~~Hughes, Management.~~CONTENTS

~~(1)~~and ~~Includes~~lower ~~refurbished~~the mast and rig floor without having to rely on heavy equipment. This is a self-contained drilling system developed in response to customer demand for rigs that require less support and are move-friendly. These rigs are ideal for conditions common in the rapidly developing North American shale oil and gas basins, where the local drilling support, such as roads, access, and heavy equipment, may be insufficient for operators to move a rig~~-ups~~. The SPARTA is designed to be transported in a limited number of highway loads and ~~complete~~can be configured as an exploration rig ~~packages~~or a development rig. Since its inception and through December 31, 2014, we have manufactured and delivered 17 SPARTA rigs for five customers.

~~Offshore~~SEDS. Our Standard, Self-Elevating Drilling System (“SEDS”) is a diesel-electric rig designed for conventional drilling sites, where rig moving equipment is readily available. This rig is based on established, proven designs and provides a cost-effective solution to conventional drilling applications due to its simplicity to rig up, disassemble, transport and operate. Our SEDS rigs can be manufactured with a broad range of options, from 1,000 HP to 3,000 HP, and can be designed to target drilling depths of up to 30,000 feet. The modular design can be custom-winterized to work in colder environments, such as the North American Rocky Mountains, or custom-fitted to work in warmer environments, such as the Middle East, Africa and South America. Since its inception and through December 31, 2014, we have manufactured and delivered seven highly customized SEDS rigs for two customers. The SEDS design has also been modified for use as a helicopter rig, custom designed to be moved by helicopter from one remote drilling site to another in locations where access or infrastructure is limited. Target markets for our helicopter rig, which can be manufactured with a broad range of options and powered to target drilling depths from 8,500 feet to 20,000 feet, include the Amazonas region in South America and Papua New Guinea in Asia.

WeOur ~~are~~rig ~~actively~~designs ~~pursuing~~offer ~~opportunities in~~customers ~~delivering~~a ~~complete~~wide ~~modular~~range ~~offshore~~of ~~platform~~options ~~and~~when ~~tender~~acquiring ~~assist~~a rig. ~~packages,~~A ~~including~~complete ~~fabrication,~~manufactured ~~equipment~~rig ~~installation, testing~~can ~~and~~range ~~commissioning.~~in Weprice ~~are~~from ~~working~~$12 onmillion ~~opportunities~~to inover ~~Mexico,~~$25 ~~Nigeria~~million, ~~Alaska,~~depending ~~and~~on the ~~Gulf~~design ~~of Mexico~~ and ~~building~~the ~~relationships with~~options ~~major~~selected. ~~shipyards~~Most tocomplete ~~integrate~~rigs ~~our~~currently ~~rig~~manufactured ~~work~~by ~~with~~us ~~their~~sell ~~hull work~~ for ~~jack-ups,~~approximately ~~barges~~$15 ~~and semisubmersibles~~million.

~~Rig~~The ~~Services~~following table sets forth the number of refurbished rigs, rig-ups and complete rig packages completed and delivered by us along with variable frequency drive (“VFD”) and silicon-controlled rectifier (“SCR”) control systems built by our IEC division for the past 10 years. Also shown are the annual changes in the average annual global land rig fleet as estimated by Baker Hughes.

We provide a comprehensive range of rig-related services, including rig refurbishment, rig reconfiguration, rig design, rig assembly and testing, and rig field service.


Year	Annual Change in Global Rig Fleet		Rigs Put Into Service By IDE⁽¹⁾		VFD and SCR Control Systems Built by IEC Division
2005		396		—		8
2006		102		4		36
2007		72		12		14
2008		-242		4		28
2009		-272		13		5
2010		672		5		7
2011		241		4		14
2012		-249		22		16
2013		88		9		9
2014		92		1		7
Total		900		74		144

~~Rig~~Sources: ~~reconfiguration~~Baker ~~and refurbishment. A large portion of the existing land rig fleet is over 20 years old. As a result~~Hughes, ~~the existing land rig fleet will need increasing amounts of repair, refurbishment and reconfiguration~~Management. ~~We offer a broad range of rig refurbishment services, including:~~

·(1) ~~Fabrication~~Includes ofrefurbished ~~new~~rigs, ~~mud~~rig-ups ~~tanks~~ and ~~mud~~complete ~~systems~~rig packages.

· Replacement and upgrading of the electrical and power systems.Offshore

·We ~~Refurbishment~~are actively pursuing opportunities in delivering complete modular offshore platform and ~~modification~~tender ofassist rig packages, including fabrication, equipment installation, testing and commissioning. We are working on opportunities in Mexico, Russia, Nigeria, Alaska, and the ~~structural~~Gulf ~~components~~of Mexico and building relationships with major shipyards to integrate our rig work with their hull work for jack-ups, barges and semisubmersibles.

~~· Retrofitting and reconfiguration of existing rigs for harsh environmental conditions, such as for desert or cold climate operation.~~7

·TABLE ~~Fabrication~~OF ~~of substructure boxes to raise the floor height and the skidding systems to convert conventional land rigs to pad drilling rigs.~~CONTENTS

·Rig Modification and refurbishment services for offshore drilling rigs related to electrical upgrades and structural modifications.Services

~~Rig-Up~~We ~~and~~provide ~~Rig Testing. Once we have designed~~ a ~~rig~~comprehensive ~~and~~range ~~procured~~of ~~all the necessary components, the components are shipped to our 30-acre~~ rig-uprelated ~~facility in Houston~~services, ~~Texas,~~ ~~where~~including ~~up to 14 rigs can be assembled and tested simultaneously. During this “~~rig~~-up”~~ ~~process~~refurbishment, ~~all~~rig ~~of the components~~reconfiguration, ~~including~~ ~~the VFD control system and electrical systems, are assembled for the first time. During the testing process, each system of the~~ rig ~~undergoes~~assembly aor ~~series of tests to ensure safe and efficient operation in compliance with the original design. Once the~~ “rig- up” and testing ~~are complete~~, ~~the~~and rig isfield ~~typically disassembled and packed by us and shipped by the customer to the customer’s drilling site~~service.

7Rig Reconfiguration and Refurbishment. A large portion of the existing land rig fleet is over 20 years old. As a result, the existing land rig fleet will need increasing amounts of repair, refurbishment and reconfiguration. We offer a broad range of rig refurbishment services, including:

~~Field~~• ~~Services.~~Fabrication Weof ~~provide~~new ~~drill site~~mud ~~services~~tanks ~~such as diagnostic support, modification~~ and ~~repair~~mud ~~services to rig owners manufactured both by us and by others. Our service teams are based in Houston, Texas and Oklahoma City, Oklahoma. Our designs, repairs and retrofits integrate electrical~~ systems ~~and VFD control systems for a wide range of drilling rigs and also provide a comprehensive collection of services in support of our I-Drive VFD control system~~. For our field service business, we maintain a staff of mobile technicians who provide on-sight repair of rig control systems as well as remote diagnostics. This team is capable of handling a wide range of on-site electronic and power problems and typically can be deployed to any location within 24 hours. The I-Drive certified technicians are deployed worldwide for a variety of field modifications, from the update of an electronic drive system to the preparation of a drive for an alternate utilization.

~~Equipment~~• ~~Installation.~~Replacement ~~Once a system has been designed~~ and ~~manufactured,~~upgrading ~~we are typically retained by the customer to install all~~ of the electrical ~~equipment in the customer’s rig. Our I-Drive installations include full start-up~~ and ~~testing~~power ~~procedures~~systems.

~~System~~• ~~Start-Up.~~Refurbishment ~~Our team is also trained~~ and ~~experienced~~modification ~~in electrical system rig start-up services, including the inspection~~ of ~~all installed electrical equipment and system start-up, as well as pulling, running and terminating all cables for~~ the ~~entire~~structural ~~drilling rig~~components.

~~Retrofit~~• Retrofitting and ~~Rebuild~~reconfiguration of ~~Existing Equipment. We retrofit and rebuild~~ existing ~~systems~~rigs tofor ~~industry~~harsh ~~specifications~~environmental ~~and~~conditions, ~~standards.~~such ~~Our~~as ~~personnel~~for ~~have~~desert ~~significant~~or ~~experience~~cold ~~in developing~~climate ~~retrofit systems that meet the market’s current demands~~operation.

~~IEC~~• —Fabrication ~~Rig~~of ~~Electrical~~substructure boxes to raise the floor height and ~~Control Systems~~the skidding systems to convert conventional land rigs to pad drilling rigs.

~~Through~~• ~~our~~Modification ~~IEC~~and ~~division,~~refurbishment weservices ~~are an established manufacturer of integrated electrical control systems~~ for aoffshore ~~wide range of~~ drilling rigs. Werelated ~~believe~~to ~~we hold approximately 10% of the market share for integrated~~ electrical ~~systems~~upgrades and ~~control~~structural ~~systems land rigs~~modifications.

~~Electrical~~Rig-Up ~~Systems~~and Rig Testing. Once ~~Our~~we ~~electrical systems~~have ~~include~~designed a rig and procured all the ~~major~~necessary ~~electrical~~components, the components ~~that~~are ~~enable~~shipped ato our 30-acre rig-up facility in Houston, Texas, where up to ~~function~~14 ~~safely~~rigs can be assembled and ~~efficiently,~~tested ~~including~~simultaneously. ~~rig~~During ~~power~~this ~~systems~~“rig-up” process, ~~electrical~~ ~~cabling~~all of the components, ~~lighting~~including the VFD control system and electrical systems, ~~closed~~are ~~circuit~~assembled ~~video~~for ~~systems~~the first time. During the testing process, ~~gas~~each ~~and~~system ~~fire~~of ~~detection~~the ~~systems~~rig undergoes a series of tests to ensure safe and ~~communications~~efficient ~~systems~~operation in compliance with the original design. Once the rig-up and testing are complete, the rig is typically ~~fire~~disassembled ~~alarms~~and packed by us and shipped by the customer to the customer’s drilling site.

~~AC/VFD~~Field ~~Control Systems~~Services. We Inprovide ~~2007, we~~drill ~~introduced~~site ~~our~~services ~~IEC~~such ~~Centurion~~as ~~Vari-Drive~~diagnostic support, amodification ~~variable~~and ~~frequency~~repair ~~drive~~services ~~(VFD)~~to ~~control~~rigs ~~system~~manufactured ~~based~~both onby ~~the~~us ~~latest~~and ~~digital~~by ~~technology~~ others. Our service teams are based in Houston, Texas and ~~controls~~Oklahoma City, Oklahoma. Our designs, repairs and ~~packaged~~retrofits ~~two~~integrate ofelectrical ~~our~~systems ~~IEC~~and ~~Centurion~~VFD ~~Vari-Drive~~control systems for a ~~land-based~~wide ~~drilling~~range ~~contractor~~of ~~operating~~drilling inrigs ~~North America.~~and ~~Today,~~also ~~the~~provide ~~IEC~~a ~~Centurion~~comprehensive ~~Vari-Drive~~collection ~~system~~of ~~represents~~services ~~approximately~~in ~~75%~~support of ~~control~~our ~~systems~~I-Drive ~~that~~VFD wecontrol ~~sell~~system. ~~Our~~For ~~Vari-Drive systems~~our ~~control~~field ~~large~~service ~~horsepower~~business, ACwe ~~motors~~maintain ~~that~~a ~~are~~staff ~~used~~of tomobile ~~power~~technicians ~~many~~who provide on-sight repair of ~~the~~rig ~~larger~~control ~~drilling~~systems ~~machinery~~as ~~components.~~well ~~These~~as ~~AC/VFD~~remote diagnostics. This ~~systems~~team ~~were~~is ~~introduced~~capable toof ~~the~~handling ~~offshore~~a ~~drilling~~wide ~~industry~~range inof ~~1994~~on-site electronic and ~~have~~power ~~become~~problems ~~more~~and ~~popular~~typically oncan ~~land~~be ~~rigs,~~deployed ~~initially~~to ~~for~~any ~~controlling top~~location ~~drives,~~within ~~where~~24 ~~lower~~hours. ~~weight~~The ~~and~~I-Drive ~~more~~certified ~~precise~~technicians ~~rotational~~are ~~control~~deployed ~~over~~worldwide ~~direct~~for ~~current~~a ~~systems~~variety ~~was~~of ~~desirable,~~field ~~and~~modifications, ~~more~~from ~~recently, for~~the ~~controlling~~update ~~the~~of ~~drawworks~~an ~~and~~electronic ~~mud~~drive ~~pumps.~~system ~~The~~to ~~key~~the ~~features~~preparation of ~~the~~a ~~IEC~~drive ~~Centurion~~for ~~Vari-Drive~~an ~~are:~~alternate utilization.

·Equipment ~~Drives~~Installation. Once ~~offer~~a ~~front~~system ~~accessible~~has ~~components~~been ~~for~~designed ~~ease~~and manufactured, we are typically retained by the customer to install all of ~~maintenance~~the electrical equipment in the customer’s rig. Our I-Drive installations include full start-up and ~~less~~testing ~~downtime~~procedures.

·System ~~Drive~~Start-Up. Our ~~horsepower~~team ~~range~~is ~~from~~also ~~300~~trained and experienced in electrical system rig start-~~2400HP~~up ~~per~~services, ~~drive~~including ~~with~~the ~~load~~inspection ~~share~~of ~~capabilities~~all installed electrical equipment and system start-up, toas ~~6000HP~~well as pulling, running and terminating all cables for the entire drilling rig.

·Retrofit ~~Controls~~and ~~offer~~Rebuild ~~fully~~of ~~integrated~~Existing ~~digital~~Equipment. We ~~controls~~retrofit ofand ~~all~~rebuild ~~drilling~~existing ~~loads~~systems to industry specifications and ~~peripherals~~standards. Our personnel have significant experience in developing retrofit systems that meet the market’s current demands.

·IEC Open— sourceRig architectureElectrical allowsand forControl integration of third party auto-drill algorithms.Systems

Through our IEC division, we are an established manufacturer of integrated electrical control systems for a wide range of drilling rigs. We believe ~~that~~we ~~IEC~~hold isapproximately ~~one~~10% of the ~~three major~~market ~~manufacturers~~share offor ~~houses~~integrated electrical systems and control systems ~~for~~land ~~AC motors~~rigs.

~~SCR~~TABLE orOF “DC” Control Systems. We also produce a control system that controls and directs the electrical power to key rig components that are powered by large horsepower DC electric motors, including mud pumps, drawworks, rotary tables and top drives. We have expertise in designing, manufacturing, installing and integrating customized direct current silicon-controlled rectifier (DC SCR) control systems that monitor and control electrical power distribution from DC motors throughout the drilling rig. These control system are typically housed in a portable trailer, also known as the electrical control house, located near the rig’s substructure.CONTENTS

Electrical Systems. Our ~~flagship~~electrical ~~control~~systems ~~system~~include isall the ~~I-Drive DC~~major ~~SCR,~~electrical ~~which~~components ~~is based on an established design~~ that weenable ~~believe has~~ a ~~strong reputation for durability, reliability and versatility. The I-Drive is available in five models and offers a broad selection of power options to suit our wide selection of~~ rig ~~designs and configurations. After our design engineers meet with a customer~~ to ~~determine~~function ~~the~~safely ~~optimal DC SCR configuration~~ and ~~design~~efficiently, ~~for a~~including ~~specific~~ rig, wepower ~~draft~~systems, anelectrical ~~engineering~~cabling, ~~plan~~lighting ~~that~~systems, isclosed ~~developed~~circuit ~~with~~video ~~the~~systems, ~~assistance~~gas ~~of the customer~~ and ~~the~~fire ~~customer~~detection ~~approves~~systems ~~the plan~~and ~~prior~~communications tosystems ~~the~~and ~~start~~fire ~~of production~~alarms. ~~The key features of our I-Drive Control System are:~~

·AC/VFD ~~The~~Control ~~control~~Systems. In ~~electronics~~2007, ~~are~~we ~~housed~~introduced inour aIEC ~~single~~Centurion ~~plug~~Vari-inDrive, ~~module~~a variable frequency drive (“VFD”) control system based on the latest digital technology and controls. Today, ~~which~~the ~~reduces~~IEC ~~troubleshooting~~Centurion ~~time~~Vari-Drive bysystem ~~minimizing~~represents ~~replacement~~approximately ~~time~~75% of control systems that we sell. Our Vari-Drive systems control large horsepower AC motors that are used to power many of the larger drilling machinery components. These AC/VFD systems were introduced to the offshore drilling industry in 1994 and have become more popular on land rigs, initially for controlling top drives, where lower weight and more precise rotational control ~~module~~over direct current systems was desirable, and, more recently, for controlling the drawworks and mud pumps. The key features of the IEC Centurion Vari-Drive are:

·• ~~Testing~~Drives ofoffer ~~all~~front accessible components ~~are~~for ~~based~~ease onof ~~military~~maintenance ~~specifications~~and less downtime.

·• ~~The~~Drive ~~modular~~horsepower ~~design~~range ~~allows~~from ~~removal~~300-2400HP ~~and~~per ~~replacement~~drive inwith ~~less~~load ~~than~~share 10capabilities ~~minutes~~up to 6000HP.

·• ~~State~~Controls ofoffer ~~the~~fully ~~art~~integrated ~~electrical~~digital ~~technology~~controls ~~and~~of ~~system~~all ~~design~~drilling ~~features~~loads ~~that~~and ~~extend component life significantly~~peripherals.

·• ~~All~~Open ~~components~~source ~~are~~architecture ~~readily~~allows ~~accessible~~for ~~from~~integration ~~the~~of ~~front~~third ofparty ~~the~~auto-drill ~~unit~~algorithms.

~~Sales~~We believe that IEC is one of the three major manufacturers of houses and ~~Marketing~~control systems for AC motors.

~~Our~~SCR ~~sales~~or ~~and~~“DC” ~~marketing~~Control ~~efforts~~Systems. We ~~are~~also ~~conducted primarily~~produce bya ~~in-house~~control ~~personnel~~system ~~and,~~that tocontrols aand ~~lesser~~directs ~~extent,~~the byelectrical ~~independent~~power ~~manufacturers’~~to ~~representatives.~~key ~~Our~~rig ~~in-house~~components ~~sales and~~that ~~marketing~~are ~~employees,~~powered ~~with~~by ~~the~~large ~~support~~horsepower ofDC ~~our~~electric ~~sales~~motors, ~~engineers~~including ~~and~~mud ~~sales~~pumps, ~~estimators~~drawworks, ~~are~~rotary ~~responsible~~tables ~~for~~and ~~implementing~~top ~~marketing plans~~drives. ~~and~~We ~~sales~~have ~~programs,~~expertise ~~providing~~in ~~technical~~designing, ~~advice~~manufacturing, installing and ~~customer~~integrating ~~service,~~customized ~~handling~~direct ~~customer~~current ~~inquiries,~~silicon-controlled ~~following~~rectifier up(“DC onSCR”) ~~shipments to~~control ~~customers,~~systems ~~informing~~that ~~customers~~monitor ofand ~~special~~control ~~promotions,~~electrical ~~coordinating~~power ~~our~~distribution ~~trade~~from ~~shows~~DC ~~and~~motors ~~providing~~throughout ~~other~~the ~~types~~drilling ofrig. ~~customer~~These ~~service. Generally,~~control ~~our~~system ~~in-house~~are ~~sales~~typically ~~personnel~~housed ~~receive~~in a ~~base~~portable ~~salary~~trailer, ~~plus~~also ~~commission~~known ~~and~~as ~~manufacturers’~~the electrical ~~representatives~~control ~~receive a~~house, ~~commission~~located onnear ~~sales~~the rig’s substructure.

WeOur ~~believe~~flagship ~~that~~control ~~direct~~system ~~senior~~is ~~management involvement~~the I-Drive DC SCR, which is ~~crucial~~based toon ~~establishing~~an ~~and~~established ~~maintaining~~design ~~long-term~~that ~~customer~~we ~~relationships.~~believe ~~Accordingly~~has a strong reputation for durability, ~~our~~reliability ~~senior~~and ~~management~~versatility. The I-Drive is ~~actively~~ ~~involved~~available in ~~our~~five ~~marketing~~models ~~activities,~~and ~~particularly~~offers ~~with~~a ~~major~~broad ~~international~~selection ~~drilling~~of ~~contractors.~~power Inoptions ~~addition,~~to ~~because a~~suit ~~significant~~our ~~portion~~wide selection of ~~products~~rig ~~are~~designs ~~customized~~and toconfigurations. ~~suit~~After ~~specific~~our design engineers meet with a customer ~~needs~~to determine the optimal DC SCR configuration and design for a specific rig, ~~our~~we ~~team~~draft ~~works~~an ~~directly~~engineering plan that is developed with ~~most~~the assistance of ~~our~~the ~~customers to~~customer ~~modify~~ and ~~customize~~the ~~our~~customer ~~products~~approves the plan prior to ~~meet~~the ~~their~~start ~~specific~~of ~~requirements~~production. The key features of our I-Drive Control System are:

As• ofThe ~~December~~control ~~31,~~electronics ~~2012,~~are wehoused ~~employed 12 individuals~~ in ~~our~~a ~~sales~~single ~~and~~plug-in ~~marketing department~~module, which isreduces ~~based~~troubleshooting attime ~~our corporate headquarters in Houston, Texas. We also retain, on a case-~~by~~-case~~ ~~basis,~~minimizing ~~independent~~replacement ~~sales~~time ~~agents~~of ~~who sell to countries around~~ the ~~world~~control module.

~~Customers~~• Testing of all components are based on military specifications.

~~Most~~• ~~exploration~~The ~~and~~modular ~~production~~design ~~companies do~~allows ~~not~~removal ~~own drilling rigs but instead rely on drilling contractors to supply the rigs~~ and ~~crews~~replacement ~~required~~in toless ~~drill~~than ~~oil~~10 ~~and gas wells~~minutes. ~~As a result, the principal customers for our products and services are drilling contractors.~~

We• ~~have~~State ~~an active customer base. Over the past three years, we have sold our products to over 150 unique customers. The number~~ of ~~customers has ranged from 75 to 100 individual customers during any year. During~~ the ~~year~~art ~~ended~~electrical ~~December 31,~~technology ~~2012, our five largest customers, Nabors Industries, Sidewinder Drilling, Union Drilling, Lewis Energy Group~~ and ~~Pioneer~~system ~~Energy~~design ~~Services,~~features ~~accounted~~that ~~for~~extend ~~89%~~component oflife ~~our total sales~~significantly.

9• All components are readily accessible from the front of the unit.

Sales byand RegionMarketing

WeOur ~~sell~~sales ~~our~~and ~~products~~marketing efforts are conducted primarily by in-house personnel and, ~~services~~to ~~throughout the~~a ~~world.~~lesser Weextent, ~~categorize~~by ~~our~~independent manufacturers’ representatives. Our in-house sales ~~geographically~~and ~~based~~marketing onemployees, with the ~~location~~support toof ~~which~~ our ~~products~~sales engineers and sales estimators, are ~~shipped~~responsible orfor weimplementing ~~have~~marketing ~~been~~plans ~~informed they~~and ~~will~~sales beprograms, ~~shipped~~providing ortechnical atadvice ~~which~~and customer service, handling customer inquiries, following up on shipments to customers, informing customers of special promotions, coordinating our ~~services~~trade ~~are~~shows ~~performed.~~and ~~The~~providing ~~geographical~~other ~~distribution~~types of customer service. Generally, our ~~revenue~~in-house ~~during~~sales ~~the~~personnel ~~periods~~receive ~~indicated~~a base salary and ~~was~~manufacturers’ asrepresentatives ~~follows:~~receive a commission on sales.

	For the Year Ended December 31,
	2012			2011			2010
U.S. & Canada		98.4	%		79.7	%		56.3	%
Mexico, Central & South America		0.6	%		15.5	%		38.7	%
Europe, Russia & Asia		0.5	%		3.8	%		1.7	%
North Africa & Middle East		0.5	%		0.8	%		2.1	%
Other International		—			0.2	%		1.2	%

~~Suppliers~~TABLE ~~and~~OF ~~Materials~~CONTENTS

~~The~~We ~~principal~~believe ~~materials~~that ~~required~~direct ~~for~~senior ~~our operations~~management ~~include~~involvement ~~steel,~~is ~~electrical~~crucial ~~wire/cable,~~to ~~rig~~establishing ~~lighting products, miscellaneous electrical components~~ and ~~other~~maintaining ~~components, such~~long-term ascustomer ~~valves and pipes~~relationships. WeAccordingly, ~~obtain~~our ~~these~~senior ~~materials~~management ~~from~~is aactively ~~variety~~involved ofin ~~suppliers.~~our ~~Despite~~marketing ~~purchasing some materials from a few sources~~activities, we doparticularly ~~not~~with ~~believe~~major weinternational ~~are~~drilling ~~overly dependent on any of our suppliers~~contractors. WeIn ~~believe~~addition, ~~that~~because ~~purchasing larger volumes from~~ a ~~single~~significant ~~source can~~portion ~~provide~~of ~~pricing~~products ~~advantages.~~are Wecustomized ~~typically purchase our materials as needed and generally have been able~~ to ~~obtain~~suit ~~adequate~~specific ~~supplies of~~customer ~~raw~~needs, ~~materials for~~ our ~~operations.~~team Weworks ~~typically~~directly ~~provide our customers~~ with amost ~~quote after obtaining an estimate~~ of ~~the cost of the materials from~~ our ~~suppliers.~~customers Toto ~~mitigate~~modify ~~any~~and ~~risk~~customize ofour aproducts ~~material price increase, we purchase all of the inventory needed~~ to ~~fulfill~~ ~~the~~meet ~~order~~their atspecific ~~or around the time the customer contract is signed~~requirements.

~~Intellectual~~As ~~Property~~of December 31, 2014, we employed 8 individuals in our sales and marketing department, which is based at our corporate headquarters in Houston, Texas. We also retain, on a case-by-case basis, independent sales agents who sell to countries around the world.

In connection with the Merger, we acquired intellectual property from International Drilling Equipment Company, LLC (“International”). The intellectual property we received included four patents covering the design and assembly of drilling rigs and all other related intellectual property and know-how International possessed. We are required to pay International royalties of $12,500 for each mast and $12,500 for each substructure that we manufacture or cause to be manufactured using the engineering and designs provided by International. While our Chief Executive Officer owns 50% of International, as part of the merger agreement, he agreed to waive his right to receive any royalty payments from us. Any royalty payments will be distributed to the other shareholder of International.Customers

~~While~~Most weexploration ~~own~~and ~~certain~~production ~~trademarks~~companies ~~and~~do ~~logos, we~~not ~~primarily~~own drilling rigs but instead rely ~~upon~~on ~~trade~~drilling ~~secrets,~~contractors ~~know-how~~to supply the rigs and ~~other~~crews ~~unpatented~~required ~~proprietary~~to ~~information~~drill oil and gas wells. ~~Management~~As ~~believes~~a ~~patent~~result, the principal customers for our products and ~~trademark protection~~services are ~~not~~land ~~material~~and tooffshore ~~our~~drilling ~~business~~contractors.

We ~~require~~have ~~all~~an ~~key~~active ~~employees~~customer tobase. ~~enter~~Over ~~into confidentiality~~the ~~and~~past ~~non-competition~~three ~~agreements~~years, towe ~~protect~~have sold our ~~proprietary~~products ~~information~~to over 150 unique customers. ~~Certain~~The number of ~~our~~customers ~~key~~has ~~employees~~ranged ~~are~~from ~~also~~75 ~~party~~ to ~~employment~~100 ~~agreements~~individual ~~that~~customers ~~provide~~during ~~for~~any year. Despite our range of customers, the ~~assignment~~majority of ~~rights~~our sales are concentrated to ~~innovations~~five ~~developed~~customers. byDuring ~~them~~the ~~while~~year ~~employed~~ended byDecember ~~us.~~31, ~~However~~2014, ~~there~~ isour nofive ~~assurance~~largest ~~that~~customers, ~~those~~Nabors ~~agreements~~Industries, ~~will~~Ensign beEnergy ~~enforceable~~Services, ifLewis ~~they~~Energy ~~are~~Group, ~~breached~~Patterson orUTI and Savanna Energy Services, ifaccounted ~~enforceable~~for 73% of our total sales. During the year ended December 31, ~~that~~2013, ~~they~~our ~~will~~five ~~adequately~~largest customers, Nabors Industries, Lewis Energy Group, Kenai Drilling ~~protect~~Limited, usSidewinder Drilling and Felderhoff Drilling, accounted for 82% of our total sales.

WeSales alsoby have a research and development program related to instrument and measurement control systems. We spent approximately $0.5 million on this program in 2012.Region

10We sell our products and services throughout the world. We categorize our sales geographically based on the location to which our products are shipped or we have been informed they will be shipped or at which our services are performed. The geographical distribution of our revenue during the periods indicated was as follows:

Competition


	For the Year Ended December 31,
	2014			2013
U.S. & Canada		91.4	%		99.5	%
Mexico, Central & South America		3.2	%		0.2	%
Europe, Russia & Asia		0.5	%		0.1	%
Africa & Middle East		4.0	%		0.2	%
Australia		0.9	%		—

TheSuppliers largest manufacturer in the drilling rig and drilling rig component industry is National Oilwell Varco (“NOV”). Based in Houston, Texas, NOV generated approximately $10.1 billion in revenues in 2012 from designing, manufacturing, selling and servicing oil and gas drilling rigs, which amount accounted for approximately 50% of its total revenue. The majority of NOV’s revenue is from offshore rig packages. We believe NOV’s annual capacity of complete new land rigs is comparable to ours. Because of the wide acceptance of NOV’s products by drilling contractors around the globe, we believe that NOV is able to price its products at a premium.Materials

~~Other~~The ~~leading~~principal ~~rig~~materials ~~manufacturers~~required ~~include Aker~~for ~~Solutions,~~our aoperations ~~Norwegian~~include ~~provider~~steel, ofelectrical ~~engineering~~wire/cable, ~~and~~rig ~~construction~~lighting ~~services and technology~~ products, ~~and~~miscellaneous ~~Abbot~~electrical ~~Group/Bentec, a~~components ~~German manufacturer of mechanical~~ and ~~electrical~~other components, ~~for~~such ~~land-based~~as valves and ~~offshore drilling rigs~~pipes. ~~Other~~We ~~key~~obtain ~~players~~these inmaterials ~~the global~~from ~~market~~a ~~include~~variety ~~Baoji~~of ~~Oilfield~~suppliers. ~~Machinery~~Despite ~~Company~~purchasing ~~(“BOMCO”)~~some ~~and~~materials ~~Honghua,~~from ~~which~~a ~~together~~few ~~dominate~~sources, ~~the~~we ~~land-rig manufacturing~~do ~~market~~not inbelieve ~~China.~~we ~~Due~~are tooverly ~~cheaper~~dependent ~~labor~~on ~~and~~any ~~raw~~of ~~material~~our ~~costs,~~suppliers. weWe believe ~~both~~that ~~BOMCO~~purchasing ~~and~~larger ~~Honghua~~volumes ~~are~~from ~~able~~a tosingle ~~price their~~source ~~products~~can atprovide apricing 30advantages. toWe ~~40%~~typically ~~discount~~purchase toour ~~NOV’s~~materials ~~prices.~~as Aneeded ~~number~~and ofgenerally ~~smaller~~have ~~U.S.-based~~been ~~rig~~able ~~manufacturers~~to ~~compete~~obtain ~~across~~adequate ~~different rig~~supplies ~~types~~of ~~and~~raw ~~regions.~~materials Afor ~~few~~our ~~offer~~operations. ~~complete~~We ~~rig~~typically ~~packages,~~provide ~~such~~our customers aswith ~~Applied~~a ~~Machinery~~quote ~~Corporation~~after ~~and~~obtaining ~~TNT~~an ~~Crane~~estimate &of ~~Rigging, but~~ the ~~majority~~cost of the ~~larger~~materials ~~service~~from ~~companies~~our ~~only offer specialized rig components~~suppliers. ~~The~~To ~~major~~mitigate ~~rig~~any ~~component~~risk ~~manufacturers~~of ~~are~~a ~~Cameron International,~~material ~~Forum~~price ~~Energy Technologies~~increase, ~~Oil~~we ~~States~~purchase ~~International~~all ~~and~~of GEthe ~~Oil~~inventory &needed ~~Gas.~~to ~~The~~fulfill ~~global~~the ~~land~~order ~~rig~~at ~~manufacturing~~or ~~industry is~~around ~~comprised~~the oftime ~~hundreds~~the ofcustomer ~~relatively~~contract ~~small~~is ~~regional players, including some that we view as potential acquisition candidates~~signed.

InIntellectual addition to the manufacturing-focused companies mentioned above, a number of land drillers manufacture complete rigs or rig components in-house, including Nabors Industries, Patterson-UTI Energy and Helmerich & Payne. These companies do not rely entirely on third-party service providers to fabricate and construct new-build rigs, although they frequently buy certain components from third-party suppliers or contract out some portion of the new-build process. For example, a company may manufacture top drives, floor wrenches, catwalks and rig control systems, but not manufacture or fabricate all the components necessary for a complete rig package. This provides us with an opportunity to manufacture and market additional components that are not within the drilling contractors’ manufacturing capabilities. These land drillers also typically do not manufacture or fabricate rigs for third-party customers or compete directly with our complete rig business.Property

WeIn ~~believe~~connection ~~that~~with ~~competition in~~ the ~~drilling rig industry is based on performance~~Merger, ~~price,~~we ~~delivery~~acquired ~~times,~~intellectual ~~reputation,~~property ~~quality~~from ~~and~~International ~~customer~~Drilling ~~service.~~Equipment ~~As noted above~~Company, ~~Chinese companies~~LLC ~~tend to compete mainly on price while NOV has a strong brand recognition and reputation for quality~~(“International”). WeThe ~~believe~~intellectual property we ~~are well~~received ~~positioned~~included tofour ~~compete~~patents incovering ~~this industry because we believe we have~~ the ~~advantages~~design ~~of speed, quality service, proven designs~~ and ~~quality~~assembly ~~components~~of asdrilling arigs ~~vertically integrated rig manufacturer~~ and ~~established~~all ~~provider~~other ofrelated ~~refurbishment~~intellectual ~~and~~property ~~reconfiguration services. However, some of our competitors may possess greater financial~~ and ~~other~~know-how ~~resources~~International ~~than us~~possessed. We ~~also~~are ~~differentiate~~required ~~ourselves by delivering both standardized and customized products and services~~ to ~~our~~pay ~~global~~International ~~customers~~royalties onof an$12,500 ~~expedited~~for ~~basis.~~each ~~Our~~mast ~~client service~~and ~~teams~~$12,500 ~~offer~~for aeach ~~comprehensive~~substructure ~~range~~that ofwe ~~services~~manufacture onor ~~par~~cause ~~with~~to ~~those~~be ~~provided~~manufactured byusing the ~~industry~~engineering ~~leader, NOV,~~ and ~~our~~designs ~~repair~~provided ~~teams can~~by ~~be deployed worldwide within 24 hours~~International. ~~Our~~While ~~major~~our ~~rig~~Vice ~~models~~Chairman ~~are~~of ~~based~~the onBoard ~~established designs, we also offer a range~~ of ~~innovative rigs~~Directors ~~to meet changing client needs,~~ (and weformer ~~have~~Chief ~~longstanding relationships with established third-party providers of high-quality~~Executive ~~rig~~Officer) ~~components.~~owns

~~Industry Background~~10

~~Drilling~~TABLE ~~rig~~OF manufacturing companies manufacture drilling rigs and other components that are used by oilfield services companies to drill wells for exploration and production companies, or E&P companies, in connection with the exploration for and the development and production of hydrocarbons. Demand for onshore drilling rigs is a function of the willingness of E&P companies to make operating and capital expenditures to explore for, develop and produce hydrocarbons. When oil or natural gas prices increase, E&P companies generally increase their capital expenditures, resulting in greater revenues and profits for both drillers and rig manufacturers. Likewise, significant decreases in the prices of those commodities typically lead E&P companies to reduce their capital expenditures, which decreases the demand for drilling rigs.CONTENTS

1150% of International, as part of the merger agreement, he agreed to waive his right to receive any royalty payments from us. Any royalty payments will be distributed to the other shareholder of International.

~~Oil and natural gas prices rose to record levels in 2008. Prices began to decline in late 2008 in conjunction with the widespread economic recession.~~ While ~~the~~we ~~price~~own ~~of oil~~certain ~~rebounded~~trademarks ~~somewhat in 2009~~ and ~~continued to rise throughout 2010 and 2011~~logos, ~~the~~we ~~price~~primarily ofrely ~~natural~~upon ~~gas~~trade ~~has remained depressed since 2009 largely due to discoveries of vast new natural gas resources in the U.S. During 2011~~secrets, ~~oil~~know-how ~~prices~~and ~~generally~~other ~~remained high~~unpatented ~~due~~proprietary ~~to increased demand, generally flattening international supply and geopolitical tensions~~information. ~~Gas~~Management ~~prices~~believes ~~trended~~patent ~~upwards in the latter half of 2012,~~ and ~~prices,~~trademark asprotection ofare ~~March~~not ~~20,~~material ~~2013,~~to ~~are~~our ~~above $3~~business.94 ~~per mmbtu.~~

InWe ~~response~~require toall ~~the~~key ~~current~~employees ~~commodity~~to ~~environment of~~enter ~~high~~into ~~oil~~confidentiality ~~prices~~and ~~relative~~non-competition agreements to ~~gas~~protect ~~prices,~~our aproprietary ~~number~~information. Certain of ~~E&P~~our ~~companies~~key ~~have~~employees ~~announced that they~~ are ~~reducing~~also ~~dry~~party ~~natural~~to ~~gas drilling~~employment ~~and~~agreements ~~production and redirecting their activities and capital toward currently more economic liquids-rich plays. Liquids-rich plays are those~~ that ~~are~~provide ~~characterized~~for by the ~~production~~assignment of ~~predominantly~~rights ~~oil~~to ~~and~~innovations ~~natural~~developed ~~gas~~by ~~liquids,~~them ~~such~~while asemployed ~~ethane,~~by ~~propane, butane~~us. ~~and iso-butane~~However, ~~which~~there ~~are~~is ~~used~~no asassurance ~~energy~~that ~~sources~~those ~~and~~agreements ~~manufacturing~~will ~~feedstocks,~~be ~~the~~enforceable ~~prices~~if ofthey ~~which~~are ~~have~~breached ~~historically~~or, ~~been highly~~if ~~correlated~~enforceable, ~~with~~that ~~oil~~they ~~prices~~will ~~rather~~adequately ~~than~~protect ~~natural gas prices~~us. ~~We expect the trend toward liquids-focused drilling to continue.~~

~~Drilling~~We ~~Industry~~also ~~Dynamics~~have a research and development program related to instrument and measurement control systems. We spent approximately $0.2 million and $0.1 million on this program in fiscal 2014 and 2013 respectively.

Drilling is part of the oilfield services group within the energy industry. Drilling contractors provide the rig and the operating crews to E&P companies on a dayrate basis. In the U.S., drilling contracts are normally by well or a short-term period (e.g., 90 days). Internationally, the contracts are normally one to three years. International contracts are longer because the E&P company usually owns a larger field and the mobilization costs are prohibitive for anything less than a one-year term.Competition

The ~~drilling~~largest ~~industry~~manufacturer isin ~~often segmented into~~ the ~~North~~drilling ~~American~~rig ~~market~~ and ~~the~~drilling ~~international~~rig ~~market.~~component ~~These~~industry ~~markets~~is ~~share~~National ~~common~~Oilwell ~~exposure to the same macro environment~~Varco, ~~but~~ ~~also~~Inc. ~~exhibit unique factors that drive the dynamics of each market~~(“NOV”). ~~The~~Based ~~dramatic growth~~ in ~~the development of unconventional shale and tight sand formations~~Houston, ~~primarily in North America~~Texas, isNOV ~~placing~~generated ~~increased~~approximately ~~demands on service equipment~~$13.0 Inbillion ~~the~~in ~~U.S.,~~revenues ~~64% of~~in ~~the~~2014 ~~active~~from ~~land~~designing, ~~rigs~~manufacturing, asselling ofand ~~March~~servicing ~~15,~~oil ~~2013,~~and ~~were~~gas drilling ~~horizontal wells~~rigs, ~~the~~which ~~well~~amount ~~path~~accounted ~~best~~for ~~suited~~approximately to61% ~~developing~~of ~~shale~~its ~~and tight~~total ~~sands,~~revenue. ~~compared~~The tomajority ~~20%~~ of ~~the~~NOV’s ~~active~~revenue ~~land~~is ~~rigs~~from ~~five~~offshore ~~years~~rig ~~ago,~~packages. ~~according~~Because toof ~~data~~the ~~from~~wide ~~Baker~~acceptance ~~Hughes.~~of ~~Horizontal~~NOV’s ~~wells~~products ~~are typically~~by ~~used~~drilling incontractors ~~conjunction~~around ~~with~~the ~~hydraulic fracturing~~globe, ~~which~~we isbelieve ~~used~~that ~~even~~NOV ~~more~~is ~~frequently~~able asto ~~the~~price ~~number~~its ofproducts ~~fracturing~~at ~~stages increases~~a premium.

~~This~~Other ~~change~~leading inrig ~~development~~manufacturers ~~activity~~include ~~requires investment~~Aker inSolutions ~~new~~ASA, ~~drilling~~a ~~rigs~~Norwegian provider of engineering and ~~related~~construction ~~equipment~~services toand ~~address~~technology ~~the~~products, ~~unique~~and ~~demands~~Abbot ofGroup/Bentec, ~~these~~a ~~resource~~German ~~plays~~manufacturer ~~and~~of ~~places~~mechanical aand ~~much~~electrical ~~greater strain~~components onfor ~~drilling~~land-based and ~~completion~~offshore ~~equipment~~drilling rigs. ~~These~~Other ~~changes~~key ~~have~~players ~~resulted~~ in ~~shorter~~the ~~replacement~~global ~~cycles~~market ~~for~~include ~~capital~~Baoji ~~equipment~~Oilfield ~~and increased~~Machinery ~~demand~~Company ~~for~~Ltd. ~~maintenance~~(“BOMCO”) and ~~refurbishment~~Honghua ofGroup ~~existing equipment~~Ltd., Aswhich together dominate the ~~industry~~land-rig ~~adapts~~manufacturing market in China. Due to ~~these~~cheaper ~~increased~~labor ~~demands~~and raw material costs, we believe ~~that~~both ~~there~~BOMCO ~~will~~and beHonghua ~~significant~~are ~~opportunities~~able to ~~bring~~price ~~new~~their products ~~and~~at ~~equipment~~a 30 to ~~market~~40% ~~that~~discount ~~have~~to ~~been~~NOV’s ~~designed~~prices. ~~and~~A ~~engineered~~number ~~with~~of ~~these~~smaller ~~new~~U.S.-based ~~challenges~~rig inmanufacturers ~~mind~~compete across different rig types and regions. A few offer complete rig packages, such as Applied Machinery Corporation and TNT Crane & Rigging, Inc., but the majority of the larger service companies only offer specialized rig components. The major rig component manufacturers are Cameron International Corporation, Forum Energy Technologies, Inc., Oil States International Inc., and GE Oil & Gas. The global land rig manufacturing industry is comprised of hundreds of relatively small regional players, including some that we view as potential acquisition candidates.

12In addition to the manufacturing-focused companies mentioned above, a number of land drillers manufacture complete rigs or rig components in-house, including Nabors Industries, Ltd., Patterson-UTI Energy, Inc. and Helmerich & Payne, Inc. These companies do not rely entirely on third-party service providers to fabricate and construct new-build rigs, although they frequently buy certain components from third-party suppliers or contract out some portion of the new-build process. For example, a company may manufacture top drives, floor wrenches, catwalks and rig control systems, but not manufacture or fabricate all the components necessary for a complete rig package. This provides us with an opportunity to manufacture and market additional components that are not within the drilling contractors’ manufacturing capabilities. These land drillers also typically do not manufacture or fabricate rigs for third-party customers or compete directly with our complete rig business.

~~Source:~~We ~~Baker~~believe ~~Hughes~~that competition in the drilling rig industry is based on performance, price, delivery times, reputation, quality and customer service. As noted above, Chinese companies tend to compete mainly on price while NOV has a strong brand recognition and reputation for quality. We believe we are well positioned to compete in this industry because we believe we have the advantages of speed, quality service, proven designs and quality components as a vertically integrated rig manufacturer and established provider of refurbishment and reconfiguration services. However, some of our competitors may possess greater financial and other resources than us. We also differentiate ourselves by delivering both standardized and customized products and services to our global customers on an expedited basis. Our client service teams offer a comprehensive range

Most oil and gas operators do not own their own rigs and instead rely on specialized land rig contractors to provide the rig and the crew. The industry is highly fragmented and highly dependent on the level of drilling activity. Globally, Nabors Industries, Inc., Patterson-UTI Energy, Inc. and Helmerich & Payne are the three largest land drilling contractors by revenues, with reported 2012 revenues of $7.0 billion, $2.7 billion and $3.2 billion, respectively. Despite the fact that there are between 200 and 300 land drilling contractors in North America, the top six contractors account for 46% of the rigs. Internationally, most countries have no more than five to ten land drilling contractors in each country, not including the in-house drilling contractors of some national oil companies.11

~~The~~TABLE ~~requirements~~OF of the various regional rig markets tend to be driven by well types (gas vs. oil), well depth and environment. For example, remote international or frontier locations may require special equipment or features, such as crew quarters, water desalinization equipment, enclosed and heated drilling floors or even helicopter transportable rigs, which are required for extreme remote areas of exploration. Likewise, deep gas wells in the U.S. require powerful rigs while less powerful rigs may be suitable for shallow oil and gas wells.CONTENTS

~~Operators~~of ~~require~~services ~~newer~~on ~~technology~~par towith ~~meet increasingly~~those ~~challenging~~provided ~~drilling~~by ~~conditions,~~the ~~with~~industry ~~a focus on mobility~~leader, ~~drilling efficiency~~NOV, ~~power~~ and ~~safety.~~our ~~The~~repair ~~emergence~~teams ~~of more~~can ~~complex~~be ~~horizontal~~deployed ~~oil~~worldwide ~~wells~~generally ~~has~~within ~~sparked~~24 ahours. ~~need~~Our ~~for~~major ~~higher~~rig ~~specification,~~models ~~more~~are ~~capable~~based ~~land~~on ~~rig~~established ~~technology~~designs, ~~and~~we ~~thus,~~also offer a ~~need for~~range ~~newbuilds.~~of ~~E&P~~innovative ~~operators are demanding~~ rigs ~~that~~to ~~can~~meet ~~efficiently~~changing ~~drill~~client ~~longer~~needs, ~~lateral horizontal wells. Due to these trends, the drilling market has moved away from conventional mechanical rigs~~ and ~~direct~~we ~~current~~have ~~powered~~longstanding ~~rigs~~relationships with anestablished ~~industry movement towards alternating current powered rigs. We believe that this is a long~~third-~~term~~party ~~trend.~~providers ~~The following table sets forth a short description~~ of ~~the~~high-quality ~~main~~rig ~~types of land drilling rigs~~components.

13Industry Background

~~Land~~ Drilling ~~Rig~~rig ~~Types~~manufacturing companies manufacture drilling rigs and other components that are used by oilfield services companies to drill wells for exploration and production companies, or E&P companies, in connection with the exploration for and the development and production of hydrocarbons. Demand for onshore drilling rigs is a function of the willingness of E&P companies to make operating and capital expenditures to explore for, develop and produce hydrocarbons. When oil or natural gas prices increase, E&P companies generally increase their capital expenditures, resulting in greater revenues and profits for both drillers and rig manufacturers. Likewise, significant decreases in the prices of those commodities such as the recent trends, typically lead E&P companies to reduce their capital expenditures, which decreases the demand for drilling rigs.

~~Mechanical~~Oil ~~SCR~~and /natural DCgas ~~Electric~~prices ACrose ~~Electric~~to ·record ~~The~~levels ~~components~~in of2008. aPrices ~~mechanical~~began ~~rig~~to ~~are~~decline ~~powered~~in ~~directly~~late by2008 ~~its~~in ~~diesel~~conjunction ~~engines~~with ·the ~~Diesel~~widespread ~~engines~~economic ~~generate~~recession. DCWhile ~~power~~the ~~that~~price isof ~~used~~oil rebounded somewhat in 2009 and continued to ~~power~~rise throughout 2010 and 2011, the ~~rig’s~~price ~~components~~of ·natural ~~The~~gas ~~newest~~has ~~generation~~remained ofdepressed ~~land~~since ~~rigs~~2009 ~~are~~largely ~~driven~~due byto ACdiscoveries ~~power~~of ·vast ~~Still~~new ~~used~~natural togas ~~drill~~resources ~~conventional~~in ~~wells~~the U.S. During 2011, ~~but~~oil ~~demand~~prices isgenerally ~~falling~~remained ·high Updue to ~~six~~increased ~~engines~~demand, ~~may~~generally beflattening ~~required~~international tosupply ~~operate~~and ~~the~~geopolitical ~~rig~~tensions. ·Since AC2011 ~~power~~and ~~allows~~through ~~variable~~November ~~frequency~~2014, ~~drive~~oil ~~(VFD)~~has ·generally ~~The~~fluctuated ~~majority~~in ofa ~~mechanical~~range ~~rigs~~from ~~cannot~~$85 ~~drill~~per ~~unconventional~~barrel ~~wells~~to ~~economically~~$105 ·per barrel. ~~SCR~~In ~~rigs~~December ~~are~~2014, aoil ~~modernized~~prices ~~subset~~have ofrapidly DCplummeted ~~rigs~~and ~~that~~as ~~provide~~of ~~operators~~March ~~with~~30, ~~more~~2015 ~~precise~~are ~~control~~just ~~over~~under ~~the~~$50 DCper ~~power~~barrel. ~~flow~~Gas toprices trended upwards in the ~~rig’s~~latter ~~components~~half ·of ~~The~~2013 ~~ability~~and continued to ~~digitally~~rise ~~adjust~~in early 2014. In the ~~frequency~~summer of ~~the~~2014, ~~power~~due to ~~the~~excess ~~motor~~US ~~has~~production ~~led~~of tonatural ~~increases~~gas, inprices ~~control,~~started ~~fewer~~falling ~~downhole~~from ~~failures~~approximately ~~and~~$4.00 ~~cost~~per ~~savings~~mmbtu to ~~the~~$3.50 ~~operator~~per ·mmbtu ~~Earlier~~by ~~generation~~the ~~rigs~~end ~~are~~of ~~now~~2014. ~~being~~Consistent ~~scrutinized~~with ~~for~~the ~~retirement~~drop ·in ~~SCR-DC~~oil ~~systems~~prices, ~~can~~gas ~~accomplish~~prices ~~stepless~~have ~~speeds~~continued ~~when~~their ~~operating~~downward ~~the~~trend ~~drawworks,~~in ~~rotary~~early ~~table~~2015 and ~~mud~~as ~~pumps~~of ·March ~~Hoisting speeds~~31, ~~rotary~~2015 ~~speeds~~are ~~and~~at ~~pump~~$2.64 ~~strokes~~per ~~can~~mmbtu. ~~be adjusted~~

~~Direct~~In ~~current~~response ~~powered~~to ~~rigs~~the ~~that have silicon controlled rectifier drive and alternating~~ current ~~powered~~commodity ~~rigs~~environment ~~have been used more than conventional mechanical rigs because~~ of ~~higher~~ ~~activity~~low inoil ~~unconventional~~and ~~resource~~gas ~~plays.~~prices, ~~This~~a ~~has~~number ~~resulted in greater investments in new equipment to address the unique demands~~ of ~~these~~E&P ~~resource~~companies ~~plays,~~have ~~which~~announced ~~drives~~that ~~not~~they ~~only~~are ~~the~~reducing ~~demand~~their ~~for~~capital ~~new drilling rigs, but also the demand for maintenance and refurbishment activity~~spending.

LandDrilling RigIndustry Equipment MarketDynamics

~~The~~Drilling ~~demand~~is ~~for~~part ~~drilling~~of ~~rigs,~~the ~~rig~~oilfield ~~parts and~~services ~~related~~group ~~services~~within isthe ~~dependent~~energy onindustry. ~~specific~~Drilling ~~drivers~~contractors inprovide the ~~oil~~rig and ~~gas industry, including~~ the ~~level~~operating ofcrews ~~capital~~to ~~expenditures by~~ E&P companies, on a dayrate basis. In the ~~overall~~U.S., ~~level~~drilling ofcontracts ~~service~~are ~~intensity~~normally ~~required~~by towell ~~drill~~or ~~and~~a ~~complete~~short-term ~~wells~~period (e.g., ~~and~~90 days). Internationally, the ~~capabilities~~contracts ofare ~~the existing~~normally ~~fleet~~one to ~~meet~~three years. International contracts are longer because the ~~drilling~~E&P ~~requirements~~company ofusually ~~operators~~owns a larger field and the mobilization costs are prohibitive for anything less than a one-year term.

~~Increased~~The ~~capital~~drilling ~~spending~~industry byis ~~E&P companies.~~often ~~The~~segmented ~~worldwide~~into ~~level~~the ofNorth ~~capital~~American ~~spending~~market byand ~~oil~~the ~~and~~international ~~gas~~market. ~~companies~~These ~~for~~markets ~~exploration~~share common exposure to the same macro environment, ~~development~~but ~~and~~also ~~production~~exhibit ~~is projected~~unique tofactors ~~increase~~that 6%drive ~~from~~the ~~2012~~dynamics toof ~~2013~~each market. ~~This~~The ~~increased~~dramatic ~~level~~growth in the development of ~~spending~~unconventional shale and tight sand formations, primarily in North America, is ~~partly~~placing ~~driven~~increased bydemands on service equipment. In the ~~current~~U.S., ~~and~~75% ~~expected~~of ~~prices for~~the ~~oil~~active ~~and~~land ~~gas~~rigs, as ~~well~~of asMarch 6, 2015, were drilling horizontal wells, the ~~perceived~~well ~~stability~~path best suited to developing shale and ~~sustainability~~tight sands, compared to 50% of ~~those~~the ~~current~~active ~~and~~land ~~expected~~rigs ~~prices.~~five ~~Despite~~years ~~continuing~~ago, according ~~macroeconomic~~to ~~concerns~~data ~~and~~from ~~the~~Baker ~~recent~~Hughes. ~~volatility~~Horizontal wells are typically used in ~~global~~conjunction ~~commodity~~with ~~prices~~hydraulic fracturing, ~~expectations~~which ~~for~~is ~~worldwide~~used ~~growth~~even ~~remain~~more ~~favorable~~frequently as the number of fracturing stages increases.

~~Growing~~This ~~service~~change ~~intensity~~in ~~associated with~~development ~~unconventional~~activity ~~resources.~~requires Asinvestment ~~more~~in ~~conventional~~new ~~reservoirs~~drilling ~~have~~rigs ~~been~~and ~~discovered~~related ~~and~~equipment ~~depleted~~to ~~from~~address ~~years~~the unique demands of ~~production, operators~~these ~~must~~resource ~~increasingly~~plays ~~turn~~and toplaces ~~unconventional~~a ~~resources,~~much ~~including~~greater ~~tight~~strain ~~sands,~~on ~~shales~~drilling and ~~coal-bed~~completion ~~methane~~equipment. ~~The~~These ~~dramatic growth~~changes inhave ~~the~~resulted ~~development~~in ofshorter ~~unconventional~~replacement ~~shale~~cycles ~~and~~for ~~tight~~capital ~~sand~~equipment ~~formations,~~and ~~principally~~increased indemand ~~North~~for ~~America,~~maintenance isand ~~placing~~refurbishment ~~increasing demands~~of onexisting ~~drilling rigs~~equipment. ~~Greater~~As ~~demand~~the ~~and~~industry ~~wear~~adapts onto ~~drilling~~these ~~equipment resulting from~~ increased ~~horizontal~~demands, ~~and~~we ~~hydraulic~~believe ~~fracturing activity~~that ~~requires~~there ~~investment~~will inbe ~~new~~significant ~~equipment~~opportunities to ~~address~~bring ~~these~~new ~~unique~~products ~~demands~~ and ~~results~~equipment into ~~shorter~~market ~~replacement~~that ~~cycles~~have ~~for~~been ~~capital equipment,~~designed ~~driving~~and ~~maintenance~~engineered ~~and~~with ~~refurbishment~~these ~~activity~~new challenges in mind.

~~Recovery~~Most inoil ~~global drilling activity~~ and ~~new~~gas ~~rig~~operators ~~replacement~~do ~~cycle.~~not Asown ~~global~~their ~~drilling~~own ~~activity~~rigs ~~has~~and ~~steadily~~instead ~~recovered~~rely ~~since~~on ~~the~~specialized ~~2009~~land ~~economic downturn, there has been a corresponding increase in new-build~~ rig ~~activity~~contractors ~~as operators require newer technology~~ to ~~meet~~provide ~~increasingly~~the ~~challenging drilling~~rig ~~conditions,~~and ~~with~~the acrew. ~~focus~~The onindustry ~~mobility,~~is ~~drilling~~highly ~~efficiency,~~fragmented ~~power~~ and ~~safety.~~highly Wedependent ~~believe~~on ~~this~~the ~~trend will continue to fuel a high~~ level of ~~capital~~drilling ~~investment~~activity. inGlobally, ~~drilling~~Nabors ~~rigs~~Industries, ~~which presents an opportunity for capital equipment manufacturers and value added component suppliers~~Ltd., InPatterson-UTI ~~addition to these increased requirements for drilling rigs~~Energy, aInc. ~~large~~and ~~portion~~Helmerich of& ~~the existing land rig fleet is over 20 years old~~Payne, ~~making these rigs candidates for replacement or refurbishment in the near future~~Inc.

1412

~~While~~TABLE weOF believe that these trends will benefit us, our markets may be adversely affected by industry conditions that are beyond our control. Any prolonged substantial reduction in oil and gas prices would likely affect oil and gas drilling and production levels and therefore would affect demand for the products and services provided by us. For more information on this and other risks to our business and the industry in which we operate, see Item IA. Risk Factors — “Risks Related to Our Business and Industry.”CONTENTS

~~Environmental~~are ~~Matters~~the three largest land drilling contractors by revenues, with reported 2014 revenues of $6.8 billion, $3.2 billion and $3.9 billion, respectively. Despite the fact that there are between 200 and 300 land drilling contractors in North America, the top six contractors account for 49% of the well starts according to RigData website’s annual data through March 1, 2015. Internationally, most countries have no more than five to ten land drilling contractors in each country, not including the in-house drilling contractors of some national oil companies.

WeThe ~~are~~requirements ~~subject~~of tothe ~~environmental~~various ~~laws~~regional ~~and regulations~~rig ~~concerning~~markets ~~emissions~~tend to ~~the~~be ~~air,~~driven ~~discharges~~by towell ~~waterways,~~types ~~and~~(gas ~~generation,~~vs. ~~handling~~oil), ~~storage,~~well ~~transportation,~~depth ~~treatment~~ and ~~disposal of waste materials~~environment. WeFor ~~are~~example, ~~subject~~remote tointernational ~~other~~or ~~federal~~frontier ~~and~~locations ~~state~~may ~~laws~~require ~~and~~special ~~regulations~~equipment ~~regarding~~or ~~health~~features, ~~and~~such ~~safety~~as ~~matters.~~ crew ~~While~~quarters, wewater ~~believe~~desalinization weequipment, ~~are~~enclosed ~~currently~~and inheated ~~compliance~~drilling ~~with~~floors ~~applicable~~or ~~environmental~~even ~~and~~helicopter ~~health~~transportable ~~and~~rigs, ~~safety~~which ~~laws~~are ~~and~~required ~~regulations,~~for ~~these laws~~extreme ~~and~~remote ~~regulations~~areas ~~are~~of ~~constantly~~exploration. ~~evolving~~Likewise, ~~and~~deep itgas iswells ~~impossible~~in tothe ~~predict~~U.S. ~~whether~~require ~~compliance~~powerful ~~with~~rigs ~~these~~while ~~laws~~less ~~and~~powerful ~~regulations~~ rigs may ~~have~~be asuitable ~~material~~for ~~adverse~~shallow ~~effect~~oil onand ~~our~~gas ~~business in the future~~wells.

~~Employees~~Operators require newer technology to meet increasingly challenging drilling conditions, with a focus on mobility, drilling efficiency, power and safety. The emergence of more complex horizontal oil wells has sparked a need for higher specification, more capable land rig technology, and thus, a need for newbuilds. E&P operators are demanding rigs that can efficiently drill longer, lateral horizontal wells. Due to these trends, the drilling market has moved away from conventional mechanical rigs and direct current powered rigs with an industry movement towards alternating current powered rigs. We believe that this is a long-term trend. The following table sets forth a short description of the main types of land drilling rigs.

AsLand ofDrilling December 31, 2012, we had approximately 499 permanent employees, located primarily in Houston, Texas. This includes (a) approximately 259 individuals employed in our IEC division, with 237 in Texas and 22 at a service location in Oklahoma, (b) approximately 198 full-time employees employed by our Rig Up Services in Houston, Texas and (c) 42 employees in corporate offices and sales in Houston, Texas. Approximately 142 additional contract workers are employed for various roles primarily in Houston, Texas. We are not subject to any collective bargaining agreements. We believe we have good relations with our employees.Types

~~Item 1A. Risk~~Mechanical ~~Factors~~SCR/DC Electric AC Electric • The components of a mechanical rig are powered directly by its diesel engines • Diesel engines generate DC power that is used to power the rig’s components • The newest generation of land rigs are driven by AC power • Still used to drill conventional wells, but demand is falling • Up to six engines may be required to operate the rig • AC power allows variable frequency drive (VFD) • The majority of mechanical rigs cannot drill unconventional wells economically • SCR rigs are a modernized subset of DC rigs that provide operators with more precise control over the DC power flow to the rig’s components • The ability to digitally adjust the frequency of the power to the motor has led to increases in control, fewer downhole failures and cost savings to the operator • Earlier generation rigs are now being scrutinized for retirement • SCR-DC systems can accomplish stepless speeds when operating the drawworks, rotary table and mud pumps • Hoisting speeds, rotary speeds and pump strokes can be adjusted

InDirect ~~evaluating~~current ~~our~~powered ~~company,~~rigs ~~the~~that ~~factors described~~have ~~below~~silicon ~~should~~controlled berectifier ~~considered~~drive ~~carefully.~~and ~~The~~alternating ~~occurrence~~current ofpowered ~~one~~rigs orhave been used more than conventional mechanical rigs because of ~~these~~higher ~~events~~activity ~~could~~in ~~significantly~~unconventional ~~and~~resource ~~adversely affect~~plays. ~~our~~This ~~business,~~has ~~prospects~~resulted in greater investments in new equipment to address the unique demands of these resource plays, ~~financial~~which ~~condition~~drives not only the demand for new drilling rigs, ~~results~~but ofalso ~~operations~~the demand for maintenance and ~~cash~~refurbishment ~~flows~~activity.

RisksLand RelatedRig toEquipment Our Business and IndustryMarket

WeThe ~~have~~demand afor ~~limited~~drilling ~~operating~~rigs, ~~history.~~rig Asparts aand ~~result~~related services is dependent on specific drivers in the oil and gas industry, it ~~may~~including bethe ~~difficult~~level ~~for~~of ~~you~~capital expenditures by E&P companies, the overall level of service intensity required to ~~evaluate~~drill ~~our~~and ~~business~~complete wells, and the capabilities of the existing fleet to meet the drilling requirements of operators.

~~Prior~~Decreased tocapital ~~the~~spending ~~Merger,~~by ~~our~~E&P ~~primary~~companies. Based ~~activities consisted~~on ~~of organizational activities, our initial public offering and our search for~~ a ~~suitable~~recent ~~initial~~survey ~~business~~of ~~transaction. Following~~186 ~~the Merger~~companies, ~~substantially~~U.S. ~~all~~exploration ofand ~~our~~drilling ~~operations~~spending ~~consist~~in of2015 ~~the business of IDE. As IDE’s operating history~~ is ~~limited, it~~expected ~~may be difficult for you~~ to ~~evaluate~~decline ~~our~~22% ~~business.~~from ~~IDE~~2014 ~~commenced~~levels ~~operations~~according into ~~some~~Oil ofand ~~its~~Gas ~~current lines of business in December 2008 when it acquired IEC Electrical Systems~~Journal, ~~which~~dated ~~operates~~March ~~as its IEC division~~8, ~~and Advanced Rig Services, LLC (“ARS”)~~2015. ~~Accordingly,~~ weThis ~~are~~decreased ~~still~~level ~~in the early stages~~ of ~~the~~spending ~~development~~is ofdriven ~~our~~by ~~business, which makes~~ the ~~evaluation~~lower ofexpected ~~our~~prices ~~business~~for ~~operations and~~oil ~~prospects~~as ~~difficult.~~well Weas ~~are subject to~~ the ~~risks~~perceived ~~and~~volatility ~~difficulties~~of ~~frequently~~those ~~encountered~~current byand ~~early~~expected ~~stage companies~~prices. ~~These risks and difficulties include:~~

~~· Potential fluctuations in operating results and uncertain growth rates.~~13

·TABLE ~~Limited~~OF ~~history of selling fully integrated rig products.~~CONTENTS

·Growing ~~Limited~~service ~~history~~intensity associated with unconventional resources. As more conventional reservoirs have been discovered and depleted from years of ~~servicing~~production, operators must increasingly turn to unconventional resources, including tight sands, shales and coal-bed methane. The dramatic growth in the ~~offshore~~development of unconventional shale and tight sand formations, principally in North America, is placing increasing demands on drilling ~~rig~~rigs. ~~market~~Greater demand and wear on drilling equipment resulting from increased horizontal and hydraulic fracturing activity requires investment in new equipment to address these unique demands and results in shorter replacement cycles for capital equipment, driving maintenance and refurbishment activity.

·Recovery ~~Concentration~~in ofglobal ~~revenues~~drilling activity and new rig replacement cycle. As global drilling activity has steadily recovered since the 2009 economic downturn, there has been a corresponding increase in new-build rig activity as operators require newer technology to meet increasingly challenging drilling conditions, with a ~~limited~~focus ~~number~~on mobility, drilling efficiency, power and safety. We believe this trend will continue. In addition to these increased requirements for drilling rigs, a large portion of ~~predominantly~~the ~~international~~existing ~~markets~~land rig fleet is over 20 years old, making these rigs candidates for replacement or refurbishment in the near future.

·While ~~Availability~~we ofbelieve ~~candidate~~that ~~rigs~~these trends will benefit us, our markets may be adversely affected by industry conditions that ~~require~~are ~~refurbishment~~beyond our control. Any prolonged substantial reduction in oil prices below $60/bbl would likely affect oil and gas drilling and production levels and therefore would affect demand for the products and services provided by us. For more information on this and other risks to our business and the industry in which we operate, see Item 1A. Risk Factors.

·Environmental Dependence on the oil and gas industry for all of our revenue.Matters

·We ~~Ability~~are subject to ~~generate~~environmental ~~profits~~laws ~~consistently~~and ~~from~~regulations concerning emissions to the ~~delivery~~air, discharges to waterways, and generation, handling, storage, transportation, treatment and disposal of ~~our~~waste ~~products~~materials. We are subject to other federal and ~~services~~state laws and regulations regarding health and safety matters. While we believe we are currently in compliance with applicable environmental and health and safety laws and regulations, these laws and regulations are constantly evolving, generally becoming more stringent and costing more to comply with, and it is impossible to predict whether compliance with these laws and regulations may have a material adverse effect on our business in the future.

15Employees

·As ~~Need~~of December 31, 2014, we had approximately 270 permanent, full-time employees, located primarily in Houston, Texas. This includes (a) approximately 181 individuals employed in our IEC division, with 164 in Texas and 17 at a service location in Oklahoma, (b) approximately 81 employees employed by our Rig Up Services in Houston, Texas and (c) 8 employees in corporate offices and sales in Houston, Texas. Approximately 73 additional contract workers are employed for various roles primarily in Houston, Texas. We are not subject to ~~manage~~any ~~rapidly~~collective ~~expanding~~bargaining ~~operations~~agreements. We believe we have good relations with our employees.

~~· Need to attract, train and retain qualified personnel.~~14

~~Our~~TABLE ~~international~~OF business operations expose us to potentially rapid changes in economic and political conditions and other risks inherent in operating internationally, which could result in a material adverse effect on our operations or financial condition.CONTENTS

ApproximatelyItem 45%, 40% and 2% of our revenues classified as outside the United States in 2010, 2011, and 2012, respectively, based on the location to which our products are shipped or we have been informed will be shipped or at which our services are performed1A. WeRISK market our products and services in all of the significant oil and gas producing areas in the world. As a result, we are subject to the risks customarily related to international operations and investments in foreign countries. Risks associated with our international operations include:FACTORS

·The ~~Volatility~~nature inof ~~general~~our ~~economic~~business activities subjects us to certain hazards and risks. The following is a summary of some of the material risks relating to our business activities. These risks are not the only risks we face. Our business could also be affected by additional risks and uncertainties not currently known to us or that we currently deem to be immaterial. The occurrence of one or more of these events could significantly and adversely affect our business, ~~social~~prospects, financial condition, results of operations, cash flows and ~~political~~impair ~~conditions~~the Company’s ability to implement business plans or complete development activities as scheduled. In that case, the market price of the Company’s common stock could decline.

·Our Terroristfailure acts,to warcomply andwith civilrestrictive disturbancescovenants under our credit facilities or the ability to amend these facilities could trigger prepayment obligations.

·We ~~Expropriation~~have experienced difficulty complying with the restrictive covenants in our credit facilities. As of February 28, 2013, we were not in compliance with certain covenants of our existing credit facilities. On April 9, 2013, we amended both of our existing credit agreements and as of that date, we were in compliance with our credit facilities. As of June 30, 2013, we were not in compliance with certain covenants of our existing credit facilities. On October 17, 2013, we amended both of our existing credit agreements and as of that date, we are in compliance with our credit facilities. On March 31, 2014 and again on December 31, 2014, we amended both of our existing credit agreements principally to extend the maturity dates on the respective debt instruments but also to modify the financial covenants and reporting requirements. In the future, we may seek to amend existing or ~~nationalization~~enter into new credit facilities. Our failure to comply with the restrictive covenants under our existing or future credit facilities could result in an event of ~~assets~~default under such facilities, which, if not cured or waived, would give the lender the right to declare the debt immediately due and payable. In the event of an acceleration of amounts due under our debt facilities as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments, and the lenders could seek to enforce their security interests in the collateral securing such indebtedness, which would have a material adverse effect on our business, prospects and financial condition.

·Our Renegotiationability orto nullificationfinance ofour existingbusiness contractsactivities will require us to generate substantial cash flow.

·Our ~~Foreign~~business ~~taxation,~~activities ~~including~~require ~~changes~~substantial capital. We intend to finance our operations and growth in ~~law~~the future through cash flows from operations (including customer deposits), available cash, proceeds from warrant exercises, the incurrence of additional indebtedness and/or ~~interpretation~~the issuance of ~~existing~~additional ~~law~~equity securities. We cannot be sure that our business will continue to generate cash flow at or above current levels.

·If ~~Attacks~~we are unable to generate sufficient cash to fund our business and service our debt, we may have to obtain additional financing through the issuance of additional debt and/or equity securities. We cannot be sure that any additional financing will be available to us on ~~property~~acceptable terms, or ~~personnel~~at all. Issuing equity securities to satisfy our financing requirements could cause substantial dilution to our stockholders.

·If ~~Restrictive~~our ~~action~~revenues bywere ~~local~~to ~~governments~~decrease due to lower demand for our products and services as a result of lower oil and nature gas prices or for other reasons, and if we could not obtain capital through our revolving credit facility or otherwise, our ability to operate and grow our business could be materially adversely affected.

·Demand Foreignfor monetaryour policiesproducts and services depends on oil and natural gas industry activity and expenditure levels that are directly affected by trends in oil and natural gas prices.

·Demand ~~Limitations~~for onour ~~repatriation~~products and services is particularly sensitive to the level of ~~earnings~~exploration, development and production activity of, and the corresponding capital spending by, oil and natural gas companies, including national oil companies. Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and speculation, and a variety of other factors that are beyond our control. The equity, credit and commodity markets have seen significant volatility since late 2008. Oil and natural gas prices rose to record levels in 2008 and then began to decline in late 2008 in conjunction with the widespread economic recession. The price of natural gas has remained depressed since 2009, largely due to discoveries of vast new natural gas resources in the U.S. The price of oil and gas may continue to fluctuate in the near- and long-term. Any prolonged

~~· Travel limitations or operational problems caused by public health threats.~~15

·TABLE ~~Extended~~OF ~~payment terms and their related financing.~~CONTENTS

Wereduction doin ~~business~~oil inand ~~countries~~natural ~~with~~gas ~~regulatory~~prices may depress the immediate levels of exploration, development and ~~compliance~~ ~~regimes~~production ~~that~~activity. ~~differ~~Perceptions ~~from~~of ~~those~~longer-term lower oil and natural gas prices by oil and gas companies may result in the ~~United~~reduction ~~States~~or deferral of major expenditures given the long-term nature of many large-scale development projects. ~~Our~~Lower ~~business~~levels of activity may ~~suffer~~result ~~because~~in ~~our~~a ~~efforts~~corresponding todecline ~~comply~~in ~~with~~the ~~United States~~demand ~~laws~~for our products and ~~regulations~~services that could ~~restrict~~have a material adverse effect on our ~~ability~~revenue toand ~~effectively~~profitability. ~~compete~~Many ~~with~~factors ~~companies~~affect ~~that~~the ~~are~~supply ~~not~~and ~~subject~~demand tofor ~~United~~oil ~~States~~and natural gas and therefore influence the demand for our ~~laws~~products and ~~regulations.~~services, including:

~~Our~~• ~~international~~The ~~business~~level includes 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 U.S. Foreign Corrupt Practices Act, may have competitive advantages by securing business awards, licenses or other preferential treatment in those jurisdictions using methods that U.S. law prohibits us from using. For example, our non-U.S. competitors may not be subject to the anti-bribery restrictions of ~~the U~~production.S. 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 payments to government officials and others in positions of influence.

~~While~~• weThe ~~are~~levels ~~committed to conducting business in a legal and ethical manner, there is a risk~~ of ~~violating~~oil the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign officials for the purpose of obtaining or retaining business. Violations of these laws could result in monetary penalties against us and ~~could~~natural ~~damage~~gas ~~our reputation and, therefore, our ability to do business~~inventories.

16• Domestic and worldwide demand for oil and natural gas.

~~Additionally,~~• toThe ~~the~~expected ~~extent~~cost ~~we export products and services outside~~ of ~~the~~developing ~~United~~new ~~States, we are subject to U~~reserves.S. and international laws and regulations governing international trade and exports, including the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control with the Department of Treasury. These violations may include, for example, transfers without required governmental authorization. A failure to comply with these laws and regulations could result in civil or criminal sanctions, including the imposition of fines and the denial of export privileges.

~~Our~~• ~~inability~~The toactual ~~deliver~~cost ~~our~~of ~~backlog~~finding onand ~~time~~producing ~~could affect~~oil ~~our future sales~~ and ~~profitability~~natural ~~and our relationships with our customers~~gas.

We• ~~currently~~The ~~have~~availability ~~a significant amount~~ of ~~backlog.~~attractive ~~The~~oil ~~ability~~and togas ~~meet~~field ~~customer~~prospects, ~~delivery~~which ~~schedules~~may ~~for~~be ~~this~~affected ~~backlog~~by isgovernmental ~~dependent~~actions onand aregulations ~~number~~or ofenvironmental ~~factors, including:~~activists.

·• ~~Access~~The toavailability ~~the~~of ~~raw~~transportation ~~materials~~infrastructure ~~required~~and ~~for~~refining ~~production~~capacity.

·• AnThe ~~adequately~~level ~~trained~~of ~~and~~drilling ~~capable workforce~~activity.

·• ~~Project~~Global ~~engineering~~weather ~~expertise~~conditions ~~for~~and ~~certain~~natural ~~large projects~~disasters.

·• ~~Sufficient~~Worldwide ~~manufacturing~~political, ~~plant~~military ~~capacity~~and economic conditions and economic activity, including growth in underdeveloped countries.

·• ~~Appropriate~~National ~~planning~~government ~~and~~political ~~scheduling~~objectives, including the ability of ~~manufacturing~~the Organization of Petroleum Exporting Countries to set and ~~personnel~~maintain ~~resources~~production levels and prices for oil.

~~Our~~• ~~failure~~The tocost ~~deliver in accordance with customer expectations may harm our existing customer relationships~~ and ~~result~~timing ~~in the loss~~ of ~~future business. Failure to deliver backlog in accordance with expectations could also negatively impact our financial performance. In addition,~~ the ~~cancellation~~development ~~by our customers~~ of ~~existing~~alternate ~~backlog~~energy ~~orders, as a result of an economic downturn or otherwise, could adversely affect our business~~sources.

If• weTax ~~are unable to successfully manage our anticipated future growth, we may not be able to maintain or increase our revenues and profitability and our business reputation could be harmed~~policies.

~~Managing~~If ~~our~~demand ~~growth~~for ~~may~~drilling beservices ~~one~~or ofdrilling ~~our~~rig ~~greatest challenges.~~utilization ~~Between~~rates ~~2009~~decreases ~~and 2012~~significantly, demand for our ~~annual~~products ~~revenue~~and ~~increased~~services ~~from~~may ~~$66.8~~decrease, ~~million~~which tocould ~~$284~~affect ~~million~~our result of operations.

PastOur andinternational futurebusiness growthoperations willexpose continueus to place significantpotentially demandsrapid onchanges ourin management,economic financial and accountingpolitical systems,conditions information technology systems, real estate and other componentsrisks ofinherent our infrastructure. To meet our growth and related demands, we continue to invest in enhancedoperating or new systemsinternationally, including towhich ourcould accounting,result billing and information technology systems. We may acquire or lease additional real estate to increase the number of rig pads we have available. In addition, we may need to hire additional personnel, particularly in our sales, marketing, professional services, finance, administrative and information technology groups. Our success will depend in part upon the activities of our current management team to effectively manage this growth and transition to being a publicmaterial company.adverse Oureffect managementon will be required to devote considerable time to this process, which will reduce the time our managementoperations willor havefinancial to implement our business and expansion planscondition.

IfApproximately we1% doand ~~not~~9% ~~correctly~~of ~~anticipate~~ our ~~needs~~ revenues classified as weoutside ~~grow,~~the ifUnited weStates ~~fail~~in to2013 ~~successfully~~and ~~implement~~2014, ~~our~~respectively, ~~enhanced~~based oron ~~new~~the ~~systems~~location ~~and~~to ~~other~~which ~~infrastructure~~our ~~improvements~~products ~~effectively and~~are ~~timely~~shipped or if we ~~encounter~~have ~~delays~~been orinformed ~~unexpected~~will ~~costs~~be inshipped ~~hiring,~~or ~~integrating,~~at ~~training~~which ~~and~~our ~~guiding~~services ~~our~~are ~~new~~performed. ~~employees,~~We wemarket ~~may be~~our ~~unable~~products toand ~~maintain~~services orin ~~increase~~all ~~our~~of ~~revenues~~the ~~and~~significant ~~profitability~~oil and ~~our~~gas ~~business~~producing ~~reputation~~areas ~~could~~in bethe ~~materially~~world. ~~adversely~~As ~~affected. Furthermore~~a result, if we are ~~unable~~subject to ~~effectively~~the ~~manage~~risks ~~our~~customarily ~~growth,~~related ~~our~~to ~~expenses~~international ~~may~~operations ~~increase~~and ~~more~~investments ~~than~~in ~~expected,~~foreign ~~our~~countries. ~~revenues~~Risks ~~could decline~~associated orwith ~~grow~~our ~~more~~international ~~slowly~~operations ~~than~~include: ~~expected and we may be unable to implement our business strategy.~~

If• weVolatility doin ~~not~~general ~~develop and commercialize new products or expand our service offerings~~economic, ~~our~~social ~~revenues~~and ~~may~~political ~~decline~~conditions.

To• ~~remain~~Renegotiation competitive in the market for oil field products and services, we must continue to develop new products and expand our service offerings. If we are not able to develop commercially competitive products in a timely manner or ~~expand~~nullification ~~our~~of ~~service~~existing ~~offerings in response to industry demands, our business and revenues will be adversely affected~~contracts. ~~Our future ability to develop new products and expand services depends on our ability to:~~

·• ~~Design~~Foreign ~~and~~taxation, ~~commercially~~including ~~produce~~changes ~~products~~in ~~that~~law ~~meet~~or ~~the~~interpretation ~~needs~~ of ~~our~~existing ~~customers~~law.

17• Attacks on property or personnel.

·• ~~Incorporate~~Restrictive ~~and~~action ~~implement~~by ~~services~~local ~~that meet the needs of our customers~~governments.

·• ~~Expand~~Foreign ~~into~~monetary ~~new facilities and expand existing infrastructure~~policies.

·• ~~Successfully~~Limitations ~~market~~on ~~new~~repatriation ~~products~~of ~~and services~~earnings.

·• ~~Protect~~Travel ~~our~~limitations ~~proprietary~~or ~~designs~~operational problems caused by public health threats.

We may encounter resource constraints or technical or other difficulties that could delay the introduction of new products and services. Our competitors may introduce new products and services before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial products or provide revenues. Moreover, we may experience operating losses after new products are introduced and commercialized because of high start-up costs, unexpected manufacturing costs or problems, lack of demand, or increased costs, including materials, labor and overhead.16

WeTABLE ~~plan~~OF ~~to pursue acquisitions and joint ventures that by their nature present risks and that may not be successful.~~CONTENTS

~~Acquisition~~• ~~Strategy.~~Extended ~~Our~~payment ~~growth strategy~~terms ~~includes the acquisition of,~~ and ~~formation~~their ofrelated ~~joint ventures with, additional manufacturers of drilling rigs, oilfield products and providers of services to the oil and gas industry, both domestically and internationally~~financing. ~~We are currently considering a number of strategic transactions. Our ability to accomplish our acquisition strategy will depend upon a number of factors, including our ability to:~~

·• ~~Identify~~Terrorist ~~acceptable~~acts, ~~acquisition~~war and ~~joint~~civil ~~venture candidates~~disturbances.

·We Obtaindo adequatebusiness financingin countries with regulatory and compliance regimes that differ from those in the United States. Our business may suffer because our efforts to comply with United States laws and regulations could restrict our ability to effectively compete with companies that are not subject to United States laws and regulations.

·Our ~~Complete~~international business includes 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 ~~acquisition~~U.S. Foreign Corrupt Practices Act, may have competitive advantages by securing business awards, licenses or other preferential treatment in those jurisdictions using methods that U.S. law prohibits us from using. For example, our non-U.S. competitors may not be subject to the anti-bribery restrictions of the U.S. Foreign Corrupt Practices Act, which make it illegal to give anything of value to foreign officials or employees ~~joint~~or ~~venture~~agents ~~with~~of ~~such~~nationally ~~businesses~~owned onoil ~~terms~~companies in order to obtain or retain any business or other advantage. We may be subject to competitive disadvantages to the extent that weour ~~find~~competitors ~~acceptable~~are able to secure business, licenses or other preferential treatment by making payments to government officials and others in positions of influence.

·While ~~Retain~~we are committed to conducting business in a legal and ethical manner, ~~hire~~there is a risk of violating the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign officials for the purpose of obtaining or retaining business. Violations of these laws could result in monetary penalties against us and ~~train~~could ~~professional~~damage ~~management~~our reputation and, ~~sales~~therefore, ~~personnel~~our atability ~~each~~to ~~such~~do business.

·Additionally, ~~Promptly~~to the extent we export products and ~~profitably~~services ~~integrate~~outside of the ~~acquired~~United ~~business~~States, ~~operations~~we ~~into~~are ~~our~~subject ~~then-existing~~to ~~business~~U.S. and international laws and regulations governing international trade and exports, including the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control with the Department of Treasury. These violations may include, for example, transfers without required governmental authorization. A failure to comply with these laws and regulations could result in civil or criminal sanctions, including the imposition of fines and the denial of export privileges.

WeThe cannotCompany assurehas youreceived thatnotices ourfrom acquisition strategyPEMEX willterminating beits successfulfour orpurchase thatagreements anyfor acquiredmodular operationsdrilling willunits be profitable or be successfully integrated into our then-existing business without substantial costs, delays or other problems. In addition, to the extent that consolidation becomes more prevalent in the oilfield products and services industry, the prices for attractive acquisition candidates may increase. In any event, there can be noliable assurancefor thatliquidated businesses acquired in the future will achieve sales and profitability levels that justify the investments we makedamages. Acquisitions also could result in the accumulation of substantial goodwill and intangible assets, which may result in substantial impairment charges that could reduce our reported earnings.

~~Capital~~On ~~Requirements~~August of9, ~~Acquisitions. Acquiring~~2013, ~~additional~~we ~~businesses~~received innotices ~~the~~from ~~oil~~PEMEX ~~and~~Procurement ~~gas~~International, ~~products~~Inc. ~~and~~(“PII”) ~~services~~(formerly ~~industries~~Integrated ~~will~~Trade ~~require~~Systems, ~~additional~~Inc.), ~~capital~~an ~~and~~agent ~~may~~for ~~have a~~PEMEX-Exploración ~~significant~~y ~~impact~~Producción on(“PEMEX”) ~~our~~terminating ~~financial~~its ~~position.~~four Wepurchase ~~may~~agreements ~~finance~~for ~~future~~modular ~~acquisitions~~drilling byunits. ~~using~~The ~~our~~collective ~~common~~value ~~stock for all or a portion~~ of the ~~consideration~~four toagreements bewas ~~paid~~approximately $354.0 Inmillion. ~~the~~As ~~event~~a ~~our~~result ~~common~~of ~~stock~~their ~~does~~decision ~~not~~to ~~maintain~~exercise ~~sufficient~~their ~~value,~~right ~~or potential acquisition candidates are unwilling~~ to ~~accept~~terminate ~~our~~the ~~common~~purchase ~~stock~~agreements, asunder ~~consideration for~~ the ~~sale~~terms of ~~their~~the ~~businesses~~agreements, wePEMEX may beseek ~~required~~liquidated todamages ~~utilize~~from ~~more of~~us ~~our cash resources, if available,~~ in ~~order to continue our acquisition program. If we do not have sufficient cash resources, our growth could be limited unless we are able to obtain capital through~~ the ~~issuance~~amount of ~~additional~~12% ~~debt~~of or the ~~issuance~~purchase price of ~~one or~~each ~~more series or classes~~ of ~~our~~the ~~equity~~modular ~~securities,~~drilling ~~which~~units. ~~could~~As ~~have~~of aMarch ~~dilutive effect on our then-outstanding capital stock. There~~31, ~~can~~2015, be no ~~assurance~~provision ~~that~~has webeen ~~will~~made befor ~~able~~any topotential ~~obtain~~liability ~~such~~that ancould ~~arrangement~~arise ~~on terms we find acceptable or sufficient for our needs, if at all,~~ should wePEMEX ~~determine to do so. We may also~~ seek ~~debt,~~liquidating ~~equity~~damages oras ~~seller~~a ~~financing~~result inof ~~order~~the toterminated ~~pursue~~purchase ~~other strategic transactions under consideration~~agreements.

EnvironmentalOur Risksinability Associated with Acquisitions. Although we intend to performdeliver anour investigationproducts of each business that we acquire, there may nevertheless be liabilities that we fail or are unable to discover,customers includingon liabilitiestime arisingcould fromaffect non-complianceour withfuture environmentalsales laws by prior owners, and forprofitability which we, as a successor owner, may be responsible. We will seek to minimize the impact of these liabilities by obtaining indemnities and warrantiesour fromrelationships thewith sellerour that may be supported by deferring payment of a portion of the purchase pricecustomers. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to their limited scope, amount or duration, the financial limitations of the indemnitor or warrantor, or other reasons.

18The ability to meet customer delivery schedules for our products is dependent on a number of factors, including:

~~Our~~• ~~failure~~Access to ~~comply~~the ~~with~~raw ~~restrictive~~materials ~~covenants under~~required ~~our~~for ~~credit facilities could trigger prepayment obligations~~production.

At• ~~December~~An ~~31,~~adequately ~~2012,~~trained we were in compliance with the restrictive covenants under our existing credit facilities. As of February 28, 2013, we were not in compliance with certain covenants of our existing credit facilities. On April 9, 2013, we amended both of our existing credit agreements and ascapable ~~of that date, we are in compliance with our credit facilities~~workforce. In the future, we may seek to amend existing or enter into new credit facilities. Our failure to comply with the restrictive covenants under our existing or future credit facilities could result in an event of default under such facilities, which, if not cured or waived, would give the lender the right to declare the debt due and payable. If this occurs and we are forced to refinance our borrowings, our results of operations and financial condition could be adversely affected by increased debt, costs and interest rates.

We• ~~may~~Project ~~lose~~engineering ~~money~~expertise onfor ~~fixed-price~~certain ~~contracts~~large projects.

A• ~~significant~~Sufficient ~~portion of our business consists of designing,~~ manufacturing, ~~selling~~plant ~~and installing equipment for major projects on a fixed-price basis~~capacity. Under these contracts, we are typically responsible for all cost overruns, other than the amount of any cost overruns resulting from requested changes in order specifications. Our actual costs and any gross profit on these fixed-price contracts will often vary from the estimated amounts on which these contracts were originally based. This may occur for various reasons, including:

·• ~~Errors~~Appropriate inplanning ~~estimates~~and orscheduling ~~bidding~~of manufacturing and personnel resources.

·Our ~~Design~~failure ~~changes~~to ~~that~~deliver ~~are~~in ~~not~~accordance ~~reimbursable~~with bycustomer ~~the~~expectations may harm our existing customer relationships and result in the loss of future business. Failure to deliver any backlog in accordance with

~~· Changes in availability and cost of labor and materials.~~17

·TABLE ~~Variations~~OF ~~in productivity from our original estimates.~~CONTENTS

~~These~~expectations ~~variations~~could ~~and~~also ~~the~~negatively ~~related~~impact ~~risks inherent~~our infinancial ~~our~~performance. ~~projects~~In ~~may~~addition, ~~result~~the incancellation ~~reduced~~by ~~profitability~~our orcustomers ~~losses~~of onexisting ~~projects.~~backlog ~~Depending~~orders, onas ~~the~~a ~~size~~result of aan ~~project,~~economic ~~variations from~~downturn ~~estimated~~or ~~contract~~otherwise, ~~performance~~ could ~~have~~adversely aaffect ~~material adverse impact on~~ our ~~operating results~~business.

WeIf we are unable to successfully manage our anticipated future growth, we may experiencenot fluctuationsbe inable to maintain or increase our quarterly operatingrevenues resultsand profitability and our business reputation could be harmed.

~~Our~~Past ~~quarterly~~and ~~operating~~future ~~results~~growth ~~may~~will ~~fluctuate significantly~~continue into ~~the~~place ~~future~~significant demands on our management, financial and accounting systems, information technology systems, real estate and other components of our infrastructure. ~~Significant~~To ~~annual~~meet our growth and ~~quarterly~~related ~~fluctuations~~demands, we continue to invest in enhanced or new systems, including our ~~results~~accounting, billing and information technology systems. We may acquire or lease additional real estate to increase the number of ~~operations~~rig pads we have available. In addition, we may beneed ~~caused~~to byhire additional personnel, ~~among~~particularly in our sales, marketing, professional services, finance, administrative and information technology ~~other~~groups. ~~factors:~~Our success will depend in part upon the activities of our current management team to effectively manage this growth and transition to being a public company. Our management will be required to devote considerable time to this process, which will reduce the time our management will have to implement our business and expansion plans.

·If ~~The~~we ~~timing~~do ofnot correctly anticipate our ~~announcements~~needs ~~for~~as ~~the~~we ~~distribution~~grow, ofif we fail to successfully implement our enhanced or new ~~products~~systems and ~~any~~other ~~such~~infrastructure ~~announcements~~improvements byeffectively and timely or if we encounter delays or unexpected costs in hiring, integrating, training and guiding our ~~competitors~~new employees, we may be unable to maintain or increase our revenues and profitability and our business reputation could be materially adversely affected. Furthermore, if we are unable to effectively manage our growth, our expenses may increase more than expected, our revenues could decline or grow more slowly than expected and we may be unable to implement our business strategy.

·If Thewe acceptancedo ofnot thedevelop productsand wecommercialize manufacturenew andproducts sellor inexpand theour oilservice andofferings, gasour equipmentrevenues andmay services marketplacedecline.

·To ~~General~~remain ~~economic~~competitive ~~conditions~~in the market for oil field products and services, we must continue to develop new products and expand our service offerings. If we are not able to develop commercially competitive products in a timely manner or expand our service offerings in response to industry demands, our business and revenues will be adversely affected. Our ability to develop new products and expand services depends on, among other things, our ability to:

~~There~~• ~~can~~Design ~~be no assurance that the level of revenues~~ and ~~profits,~~commercially ifproduce ~~any,~~products ~~achieved~~that bymeet usthe inneeds ~~any particular fiscal period will not be significantly lower than in other, including comparable, fiscal periods. We believe quarter-to-quarter comparisons~~ of our ~~revenues and operating results are not necessarily meaningful and should not be relied on as indicators of future performance~~customers. ~~Operating expenses are based on management’s expectations of future revenues and are relatively fixed in the short term. We plan to increase operating expenses to:~~

·• ~~Expand~~Incorporate ~~our~~and ~~product~~implement ~~line~~services that meet the needs of our customers.

·• Expand ~~our~~into ~~sales~~new facilities and ~~marketing~~expand ~~operations~~existing infrastructure.

·• ~~Increase~~Successfully ~~our~~market ~~services~~new products and ~~support capabilities~~services.

·• ~~Improve~~Protect our ~~operational~~proprietary ~~and financial systems~~designs.

19We may encounter resource constraints or technical or other difficulties that could delay the introduction of new products and services. Our competitors may introduce new products and services before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial products or provide revenues. Moreover, we may experience operating losses after new products are introduced and commercialized because of high start-up costs, unexpected manufacturing costs or problems, lack of demand, or increased costs, including materials, labor and overhead.

IfWe ourplan revenuesto dopursue notacquisitions increaseand alongjoint with theseventures expenses,that ourby businesstheir couldnature bepresent seriouslyrisks harmed and netthat profits, if any, in a given quarter may not be smaller than expectedsuccessful. This could result in a material adverse impact on our results of operations or financial condition.

WeAcquisition ~~derive~~Strategy. aOur ~~significant~~growth ~~portion~~strategy ofincludes ~~our~~the ~~revenues from~~acquisition aof, ~~small~~and ~~number~~formation of ~~customers.~~joint ~~The~~ventures ~~loss~~with, additional manufacturers of ~~any~~drilling rigs, oilfield products and providers of services to the oil and gas industry, both domestically and internationally. Our ability to accomplish our ~~major~~acquisition ~~customers~~strategy ~~may~~will ~~cause~~depend ~~significant~~upon ~~declines~~a innumber of factors, including our ~~revenues.~~ability to:

We• ~~derive~~Identify aacceptable ~~significant~~acquisition ~~portion of our revenues from a small number of customers. We may be unable to maintain~~ and ~~expand~~joint ~~our~~venture ~~current customer relationships~~candidates. During 2012, our five largest customers by revenue represented approximately 89% of our total revenues. Our largest customer represented approximately 26% of our total revenues. While we expect to expand our client base in the future, in the near term we expect we will continue to depend on a relatively small number of customers for a significant portion of our sales volume and revenues. If we lose any of our major customers for any reason, including, for example, if our reputation declines, a customer materially reduces its orders from us, our relationship with one or more of our major customers deteriorates, or a major customer becomes insolvent or otherwise unable to pay for our products, our business and results of operations may be materially adversely affected.

~~Our ability to finance our business activities will require us to generate substantial cash flow.~~18

~~Our~~TABLE ~~business~~OF activities require substantial capital. We intend to finance our operations and growth in the future through cash flows from operations (including customer deposits), available cash, proceeds from warrant exercises, the incurrence of additional indebtedness and/or the issuance of additional equity securities. We cannot be sure that our business will continue to generate cash flow at or above current levels.CONTENTS

If• weObtain ~~are~~adequate ~~unable to generate sufficient cash to fund our business and service our debt, we may have to obtain additional~~ financing ~~through the issuance of additional debt and/or equity securities~~. We cannot be sure that any additional financing will be available to us on acceptable terms, or at all. Issuing equity securities to satisfy our financing requirements could cause substantial dilution to our stockholders.

If• ~~our~~Complete ~~revenues~~the ~~were~~acquisition ~~to decrease due to lower demand for our products and services as a result~~ of ~~lower~~or ~~oil~~joint ~~and~~venture ~~nature~~with ~~gas~~such ~~prices~~businesses oron ~~for~~terms ~~other~~that ~~reasons, and if~~ we ~~could not~~find ~~obtain capital through our revolving credit facility or otherwise, our ability to operate and grow our business could be materially adversely affected~~acceptable.

We• ~~may~~Retain, behire ~~required~~and totrain ~~recognize~~professional amanagement ~~charge~~and ~~against current~~sales ~~earnings~~personnel ~~because~~at ofeach ~~percentage-of-completion~~such ~~accounting~~business.

~~Revenues~~• ~~and~~Promptly ~~profits on long-term project contracts are recognized on a percentage-of-completion method based on the ratio of costs incurred to the total estimated costs. Accordingly, purchase order price~~ and ~~cost~~profitably ~~estimates~~integrate ~~are reviewed periodically as~~ the ~~work~~acquired ~~progresses,~~business ~~and~~operations ~~adjustments~~into ~~proportionate to~~our ~~the~~then-existing ~~percentage completed are reflected in the period when those estimates are revised~~business. To the extent that these adjustments result in a reduction or elimination of previously reported profits, we would have to recognize a charge against current earnings, which could be significant depending on the size of the project or the adjustment.

~~Our~~We ~~businesses~~cannot ~~and~~assure ~~our~~you ~~customers’~~that ~~businesses are~~our ~~subject~~acquisition tostrategy ~~environmental~~will ~~laws~~be ~~and~~successful ~~regulations~~or that ~~may~~any ~~increase~~acquired operations will be profitable or be successfully integrated into our then-existing business without substantial costs, ~~limit~~delays or other problems. In addition, to the ~~demand~~extent ~~for~~that ~~our~~consolidation becomes more prevalent in the oilfield products and services orindustry, the prices for attractive acquisition candidates may increase. In any event, there can be no assurance that businesses acquired in the future will achieve sales and profitability levels that justify the investments we make. Acquisitions also could result in the accumulation of ~~restrict~~substantial goodwill and intangible assets, which may result in substantial impairment charges that could reduce our ~~operations~~reported earnings.

~~Our~~Capital ~~operations~~Requirements ~~and~~of ~~the~~Acquisitions. Acquiring ~~operations~~additional ofbusinesses ~~our customers~~in ~~are~~the ~~subject~~oil toand ~~federal,~~gas ~~state~~products and ~~local~~services ~~and~~industries ~~foreign~~will ~~laws~~require additional capital and ~~regulations~~may ~~relating~~have toa ~~the~~significant ~~protection~~impact ofon ~~the~~our ~~environment~~financial position. ~~These~~ ~~environmental~~We ~~laws~~may ~~and~~finance ~~regulations~~future ~~affect~~acquisitions ~~the~~by ~~products~~using ~~and~~our ~~services~~common westock ~~design,~~for ~~market~~all ~~and~~or ~~sell,~~a asportion ~~well~~of as the ~~facilities where~~consideration weto ~~manufacture~~be ~~our products~~paid. In ~~addition~~the event our common stock does not maintain sufficient value, ~~environmental~~or ~~laws~~potential ~~and~~acquisition ~~regulations~~candidates ~~could~~are ~~limit~~unwilling to accept our ~~customers’~~common ~~exploration and~~stock ~~production~~as ~~activities.~~consideration Wefor ~~are~~the sale of their businesses, we may be required to ~~invest~~utilize ~~financial~~more ~~and~~of ~~managerial~~our cash resources, toif ~~comply~~available, ~~with~~in ~~environmental~~order ~~laws~~to ~~and regulations~~continue ~~and~~our ~~anticipate~~acquisition ~~that~~program. If we ~~will~~do ~~continue~~not tohave sufficient cash resources, our growth could be ~~required~~limited unless we are able to doobtain socapital inthrough the ~~future.~~issuance ~~These~~of ~~laws~~additional ~~and~~debt ~~regulations~~or ~~change~~the ~~frequently~~issuance of one or more series or classes of our equity securities, which ~~makes~~ itcould ~~impossible~~have ~~for~~a usdilutive effect on our then-outstanding capital stock. There can be no assurance that we will be able to ~~predict~~obtain ~~the~~such ~~cost~~an arrangement on terms we find acceptable or ~~impact~~sufficient onfor our ~~future~~needs, ~~operations.~~if ~~The~~at ~~modification~~all, ofshould ~~existing~~we ~~laws~~determine orto ~~regulations or~~do ~~the~~so. ~~adoption~~We ofmay ~~new~~also ~~laws~~seek debt, equity or ~~regulations~~seller ~~imposing~~financing ~~more~~in ~~stringent~~order ~~environmental~~to ~~restrictions~~pursue ~~could~~other ~~adversely~~strategic ~~affect~~transactions ~~our~~under ~~operations~~consideration.

20Environmental Risks Associated with Acquisitions. Although we intend to perform an investigation of each business that we acquire, there may nevertheless be liabilities that we fail or are unable to discover, including liabilities arising from non-compliance with environmental laws by prior owners, and for which we, as a successor owner, may be responsible. We will seek to minimize the impact of these liabilities by obtaining indemnities and warranties from the seller that may be supported by deferring payment of a portion of the purchase price. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to their limited scope, amount or duration, the financial limitations of the indemnitor or warrantor, or other reasons.

TheseWe lawsderive may provide for “strict liability” for damages to natural resources or threats to public health and safety, rendering a partysignificant liableportion for environmental damage without regard to negligence or fault on the part of suchour party.revenues Sanctionsfrom fora noncompliancesmall maynumber include revocation of permits, corrective action orders, administrative or civil penalties, and criminal prosecutioncustomers. SomeThe environmentalloss laws and regulations provide for joint and several strict liability for remediation of spillsany and releases of hazardousour substances.major Incustomers addition, we may because subjectsignificant todeclines claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances as well as damage to natural resources. These laws and regulations also may expose us to liability for the conduct of or conditions caused by others or for our acts that were in compliance with all applicable laws and regulations at the time such acts were performed. Any of these laws and regulations could result in claims, fines or expenditures that could be material to our earnings, financial condition or cash flowrevenues.

~~Hydraulic~~We ~~fracturing~~derive ~~has~~a ~~been~~significant ~~regulated at~~portion ~~the~~of ~~state~~our ~~level~~revenues ~~through~~from ~~permitting~~a ~~and~~small ~~compliance~~number ~~requirements~~of customers. ~~State~~We ~~level~~may ~~initiatives~~be ~~have~~unable ~~been~~to ormaintain ~~may~~and beexpand ~~proposed~~our orcurrent ~~implemented to~~customer ~~further~~relationships. ~~regulate~~During ~~hydraulic~~2014, ~~fracturing~~our ~~practices,~~five ~~limit~~largest ~~water~~customers ~~withdrawals~~by ~~and~~revenue ~~water~~represented ~~use,~~approximately ~~require~~73% ~~disclosure~~of our total revenues. Our largest customer represented approximately 34% of ~~fracturing~~our ~~fluid constituents,~~total ~~restrict~~revenues. ~~which~~While ~~additives~~we ~~may~~expect beto ~~used~~expand our client base in the future, orin ~~implement~~the ~~temporary~~near orterm ~~permanent~~we ~~bans~~expect we will continue to depend on ~~hydraulic~~a ~~fracturing.~~relatively Insmall ~~addition, the~~number Uof customers for a significant portion of our sales volume and revenues.S. ~~Congress~~If ~~has~~we ~~considered,~~lose ~~but~~any ~~not~~of ~~enacted,~~our ~~legislation~~major ~~that~~customers ~~would~~for ~~require~~any ~~regulation~~reason, ~~affecting~~including, ~~the~~for ~~hydraulic~~example, ~~fracturing~~if our ~~process.~~reputation ~~In 2010~~declines, ~~the~~a ~~EPA~~customer ~~announced~~materially reduces its ~~intention~~orders tofrom ~~conduct~~us, aour ~~comprehensive~~relationship ~~research~~with ~~study~~one onor ~~the~~more ~~potential~~of ~~effects~~our ~~that~~major ~~hydraulic fracturing~~customers ~~may~~deteriorates, ~~have~~or ona ~~water~~major ~~quality~~customer ~~and~~becomes ~~public~~insolvent ~~health.~~or ~~The~~otherwise ~~EPA~~unable ~~issued~~to apay ~~progress~~for ~~report~~our inproducts, ~~December~~our ~~2012~~business and ~~expects~~results toof ~~issue a~~operations ~~final~~may ~~report~~be inmaterially ~~2014~~adversely affected.

IncreasedWe regulation and attention given to hydraulic fracturing could lead to greater opposition to oil and gas production activities using these techniques, which may increase thelose costsmoney associated with or otherwise cause our customers to reduce the use of hydraulic fracturing. Additional legislation or regulation could also lead to operational delays or increased operating costs in the production of oil and natural gas from the developing shale plays or could make it more difficult to perform hydraulic fracturing. The adoption of any federal or state laws or the implementation of regulations regarding hydraulic fracturing could reduce its use and lead to a decline in demand for our drilling rigs used for hydraulic fracturing, which could have a material adverse effect on ourfixed-price business and results of operationscontracts.

~~The~~A ~~adoption~~significant portion of ~~climate~~our ~~change~~business ~~legislation~~consists orof ~~regulations restricting~~designing, ~~emissions~~manufacturing, selling and installing equipment for major projects on a fixed-price basis. Under these contracts, we are typically responsible for all cost overruns, other than the amount of ~~greenhouse~~any ~~gases~~cost ~~could~~overruns ~~increase~~resulting ~~our~~from ~~operating~~requested customer revisions in order specifications. Our actual costs orand ~~reduce~~any ~~demand~~gross ~~for~~profit ~~our~~on ~~products~~these fixed-price contracts will often vary from the estimated amounts on which these contracts were originally based. This may occur for various reasons, including:

Concern over climate change has led to legislative and regulatory initiatives aimed at limiting carbon dioxide and other greenhouse gas emissions. The adoption of laws and regulations to implement controls on greenhouse gases, including the imposition of fees or taxes, could adversely impact our operations and financial condition. Additionally, changes in the legal and regulatory environment could reduce oil and natural gas drilling activity and result in a corresponding decline in the demand for our products and services, which could have a material adverse effect on our business and results of operations.19

~~Uninsured~~TABLE orOF ~~underinsured claims or litigation or an increase in our insurance premiums could adversely impact our results.~~CONTENTS

We• ~~maintain~~Errors insurance to cover potential claims and losses, including claims for personal injury or death resulting from the use of our products. We carry comprehensive insurance, including business interruption insurance, subject to deductibles, at levels we believe are sufficient to cover existing and future claims. It is possible an unexpected judgment could be rendered against us in ~~cases~~estimates ~~in which we could be uninsured~~ or ~~underinsured~~ ~~and beyond the amounts we currently have reserved or anticipate incurring~~bidding. Significant increases in the cost of insurance and more restrictive coverage may have an adverse impact on our results of operations. In addition, we may not be able to maintain adequate insurance coverage at rates we believe are reasonable.

21• Design changes that are not reimbursable by the customer.

We• ~~could~~Changes bein ~~subject~~availability toand ~~substantial~~cost ~~liability~~of ~~claims that~~labor ~~could~~and ~~harm our financial condition~~materials.

~~Our~~• ~~operations~~Variations ~~involve hazardous activities that involve an extraordinarily high degree of risk. Hazardous operations are subject to accidents resulting~~ in ~~personal~~productivity ~~injury and the loss of life or property, environmental mishaps and mechanical failures. Litigation arising~~ from these or similar events may result in us being named a defendant in lawsuits asserting large claims. We may be held liable in certain circumstances, including if we fail to exercise reasonable care in connection with our ~~activities,~~original ~~and we may also be liable for injuries to agents, employees and contractors who are acting within the course and scope of their duties~~estimates. ~~We currently maintain liability insurance coverage with aggregate policy limits that we believe are adequate for our operations. However:~~

·These Wevariations and the related risks inherent in our projects may ~~not~~result bein ~~able~~reduced toprofitability ~~continue~~or tolosses ~~obtain~~on ~~insurance~~projects. Depending on ~~commercially~~the ~~reasonable~~size ~~terms~~of a project, variations from estimated contract performance could have a material adverse impact on our operating results.

· We may beexperience facedfluctuations within types of liabilities that will not be covered by our insurance,quarterly suchoperating as damages from environmental contaminationresults.

·Our ~~The~~quarterly ~~dollar~~operating ~~amount~~results ofmay ~~any~~fluctuate ~~liabilities~~significantly. ~~may~~Significant ~~exceed~~annual and quarterly fluctuations in our ~~policy~~results ~~limits.~~of operations may be caused by, among other factors:

A• ~~loss~~The ~~for~~timing ~~which~~of weour ~~are~~announcements ~~not~~for ~~fully insured could have a material adverse effect on us. No assurance can be given that we will not be subject to future claims in excess of~~ the ~~amount~~distribution of ~~insurance~~new ~~coverage~~products ~~that~~and weany ~~deem~~such ~~appropriate~~announcements toby ~~maintain~~our competitors.

We• ~~may~~The beacceptance ~~faced~~of ~~with~~the ~~product~~products ~~liability~~we ~~claims~~manufacture and sell in the oil and gas equipment and services marketplace.

~~Most~~• ofGeneral ~~our~~economic products are used in hazardous drilling and production applications in which an accident or a failure of a product can cause personal injury, loss of life, damage to property, equipment or the environment or suspension of operationsconditions. Despite our quality assurance measures, defects may occur in our products. Any defects could give rise to liability for damages, including consequential damages, and could impair the market’s acceptance of our products. We generally attempt to contractually disclaim responsibility for consequential damages, but our disclaimers may not be effective. We carry commercial general liability insurance coverage which includes products liability coverage. The limits under our general liability insurance are $1 million per occurrence and $2 million in the aggregate. We also have an umbrella policy for $20 million over our general liability policy. This umbrella policy also covers product liability coverage. Our insurance may not adequately cover our costs arising from defects in our products or otherwise.

~~The~~There ~~loss~~can ofbe no assurance that the ~~services~~level of ~~one~~revenues orand ~~more~~profits, ofif ~~our~~any, ~~executive officers~~achieved orby ~~key~~us ~~employees~~in ~~could~~any ~~harm~~particular ~~our~~fiscal ~~business~~period will not be significantly lower than in other, including comparable, fiscal periods. We believe quarter-to-quarter comparisons of our revenues and operating results are anot ~~small~~necessarily meaningful and ~~rapidly~~should ~~growing~~not ~~company~~be ~~that~~relied ~~relies~~on ~~upon~~as aindicators ~~few~~of ~~key~~future ~~employees to~~performance. ~~ensure~~Operating ~~our~~expenses ~~business~~are ~~operates~~based ~~efficiently~~on management’s expectations of future revenues and are relatively fixed in the short term.

~~Our~~If ~~success~~our isrevenues ~~dependent~~do tonot aincrease ~~significant degree~~our ~~upon the~~ business ~~expertise~~could ~~and~~be ~~continued~~seriously ~~contributions~~harmed ~~of our senior management team. Because we are a small~~ and ~~rapidly growing~~net ~~company~~profits, weif ~~believe~~any, ~~the~~in ~~loss~~a ofgiven ~~key~~quarter ~~personnel~~may ~~would~~ be ~~more~~smaller ~~disruptive to us~~ than ~~it would be to a large, multinational manufacturer~~expected. ~~While~~This ~~we currently have employment agreements with our senior executives, many of our employees~~ could, ~~with~~result ~~little or~~in noa ~~prior~~material ~~notice,~~adverse ~~voluntarily~~impact ~~terminate their employment with us at any time. We do not maintain key person life insurance~~ on ~~the~~ ~~life of any of~~ our ~~employees.~~results ~~The loss~~ of ~~the~~operations ~~services of any of our senior officers,~~ or anfinancial ~~inability to attract and retain other qualified personnel, may adversely affect our business and prospects~~condition.

InWe addition, our senior management team may not be ablerequired to successfullyrecognize managea ourcharge businessagainst ascurrent itearnings growsbecause larger. If they are unable to handle these increased responsibilities and we are unable to identify, hire and integrate new personnel, our business, results of operations and financial condition could suffer. Even if we are able to identify new personnel, the integration percentage-of-completion new personnel into our business will inevitably occur over an extended period of timeaccounting. During that time, the lack of sufficient senior management personnel could cause our results of operations to suffer.

22Revenues and profits on long-term project contracts are recognized on a percentage-of-completion method based on the ratio of costs incurred to the total estimated costs. Accordingly, purchase order price and cost estimates are reviewed periodically as the work progresses, and adjustments proportionate to the percentage completed are reflected in the period when those estimates are revised. To the extent that these adjustments result in a reduction or elimination of previously reported profits, we would have to recognize a charge against current earnings, which could be significant depending on the size of the project or the adjustment.

BeingOur abusinesses publicand companyour couldcustomers’ placebusinesses aare strainsubject onto environmental laws and regulations that may increase our management costs, limit the demand for our products and services or restrict our operations.

~~The~~Our ~~requirements~~operations ofand ~~being~~the aoperations ~~public~~of ~~company could~~our ~~place~~customers aare ~~strain~~subject onto ~~our~~federal, ~~senior~~state ~~management~~and ~~team.~~local Weand ~~may~~foreign ~~hire~~laws ~~additional~~and ~~persons~~regulations relating to ~~assist~~the ~~with~~protection ~~investor~~of ~~relations~~the orenvironment. ~~outsource this~~These ~~function,~~environmental ~~either~~laws ofand ~~which~~regulations ~~will~~affect ~~increase~~the ~~our~~products ~~costs.~~and ~~Further,~~services ~~management’s~~we ~~attention~~design, ~~may~~market beand ~~diverted~~sell, ~~from~~as ~~other~~well ~~business concerns,~~as ~~which~~the ~~could~~facilities ~~adversely~~where ~~affect~~we manufacture our ~~business~~products. WeIn ~~have~~addition, ~~made~~environmental ~~changes~~laws and ~~will~~regulations ~~need~~could tolimit ~~make~~our ~~additional~~customers’ ~~changes~~exploration toand ~~our~~production ~~corporate governance,~~activities. ~~disclosure~~We ~~controls~~are ~~and~~required ~~financial~~to ~~reporting~~invest financial and ~~accounting~~managerial ~~systems~~resources to ~~meet~~comply ~~our~~with ~~reporting~~environmental ~~obligations.~~laws ~~However,~~and ~~the measures~~regulations and anticipate that we ~~take~~will ~~may~~continue ~~not~~to be ~~sufficient~~required to ~~satisfy~~do ~~our~~so ~~obligations~~in asthe future. aThese ~~public~~laws ~~company.~~and ~~Any~~regulations ~~failure~~change frequently, which makes it impossible for us to ~~provide~~predict ~~reliable~~the ~~financial reports~~cost or ~~prevent~~impact ~~fraud~~on ~~would~~our ~~harm~~future ~~our~~operations. ~~business~~The ~~and~~modification ~~operating~~of ~~results~~existing ~~and~~laws ~~cause~~or usregulations toor ~~fail~~the toadoption ~~meet~~of ~~our~~new ~~reporting~~laws ~~obligations, which~~or ~~could~~regulations ~~cause~~imposing ~~our~~more ~~stock~~stringent ~~price~~environmental torestrictions ~~suffer~~could adversely affect our operations.

~~Demand~~These ~~for~~laws ~~our~~may ~~products~~provide ~~and~~for ~~services~~“strict ~~depends~~liability” ~~on oil~~for ~~and~~damages to natural ~~gas~~resources ~~industry~~or ~~activity~~threats to public health and ~~expenditure~~safety, ~~levels~~rendering ~~that~~a ~~are~~party ~~directly~~liable ~~affected~~for byenvironmental ~~trends~~damage inwithout ~~oil~~regard ~~and~~to ~~natural~~negligence ~~gas~~or ~~prices~~fault on the part of such party. Sanctions for noncompliance may include revocation of permits, corrective action orders,

Demand for our products and services is particularly sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, oil and natural gas companies, including national oil companies. Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and speculation, and a variety of other factors that are beyond our control. The equity, credit and commodity markets have seen significant volatility since late 2008. Oil and natural gas prices rose to record levels in 2008 and then began to decline in late 2008 in conjunction with the widespread economic recession. The price of natural gas has remained depressed since 2009, largely due to discoveries of vast new natural gas resources in the U.S. Gas prices began increasing in the latter half of 2012, and prices as of March 20, 2013 were above $3.94 per mmbtu. The price of oil and gas may continue to fluctuate in the near- and long-term. Any prolonged reduction in oil and natural gas prices may depress the immediate levels of exploration, development and production activity. Perceptions of longer-term lower oil and natural gas prices by oil and gas companies may result in the reduction or deferral of major expenditures given the long-term nature of many large-scale development projects. Lower levels of activity may result in a corresponding decline in the demand for our products and services that could have a material adverse effect on our revenue and profitability. Many factors affect the supply and demand for oil and natural gas and therefore influence the demand for our products and services, including:

·TABLE ~~The~~OF ~~level of production.~~CONTENTS

·administrative ~~The~~or ~~levels~~civil penalties, and criminal prosecution. Some environmental laws and regulations provide for joint and several strict liability for remediation of ~~oil~~spills and releases of hazardous substances. In addition, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances as well as damage to natural ~~gas~~resources. ~~inventories~~These laws and regulations also may expose us to liability for the conduct of or conditions caused by others or for our acts that were in compliance with all applicable laws and regulations at the time such acts were performed. Any of these laws and regulations could result in claims, fines or expenditures that could be material to our earnings, financial condition or cash flow.

·Hydraulic ~~Domestic~~fracturing has been regulated at the state level through permitting and ~~worldwide~~compliance ~~demand~~requirements. ~~for~~State ~~oil~~level initiatives have been or may be proposed or implemented to further regulate hydraulic fracturing practices, limit water withdrawals and ~~natural~~water ~~gas~~use, require disclosure of fracturing fluid constituents, restrict which additives may be used, or implement temporary or permanent bans on hydraulic fracturing. In addition, the U.S. Congress has considered, but not enacted, legislation that would require regulation affecting the hydraulic fracturing process. In 2010, the EPA announced its intention to conduct a comprehensive research study on the potential effects that hydraulic fracturing may have on water quality and public health. The EPA issued a progress report in December 2012 and expects to issue a final report in 2015.

·Increased ~~The~~regulation ~~expected~~and ~~cost~~attention given to hydraulic fracturing could lead to greater opposition to oil and gas production activities using these techniques, which may increase the costs associated with or otherwise cause our customers to reduce the use of hydraulic fracturing. Additional legislation or regulation could also lead to operational delays or increased operating costs in the production of oil and natural gas from the developing ~~new~~shale ~~reserves~~plays or could make it more difficult to perform hydraulic fracturing. The adoption of any federal or state laws or the implementation of regulations regarding hydraulic fracturing could reduce its use and lead to a decline in demand for our drilling rigs used for hydraulic fracturing, which could have a material adverse effect on our business and results of operations.

· The actualadoption costof climate change legislation or regulations restricting emissions of findinggreenhouse andgases producingcould oilincrease andour naturaloperating gascosts or reduce demand for our products.

·Concern over climate change has led to legislative and regulatory initiatives aimed at limiting carbon dioxide and other greenhouse gas emissions. The ~~availability~~adoption of ~~attractive~~laws and regulations to implement controls on greenhouse gases, including the imposition of fees or taxes, could adversely impact our operations and financial condition. Additionally, changes in the legal and regulatory environment could reduce oil and natural gas ~~field~~drilling ~~prospects~~activity and result in a corresponding decline in the demand for our products and services, which ~~may~~could behave ~~affected~~a bymaterial ~~governmental~~adverse ~~actions~~effect ~~and~~on ~~regulations~~our orbusiness ~~environmental~~and ~~activists~~results of operations.

·Uninsured Theor availabilityunderinsured ofclaims transportationor infrastructurelitigation andor refiningan capacityincrease in our insurance premiums could adversely impact our results.

·We ~~The~~maintain ~~level~~insurance to cover potential claims and losses, including claims for personal injury or death resulting from the use of ~~drilling~~our ~~activity~~products. We carry comprehensive insurance, including business interruption insurance, subject to deductibles, at levels we believe are sufficient to cover existing and future claims. It is possible an unexpected judgment could be rendered against us in cases in which we could be uninsured or underinsured and beyond the amounts we currently have reserved or anticipate incurring. Significant increases in the cost of insurance and more restrictive coverage may have an adverse impact on our results of operations. In addition, we may not be able to maintain adequate insurance coverage at rates we believe are reasonable.

·We Globalcould weatherbe conditionssubject andto naturalsubstantial disastersliability claims that could harm our financial condition.

·Our ~~Worldwide~~operations ~~political,~~involve ~~military~~hazardous activities that involve an extraordinarily high degree of risk. Hazardous operations are subject to accidents resulting in personal injury and ~~economic~~the ~~conditions~~loss of life or property, environmental mishaps and ~~economic~~mechanical ~~activity~~failures. Litigation arising from these or similar events may result in us being named a defendant in lawsuits asserting large claims. We may be held liable in certain circumstances, including ~~growth~~if we fail to exercise reasonable care in ~~underdeveloped~~connection ~~countries~~with our activities, and we may also be liable for injuries to agents, employees and contractors who are acting within the course and scope of their duties. We currently maintain liability insurance coverage with aggregate policy limits that we believe are adequate for our operations. However:

~~· National government political objectives, including the ability of the Organization of Petroleum Exporting Countries to set and maintain production levels and prices for oil.~~21

23TABLE OF CONTENTS

·• ~~The~~We ~~cost~~may ~~and~~not ~~timing~~be ofable ~~the~~to ~~development~~continue ofto ~~alternate~~obtain ~~energy~~insurance ~~sources~~on commercially reasonable terms.

·• ~~Tax~~We ~~policies~~may be faced with types of liabilities that will not be covered by our insurance, such as damages from environmental contamination.

If• ~~demand~~The ~~for~~dollar ~~drilling~~amount ~~services~~of orany ~~drilling rig~~liabilities ~~utilization rates decreases significantly, demand for our products and services~~ may ~~decrease,~~exceed ~~which could affect~~ our ~~result of~~policy ~~operations~~limits.

~~The~~A ~~oil~~loss ~~and~~for ~~gas~~which ~~industry~~we isare ~~undergoing~~not ~~continuing consolidation~~fully insured could have a material adverse effect on us. No assurance can be given that ~~may~~we ~~impact~~will ~~our~~not ~~results~~be subject to future claims in excess of ~~operations~~the amount of insurance coverage that we deem appropriate to maintain.

TheWe oil and gas industry is rapidly consolidating. As a result, some of our largest customers have consolidated and are using their size and purchasing power to seek economies of scale and pricing concessions. This consolidation may result in reduced capital spending by some of our customers or the acquisition of one or more of our primary customers, which may lead to decreased demand for our products and services. Additionally, our customers could acquire one of our competitors and begin producing products similar to ours, which may also lead to decreased demand for our products and services. We cannot assure you that we will be ablefaced to maintain our current level of sales to a customer that has consolidated or replace that revenue with increasedproduct businessliability activity with other customersclaims. As a result, the acquisition of one or more of our primary customers or competitors may have a significant negative impact on our results of operations or our financial condition. We are unable to predict what effect consolidation in the industry may have on price, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customers.

WeMost ~~must~~of ~~successfully~~our ~~compete~~products are used in hazardous drilling and production applications in which an accident or a failure of a product can cause personal injury, loss of life, damage to property, equipment or the environment or suspension of operations. Despite our quality assurance measures, defects may occur in our products. Any defects could give rise to liability for damages, including consequential damages, and could impair the ~~services~~market’s acceptance of our products. We generally attempt to contractually disclaim responsibility for consequential damages, but our disclaimers may not be effective. We carry commercial general ~~highly-trained~~liability ~~technical~~insurance orcoverage ~~trade~~which ~~personnel~~includes products liability coverage. The limits under our general liability insurance are $1 million per occurrence and $2 million in the aggregate. We also have an umbrella policy for $20 million over our general liability policy. This umbrella policy also covers product liability coverage. Our insurance may not adequately cover our costs arising from defects in our products or otherwise.

ManyThe loss of the services thatof weone provideor are complex,more require a high level of expertise and often must be performed in harsh conditions. Our success depends in part upon our ability toexecutive employofficers andor retainkey technicalemployees personnelcould withharm the ability to perform these services. In addition, our ability to expand our operations depends in part on our ability to expand our skilled labor forcebusiness. TheWe demandare for skilled workers in our industry is high and the supply is limited. A significant increase in the wages paid by competing employers could result in a reduction ofsmall ourcompany skilled labor force, increases in the wage rates that werelies mustupon pay,a orfew both.key Ifemployees these events were to occur,ensure our costbusiness structure couldoperates increase, our margins could decrease, and our growth potential could be impairedefficiently.

~~The~~Our ~~intense~~success ~~competition~~is independent to a significant degree upon the business expertise and continued contributions of our ~~industry~~senior ~~could~~management ~~result in~~team. Because we are a small company, we believe the loss of key personnel would be more disruptive to us than it would be to a large, multinational manufacturer. While we currently have employment agreements with our ~~reduced~~senior ~~profitability~~executives, ~~and~~many of our employees could, with little or no prior notice, voluntarily terminate their employment with us at any time. We do not maintain key person life insurance on the life of any of our employees. The loss of ~~market~~the ~~share~~services of any of our senior officers, or an inability to attract and retain other qualified personnel, may adversely affect our business and prospects.

WeIn ~~compete with the energy industry’s largest equipment and service providers~~addition, ~~including,~~our ~~NOV.~~senior ~~NOV~~management isteam ~~the~~may ~~largest~~not ~~manufacturer~~be inable ~~the~~to ~~industry~~successfully ~~and~~manage ~~has~~our ~~reported~~business ~~segment revenues~~as init ~~2012~~grows ~~of approximately $10~~larger.1 ~~billion.~~If ~~Some~~they ofare ~~our~~unable ~~competition~~to ~~have~~handle ~~substantially~~these ~~greater~~increased ~~financial~~responsibilities ~~resources~~ and ~~larger operations than~~ we ~~do.~~are Inunable ~~addition, some of these companies may be better able~~ to ~~compete~~identify, ~~because~~hire ~~of their broader geographic dispersion or their product~~ and ~~service~~integrate ~~diversity.~~new Aspersonnel, aour ~~result~~business, weresults ~~could~~of ~~lose~~operations ~~customers~~ and ~~market~~financial ~~share~~condition tocould ~~those competitors~~suffer. ~~These~~Even ~~companies may~~if ~~also~~we beare ~~better~~able ~~positioned~~ to ~~successfully~~identify ~~manage~~new ~~downturns~~personnel, in the ~~energy~~integration ~~industry.~~of ~~Our~~new ~~operations~~personnel ~~may~~into ~~be adversely affected if~~ our ~~current~~business ~~competitors~~will orinevitably ~~new~~occur ~~market~~over ~~entrants~~an ~~introduce~~extended ~~new~~period ~~products~~of ortime. ~~services~~During ~~with~~that ~~better prices~~time, ~~features,~~the ~~performance or~~lack ~~other~~of ~~competitive~~sufficient ~~characteristics~~senior ~~than~~management ~~our~~personnel ~~products and services. Competitive pressures or other factors also may result in significant price competition that~~ could ~~harm~~cause our ~~revenue~~results ~~and~~of ~~our~~operations ~~business.~~to Wesuffer ~~also~~as ~~face~~well ~~competition~~as inimpact our ~~efforts~~growth toand ~~acquire~~ other ~~businesses~~operational initiatives.

TheBeing higha costpublic orcompany unavailability of materials, equipment, supplies and personnel could adverselyplace affecta ourstrain abilityon to execute our operations on a timely basismanagement.

~~Our~~The ~~manufacturing~~requirements ~~operations~~of ~~are~~being ~~dependent on~~a ~~having~~public ~~sufficient~~company ~~raw~~could ~~materials,~~place ~~component~~a ~~parts~~strain ~~and~~on ~~manufacturing~~our ~~capacity~~senior ~~available~~management toteam. ~~meet~~We ~~our~~may ~~manufacturing~~hire ~~plans~~additional atpersons ato ~~reasonable cost~~assist ~~while~~with ~~minimizing~~investor ~~inventories.~~relations ~~Our~~or ~~ability~~outsource tothis ~~effectively~~function, ~~manage~~either ~~our~~of ~~manufacturing~~which ~~operations~~will toincrease ~~meet~~our ~~these~~costs. ~~goals~~Further, ~~can~~management’s ~~have a~~attention ~~significant~~may ~~impact~~be ondiverted ~~our~~from other business concerns, ~~including~~which could adversely affect our ~~ability~~business. We have made changes and may need to ~~meet~~make ~~our~~additional ~~manufacturing~~changes ~~plans~~to ~~and~~our ~~revenue~~corporate ~~goals~~governance, ~~control~~disclosure ~~costs~~controls and ~~avoid~~ ~~shortages~~financial ofreporting ~~raw~~and ~~materials~~accounting ~~and~~systems ~~component~~to ~~parts.~~meet ~~Raw~~our ~~materials,~~reporting ~~component~~obligations. ~~parts~~However, ~~and~~the ~~equipment~~measures ofwe ~~particular~~take ~~concern~~may ~~include steel,~~not ~~copper,~~be ~~engine~~sufficient ~~generator~~to ~~sets,~~satisfy ~~drill~~our ~~pipe~~obligations ~~and~~as ~~electronic~~a public ~~components~~company. AAny ~~lack~~failure ofto ~~manufacturing~~provide ~~capacity~~reliable ~~could~~financial ~~result~~reports inor ~~increased backlog,~~prevent ~~which~~fraud ~~may~~would ~~limit~~harm our ~~ability~~business and operating results and cause us to ~~respond~~fail to ~~short~~meet ~~lead-time~~our ~~orders~~reporting orobligations, ~~opportunities~~which could cause our stock price to suffer.

24The oil and gas industry is undergoing continuing consolidation that may impact our results of operations.

~~People~~The ~~are~~oil ~~a key resource to developing, manufacturing~~ and ~~delivering~~gas ~~our~~industry ~~products~~is ~~and~~rapidly ~~services to our customers around the world~~consolidating. ~~Our~~As ~~ability~~a ~~to manage the recruiting~~result, ~~training~~ ~~and~~some ~~retention~~ of ~~this highly-skilled workforce could impact~~ our ~~business.~~largest ~~Rapid~~customers ~~growth~~have consolidated and ~~the~~are ~~resulting~~using ~~need~~their ~~for~~size ~~additional skilled~~and ~~employees~~purchasing ~~present~~power ~~a challenged~~ to usseek aseconomies ~~well as the impact~~ of ~~wage~~scale ~~inflation~~ and ~~the~~pricing ~~potential~~concessions. ~~lack~~This ofconsolidation ~~available~~may ~~qualified labor~~result in ~~our~~reduced ~~market.~~capital ~~Labor-related~~spending ~~actions,~~by ~~including~~some ~~strikes,~~of ~~work~~our ~~slowdowns~~customers ~~and~~or ~~facility~~the ~~occupations, can also have a negative impact on our business.~~

We depend on third-party suppliers for timely deliveries of raw materials at a reasonable cost. Our results of operations could be adversely affected if we are unable to obtain adequate supplies in a timely manner.22

~~Our~~TABLE ~~manufacturing~~OF operations depend upon obtaining adequate supplies of raw materials from third parties. The ability of these third parties to deliver raw materials may be affected by events beyond their control. Any interruption in the supply, restrictions on third party credit, or increase in the prices of raw materials needed to manufacture our products could adversely affect our business, results of operations and reputation with our customers. Fluctuations in commodity prices may affect our margins and our earnings.CONTENTS

Ifacquisition of one or more of our ~~existing~~primary ~~arrangements~~customers, ~~with~~which may lead to decreased demand for our ~~suppliers were~~products ~~adversely~~and ~~affected~~services. Additionally, our ~~equipment~~customers ~~sales~~could acquire one of our competitors and ~~parts~~begin producing products similar to ours, which may also lead to decreased demand for our products and ~~service~~services. ~~businesses~~We cannot assure you that we will be able to maintain our current level of sales to a customer that has consolidated or replace that revenue with increased business activity with other customers. As a result, the acquisition of one or more of our primary customers or competitors may ~~suffer~~have a significant negative impact on our results of operations or our financial condition. We are unable to predict what effect consolidation in the industry may have on price, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customers.

We currentlymust dependsuccessfully oncompete a limited number of suppliers for importantthe componentsservices of our products. Our purchases from most of these suppliers are not made pursuant to longhighly-term contracts.trained Sometechnical ofor ourtrade arrangements require notification before they may be terminated and, others terminate upon the occurrence of certain events, many of which may be beyond our controlpersonnel. The loss of any of these suppliers could have a material adverse effect on our business, financial condition and results of operations.

~~Our~~Many ~~business~~of ~~may~~the services that we provide are complex, require a high level of expertise and often must be ~~adversely~~performed ~~affected~~in harsh conditions. Our success depends in part upon our ability to employ and retain technical personnel with the ability to perform these services. In addition, our ability to expand our operations depends in part on our ability to expand our skilled labor force. The demand for skilled workers in our industry is high and the supply is limited. A significant increase in the wages paid by ~~severe~~competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or ~~weather~~both. If these events were to occur, our cost structure could increase, our margins could decrease, and our growth potential could be impaired.

OurThe operationsintense arecompetition located in Houston, Texasour andindustry arecould directlyresult affected by seasonal differences in theour weather,reduced asprofitability well as hurricanes and otherloss storms prevalent in the region. Repercussions of severemarket weather conditions may include:share.

·We ~~Evacuation~~compete with the energy industry’s largest equipment and service providers, including, National Oilwell Varco, Inc. (“NOV”). NOV is the largest manufacturer in the industry and has reported segment revenues in 2014 of ~~personnel~~approximately $13.0 billion. Some of our competitors have substantially greater financial resources and ~~curtailment~~larger operations than we do. In addition, some of these companies may be better able to compete because of their broader geographic dispersion, their product and service diversity or longer operating history. As a result, we could lose customers and market share to those competitors. These companies may also be better positioned to successfully manage downturns in the energy industry. Our operations may be adversely affected if our current competitors or new market entrants introduce new products or services with better prices, features, performance or other competitive characteristics than our products and services. Competitive pressures or other factors also may result in significant price competition that could harm our revenue and our business. We also face competition in our efforts to acquire other businesses.

·The Suspensionhigh cost or unavailability of materials, equipment, supplies and personnel could adversely affect our ability to execute our operations on a timely basis.

·Our ~~Damage~~manufacturing operations are dependent on having sufficient raw materials, component parts and manufacturing capacity available to meet our ~~facilities~~manufacturing plans and customer demand at a reasonable cost while minimizing inventories. Our ability to effectively manage our manufacturing operations to meet these goals can have a significant impact on our business, including our ability to meet our manufacturing plans and revenue goals, control costs and avoid shortages of raw materials and component parts. Raw materials, component parts and equipment of particular concern include steel, copper, engine generator sets, drill pipe and electronic components. A lack of manufacturing capacity could result in increased backlog, which may limit our ability to respond to short lead-time orders or opportunities.

·People ~~Increase~~are ina ~~insurance~~key ~~costs~~resource to developing, manufacturing and ~~reduction~~delivering our products and services to our customers around the world. Our ability to manage the recruiting, training and retention of this highly-skilled workforce could impact our business. Rapid growth and the resulting need for additional skilled employees would present a challenge to us as well as the impact of wage inflation and the potential lack of available qualified labor in ~~its~~our ~~availability~~market. Labor-related actions, including strikes, work slowdowns and facility occupations, can also have a negative impact on our business.

·We Inabilitydepend toon receivethird-party orsuppliers delaysfor intimely receivingdeliveries requiredof equipmentraw or materials at oura facilitiesreasonable cost. Our results of operations could be adversely affected if we are unable to obtain adequate supplies in a timely manner.

·Our ~~Loss~~manufacturing operations depend upon obtaining adequate supplies of ~~productivity~~raw materials from third parties. The ability of these third parties to deliver raw materials may be affected by events beyond their

~~Our information systems may experience an interruption or breach in security.~~23

WeTABLE ~~rely~~OF on information systems to conduct our business. Any failure, interruption or breach in security of our information systems could result in failures or disruptions in our customer relationship management, general ledger systems and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial position or results of operations.CONTENTS

25control. Any interruption in the supply, restrictions on third party credit, or increase in the prices of raw materials needed to manufacture our products could adversely affect our business, results of operations and reputation with our customers. Fluctuations in commodity prices may affect our margins and our earnings.

FutureIf forecastour ofexisting earningsarrangements arewith inherentlyour uncertain andsuppliers subjectwere toadversely significant businessaffected, economic,our financial,equipment regulatorysales and competitiveparts risks and uncertaintiesservice thatbusinesses couldmay cause our actual results to differ materially from such forecastssuffer.

~~Earnings~~We ~~forecasts~~currently ~~are~~depend ~~inherently~~on ~~uncertain and~~a ~~subject~~limited tonumber ~~significant~~of ~~business,~~suppliers ~~economic,~~for ~~financial,~~important ~~regulatory~~components ~~and~~of ~~competitive~~our ~~risks~~products. ~~and~~Our ~~uncertainties~~purchases ~~that~~from ~~could~~most ~~cause~~of ~~our actual~~these ~~results~~suppliers toare ~~differ~~not ~~materially~~made ~~from~~pursuant ~~that~~to ~~which~~long-term ~~is forecasted~~contracts. ~~Because~~Some of our ~~operating~~arrangements ~~history~~require isnotification ~~limited,~~before wethey may ~~face~~be ~~greater difficulties~~terminated inand, ~~accurately~~others ~~projecting~~terminate ~~earnings.~~upon ~~Any~~the ~~earnings~~occurrence ~~forecasts~~of ~~will~~certain beevents, ~~prepared~~many byof ~~management~~which ~~and~~may ~~will not~~ be ~~verified by~~beyond anour ~~opinion~~control. orThe ~~report~~loss ~~from~~of any ~~independent~~of ~~registered~~these ~~public~~suppliers ~~accountants.~~could Wehave ~~cannot~~a ~~assure~~material ~~you~~adverse ~~that~~effect weon ~~will~~our ~~be able to forecast earnings accurately~~business, iffinancial atcondition ~~all,~~and orresults ~~that~~of ~~we will be able to achieve such forecasts~~operations.

~~Holders~~Pursuant ofto ~~our~~the ~~warrants~~Dodd-Frank ~~will~~Wall beStreet ~~able~~Reform ~~to exercise~~and ~~the~~Consumer ~~warrants~~Protection ~~for~~Act, ~~cash~~the ~~only~~SEC ifpromulgated wefinal ~~have~~rules anregarding ~~effective~~disclosure ~~registration~~of ~~statement covering~~ the ~~shares~~use of ~~common~~certain ~~stock~~minerals, ~~issuable upon~~known ~~exercise~~as ofconflict ~~the~~minerals ~~warrants~~(columbite-tantalite, ~~and~~cassiterite a(tin), ~~current~~wolframite ~~prospectus~~(tungsten) ~~relating~~and togold), ~~such~~which ~~shares~~are ofmined ~~common~~from ~~stock~~the ~~and,~~Democratic ~~even~~Republic inof the ~~case~~Congo ofand aadjoining ~~cashless exercise~~countries, ~~which~~as iswell ~~permitted~~as inprocedures ~~certain~~regarding ~~circumstances,~~a ~~such~~manufacturer’s ~~shares~~efforts ofto ~~common~~prevent ~~stock~~the ~~are~~sourcing ~~qualified~~of ~~for~~such ~~sale~~minerals orand ~~exempt~~metals produced from ~~qualification under~~those ~~the~~minerals. ~~applicable~~The ~~securities~~disclosure ~~laws~~obligations ofare ~~the~~complex, ~~states~~and inthere ~~which~~is ~~the~~little ~~various~~formal ~~holders~~guidance ofwith ~~warrants~~respect ~~reside~~to their application. ~~Although~~These wenew ~~have~~disclosure ~~contractual~~ obligations will ~~under~~require ~~the~~due ~~warrant~~diligence ~~agreement~~efforts to ~~use~~support our ~~best~~disclosure ~~efforts~~requirements. toWe ~~maintain~~will anincur ~~effective~~costs ~~registration~~associated ~~statement~~with ~~covering~~complying ~~the~~with ~~shares of~~such ~~common~~disclosure ~~stock~~requirements, ~~issuable~~including ~~upon~~costs ~~exercise~~associated ofwith ~~the~~implementing ~~warrants,~~new wesystems ~~may~~and ~~not~~processes beand ~~able~~canvassing toour dosupply ~~so.~~chain ~~Factors~~to ~~such~~determine asthe ansource ~~unexpected~~country ~~inability~~of ~~to remain~~any ~~current~~conflict minerals incorporated in our ~~SEC~~products, ~~reporting~~in ~~obligations~~addition orto ~~other~~the ~~material~~cost ~~developments~~of ~~concerning~~remediation ~~our~~and ~~business~~other ~~could~~changes ~~present~~to ~~difficulties in~~products, ~~maintaining~~processes, anor ~~effective~~sources ~~registration~~of ~~statement.~~supply ~~Holders~~as ofa ~~warrants~~consequence ~~will~~of ~~not~~such beverification ~~entitled~~activities. toTo athe ~~cash~~extent ~~settlement~~that ~~for~~the ~~their~~information ~~warrants if~~that weit ~~fail~~receives tofrom ~~have~~its ansuppliers ~~effective~~is ~~registration~~inaccurate ~~statement~~or ~~relating~~inadequate toor ~~the~~its ~~shares~~processes ofin ~~common~~obtaining ~~stock~~that ~~issuable~~information ~~upon~~do ~~exercise~~not offulfill the ~~warrants. The~~SEC's ~~expiration~~requirements, ofthe ~~warrants~~Company ~~prior~~could toface ~~exercise~~both ~~would~~reputational ~~result~~and inSEC ~~each~~enforcement ~~unit~~risks. ~~holder~~In ~~paying~~addition, the ~~full~~implementation ~~unit~~of ~~purchase~~these ~~price~~rules ~~solely~~could ~~for~~adversely affect the ~~shares~~ sourcing, supply, and pricing of ~~common~~materials ~~stock~~used ~~underlying~~in ~~the~~our ~~units~~products.

AsOur abusiness smaller reporting company, we are subject to scaled disclosure requirements that may makebe itadversely moreaffected challengingby forsevere investors to analyze our results of operations and financial prospectsweather.

~~Currently~~Our operations are located in Houston, weTexas and are adirectly ~~“smaller~~affected ~~reporting company~~by seasonal differences in the weather,” ~~meaning~~as ~~that~~well ~~our~~as ~~outstanding~~hurricanes ~~common~~and ~~stock~~other ~~held~~storms byprevalent ~~non-affiliates~~in ~~had~~the aregion. ~~value~~Repercussions of ~~less~~severe ~~than~~weather ~~$75~~conditions ~~million.~~may include:

As• aEvacuation ~~“smaller reporting company,” we are able to provide simplified executive compensation disclosures in our filings; are exempt from the provisions~~ of ~~Section 404(b)~~personnel ~~of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting;~~ and ~~have~~curtailment ~~certain other decreased disclosure obligations in our SEC filings, including, being required to provide only two years~~ of ~~audited financial statements in annual reports~~services. ~~Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects.~~

We• ~~intend~~Suspension to list our common stock on the New York Stock Exchange (“NYSE”) or on the Nasdaq Stock Market (“Nasdaq”). Upon listing on either NYSE or Nasdaq, we would expect to be a controlled company within the meanings of the NYSE or Nasdaq rules and, as a result, would qualify for, and intend to rely on, exemptions from certain corporate governance requirements that may not provide as many protections as those afforded to stockholders of other companiesoperations.

~~Upon~~• ~~listing~~Damage ~~on either NYSE or Nasdaq, we would expect~~ to ~~be a controlled company under the NYSE or Nasdaq rules. As a controlled company, we would be exempt from the provisions of the NYSE and Nasdaq rules requiring that (1) a majority of~~ our board or directors consists of independent directors; (2) we have a nominating committee composed entirely of independent directors and governed by a written charter addressing the nominating committee’s purpose and responsibilities; and (3) we have a compensation committee composed entirely of independent directors with a written charter addressing the compensation committee’s purpose and responsibilitiesfacilities. We intend to use certain of these exemptions upon listing on either NYSE or Nasdaq and, as a result, our stockholders may not have the same protections as stockholders of companies that are subject to all of the NYSE or Nasdaq rules.

26• Increase in insurance costs and reduction in its availability.

~~Our~~• ~~officers,~~Inability ~~directors and their affiliates may in the future become affiliated with entities engaged in business activities that are similar~~ to ~~those~~receive ~~intended~~or todelays ~~be conducted by us and, accordingly, may have conflicts of interest~~ in ~~determining~~receiving torequired ~~which~~equipment ~~entity~~or amaterials ~~particular~~at ~~business~~our ~~opportunity should be presented~~facilities.

~~Certain~~• ofLoss our officers, directors or their affiliates may in the future become affiliated with other entities engaged in business activities similar to those intended to be conducted by us. Accordingly, they may have conflicts of ~~interest in determining to which entity a particular business opportunity should be presented~~productivity. These conflicts may not be resolved in our favor. Our certificate of incorporation provides that the corporate opportunity doctrine does not apply to us or any of our officers or directors or where the application of the doctrine would conflict with any fiduciary duties or contractual obligations the officers or directors may have currently or in the future.

Our securitiesinformation aresystems quoted on the OTC Bulletin Board, which may limitexperience thean liquidityinterruption and price of our securities more than if our securities were quoted or listedbreach onin a national securities exchangesecurity.

~~Our~~We ~~common~~rely ~~stock~~on information systems to conduct our business. Any failure, ~~units~~interruption ~~and~~or ~~warrants~~breach ~~are traded~~in onsecurity ~~the~~of ~~over-the-counter~~our ~~market~~information ~~and~~systems ~~are~~could ~~quoted~~result onin ~~the~~failures ~~OTC~~or ~~Bulletin~~disruptions ~~Board,~~in aour ~~FINRA-sponsored~~customer ~~and~~relationship ~~operated~~management, ~~inter-dealer~~general ~~automated quotation~~ledger ~~system~~systems ~~for~~and ~~equity~~other ~~securities~~systems. ~~Quotation~~While ofwe ~~our~~have ~~securities~~policies onand ~~the~~procedures ~~OTC~~designed ~~Bulletin~~to ~~Board~~prevent ~~may~~or limit the ~~liquidity~~effect ~~and~~of ~~price~~ the failure, interruption or security breach of our ~~securities~~information ~~more~~systems, ~~than~~there ifcan ~~our~~be ~~securities~~no ~~were~~assurance ~~quoted~~that any such failures, interruptions or ~~listed~~security onbreaches awill ~~national~~not ~~securities~~occur ~~exchange~~or, if they do occur, that they will be adequately addressed. ~~Lack~~The occurrence of ~~liquidity~~any ~~will~~failures, ~~limit~~interruptions or security ~~the~~breaches ~~price~~of atour ~~which~~information ~~you~~systems ~~may~~could bedamage ~~able~~our reputation, result in a loss of customer business, subject us to ~~sell~~additional ~~our~~regulatory ~~securities~~scrutiny, or ~~your~~expose ~~ability~~us to ~~sell~~civil litigation and possible financial liability, any of which could have a material adverse effect on our ~~securities~~financial atposition ~~all~~or results of operations.

~~As a result of exchange rules, the earliest we will be able to apply to list our securities on a national securities exchange is late 2013.~~24

~~Unlike~~TABLE ~~many-blank~~OF check companies that were previously quoted on the OTCBB and subsequently became listed on a national securities exchange as part of their initial business transaction, we will not be able to immediately list our securities on a national securities exchange. On November 9, 2011, the SEC approved new rules proposed by the three major U.S. listing markets that toughen the standards that companies going public through a reverse merger must meet to become listed on those exchanges. We will have to meet the strengthened listing criteria of such securities exchanges, including (a) having completed a one-year “seasoning period” by trading on the OTCBB following our initial business transaction, (b) having filed an annual report on Form 10-K covering a full fiscal year commencing after the filing with the Commission of all information regarding our initial business transaction and (c) having maintained a requisite minimum bid price for a sustained period of time. As a result, the liquidity and price of our securities may be more limited than if our securities were listed on a national securities exchange.CONTENTS

AnFuture activeforecasts marketof forearnings ourare securitiesinherently mayuncertain notand developsubject to significant business, which wouldeconomic, adverselyfinancial, affectregulatory theand liquiditycompetitive risks and priceuncertainties ofthat could cause our securitiesactual results to differ materially from such forecasts.

~~The~~Earnings ~~price~~forecasts ofare ~~our~~inherently ~~securities~~uncertain ~~may~~and ~~vary~~subject ~~significantly due~~ to ~~operating~~significant ~~losses~~business, ~~one~~economic, orfinancial, ~~more~~regulatory ~~potential~~and ~~business~~competitive ~~transactions,~~risks ~~changes~~and inuncertainties ~~market~~that ~~conditions~~could ~~for~~cause ~~the~~our ~~oil~~actual ~~and~~results ~~gas~~to ~~products and~~differ ~~services~~materially from that which is forecasted. Because our operating history is limited, we ~~provide~~may ~~and~~face ~~general~~greater ~~market~~difficulties ~~and~~in ~~economic~~accurately ~~conditions~~projecting earnings. AnAny ~~active~~earnings ~~trading~~forecasts ~~market~~will ~~for~~be ~~our~~prepared ~~securities~~by ~~may~~management ~~never~~and ~~develop~~ will not be verified by an opinion or, ifreport ~~developed,~~from itany ~~may~~independent ~~not~~registered bepublic ~~sustained~~accountants. ~~You~~We ~~may~~cannot assure you that we will be ~~unable~~able to ~~sell~~forecast ~~your~~earnings ~~securities~~accurately, ~~unless~~if anat ~~active~~all, ~~market~~or ~~for~~that ~~our~~we ~~securities can~~will be ~~established~~able orto ~~sustained~~achieve such forecasts.

WeAlthough incurredwe substantialare debtrequired to completeuse our initial businessbest transactionefforts to have an effective registration statement covering the issuance of the shares of common stock underlying the warrants at the time that our warrant holders exercise their warrants, whicha registration statement may adverselynot affectbe effective, in which case our financialwarrant conditionholders may not be able to exercise their warrants and resultstherefore ofthe operationswarrants could expire worthless.

~~The~~Holders ~~incurrence~~of our warrants will be able to exercise the warrants for cash only if we have an effective registration statement covering the shares of ~~debt~~common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock and, even in the case of a cashless exercise which is permitted in certain circumstances, such shares of common stock are qualified for sale or exempt from qualification under the applicable securities laws of the states in which the various holders of warrants reside. Although we have contractual obligations under the warrant agreement to use our best efforts to maintain an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, we may not be able to do so. Factors such as an unexpected inability to remain current in our SEC reporting obligations or other material developments concerning our business could present difficulties in maintaining an effective registration statement. Holders of warrants will not be entitled to a cash settlement for their warrants if we fail to have an effective registration statement relating to the shares of common stock issuable upon exercise of the warrants. The expiration of warrants prior to exercise would result in: each unit holder paying the full unit purchase price solely for the shares of common stock underlying the units.

·As Defaulta andsmaller foreclosurereporting oncompany, ourwe assetsare ifsubject ourto operatingscaled cashdisclosure flowrequirements afterthat amay businessmake transactionit ismore insufficientchallenging for investors to payanalyze our debtresults obligationsof operations and financial prospects.

~~· Acceleration of our obligations to repay the indebtedness~~Currently, ~~even if~~ we ~~have~~are ~~made~~a ~~all~~“smaller ~~principal~~reporting ~~and~~company,” ~~interest~~meaning ~~payments~~that ~~when due because~~ our ~~debt~~outstanding ~~contains~~common ~~covenants~~stock ~~that~~held ~~require~~by ~~the~~non-affiliates ~~maintenance~~had ~~of certain financial ratios or reserves and we could breach these covenants without~~ a ~~waiver~~value orof ~~renegotiation~~less ofthan ~~that~~$75 ~~covenant~~million.

·As ~~Our~~a ~~immediate~~“smaller ~~payment~~reporting company,” we are able to provide simplified executive compensation disclosures in our filings; are exempt from the provisions of ~~all~~Section ~~principal~~404(b) of the Sarbanes-Oxley Act requiring that an independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting; and ~~accrued~~have ~~interest~~certain other decreased disclosure obligations in our SEC filings, ifincluding, ~~any~~being required to provide only two years of audited financial statements in annual reports. Consequently, ifit ~~the~~may ~~debt~~be ~~security~~more ischallenging ~~payable~~for oninvestors ~~demand~~to analyze our results of operations and financial prospects.

·We Covenantsintend thatto limitlist our abilitycommon stock on the New York Stock Exchange (“NYSE”) or on the Nasdaq Stock Market (“Nasdaq”). Upon listing on either the NYSE or Nasdaq, we would expect to acquirebe capitala assetscontrolled company within the meanings of the NYSE or makeNasdaq additionalrules acquisitionsand, as a result, would qualify for, and intend to rely on, exemptions from certain corporate governance requirements that may not provide as many protections as those afforded to stockholders of other public companies.

27Upon listing on either the NYSE or Nasdaq, we would expect to be a controlled company under the NYSE or Nasdaq rules. As a controlled company, we would be exempt from the provisions of the NYSE and Nasdaq rules requiring that (1) a majority of our board or directors consists of independent directors; (2) we have a nominating committee composed entirely of independent directors and governed by a written charter addressing the nominating committee’s purpose and responsibilities; and (3) we have a compensation committee composed entirely of independent directors with a written charter addressing the compensation committee’s purpose and responsibilities. We intend to use certain of these exemptions upon listing on either.

· Our inability to obtain additional financing in the future, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.25

·TABLE ~~Using~~OF a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes.CONTENTS

·the ~~Limitations~~NYSE onor Nasdaq and, as a result, our ~~flexibility~~stockholders inmay ~~planning~~not ~~for~~have ~~and~~the ~~reacting~~same toprotections ~~changes~~as instockholders ~~our~~of ~~business~~companies ~~and~~that inare ~~the~~subject ~~industry~~to inall ~~which~~of wethe ~~operate~~NYSE or Nasdaq rules.

·Our Increasedofficers, vulnerabilitydirectors toand adversetheir changesaffiliates may in generalthe economic,future industrybecome andaffiliated competitivewith conditionsentities engaged in business activities that are similar to those intended to be conducted by us and, adverseaccordingly, changesmay have conflicts of interest in governmentdetermining regulationto which entity a particular business opportunity should be presented.

·Certain ~~Limitations~~of on our ~~ability~~officers, directors or their affiliates may in the future become affiliated with other entities engaged in business activities similar to ~~borrow~~those ~~additional~~intended ~~amounts~~to ~~for~~be ~~expenses,~~conducted ~~capital~~by ~~expenditures,~~us. ~~acquisitions~~Accordingly, ~~debt~~they ~~service~~may ~~requirements,~~have ~~execution~~conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our ~~strategy~~favor. ~~and~~Our ~~other~~certificate ~~purposes~~of ~~and~~incorporation ~~other~~provides ~~disadvantages~~that ~~compared~~the corporate opportunity doctrine does not apply to us or any of our ~~competitors~~officers ~~who~~or directors or where the application of the doctrine would conflict with any fiduciary duties or contractual obligations the officers or directors may have ~~less~~currently ~~debt~~or in the future.

· Our inabilitysecurities toare payquoted dividends on the OTC Bulletin Board, which may limit the liquidity and price of our commonsecurities stockmore than if our securities were quoted or listed on a national securities exchange.

Our ~~Sponsor~~common stock, ~~officers~~units and ~~directors~~warrants ~~control~~are atraded ~~substantial interest~~on inthe usover-the-counter market and ~~thus~~are quoted on the OTC Bulletin Board, a FINRA-sponsored and operated inter-dealer automated quotation system for equity securities. Quotation of our securities on the OTC Bulletin Board may ~~influence~~limit ~~certain~~the ~~actions~~liquidity ~~requiring~~and price of our securities more than if our securities were quoted or listed on a ~~stockholder~~national ~~vote~~securities exchange. Lack of liquidity will limit the price at which you may be able to sell our securities or your ability to sell our securities at all.

OurAn Sponsor,active officersmarket andfor directors beneficially own 5,725,081 of our issuedsecurities andmay outstandingnot common stock. This ownership interestdevelop, together with any other acquisitions of our common stock (or warrants which arewould subsequently exercised), could allow our Sponsor, officers and directors to influence the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. Our board of directors is divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. This concentration of ownership may also have the effect of delaying or preventing a change in control and may adversely affect the marketliquidity price of our common stock. The interests of our Sponsor, officers and directors andprice your interests may not always align and taking actions which require approval of a majority of our stockholders, such as selling the company, may be more difficult to accomplishsecurities.

WeThe price of our securities may ~~choose~~vary significantly due to ~~redeem~~operating losses, one or more potential business transactions, changes in market conditions for the oil and gas products and services we provide and general market and economic conditions. An active trading market for our ~~outstanding~~securities ~~public~~may ~~warrants at~~never adevelop ~~time~~or, ~~that~~if isdeveloped, ~~disadvantageous~~it may not be sustained. You may be unable to sell your securities unless an active market for our ~~public~~securities ~~warrant~~can ~~holders~~be established or sustained.

AsWe partincurred ofsubstantial thedebt unitsto soldcomplete in our initial public offering,business we issued warrants to purchase up to 6transaction,000,000 shareswhich of our common stock (the “Public Warrants”). We may redeemadversely theaffect outstanding Public Warrants at any time after they become exercisable, in whole and not in part, at a price of $0.01 per warrant, if the last sales price of our sharesfinancial ofcondition common stock equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. We may not redeem the Public Warrants unless on the date we give notice of redemption and duringresults the entire period thereafter until the time we redeem the Public Warrants we have an effective registration statement covering the shares of common stock issuable upon the exercise of the Public Warrants and a current prospectus relating to those shares of common stock is availableoperations.

WeThe ~~will~~incurrence ~~likely redeem the Public Warrants if the market price~~ of ~~our~~debt ~~common stock reaches $17.50 per share for the necessary trading period since doing so would allow us to decrease the dilutive effect of the Public Warrants. Redemption of the Public Warrants~~ could ~~encourage~~result ~~the warrant holders to exercise the Public Warrants, whether by paying the exercise price~~ in: cash or through a cashless exercise at a time when it may be disadvantageous for the holders to do so, to sell the Public Warrants at the then current market price when they might otherwise wish to hold the Public Warrants, or to accept the nominal redemption price, which, at the time the Public Warrants are called for redemption, is likely to be substantially less than the market value of the Public Warrants. We expect most purchasers of our Public Warrants hold their securities through one or more intermediaries, and, consequently, you are unlikely to receive notice directly from us that the Public Warrants are being redeemed. If you fail to receive notice of redemption from a third party and your Public Warrants are redeemed for nominal value, you will not have recourse to us.

28• Default and foreclosure on our assets if our operating cash flow after a business transaction is insufficient to pay our debt obligations.

An• ~~investor~~Acceleration ~~will~~of ~~only~~our beobligations ~~able~~ to ~~exercise~~repay athe ~~Public Warrant~~indebtedness, even if ~~the~~we ~~common~~have ~~stock~~made ~~issuable~~all ~~upon~~principal ~~such~~and ~~exercise~~interest ~~has~~payments ~~been~~when ~~registered~~due orbecause ~~qualified~~our ordebt iscontains ~~deemed~~covenants ~~exempt~~that ~~under~~require the ~~securities laws~~maintenance of ~~the~~certain ~~state~~financial ofratios ~~residence~~or ofreserves ~~the~~and ~~holder~~we ofcould ~~the~~breach ~~Public~~these ~~Warrants~~covenants without a waiver or renegotiation of that covenant.

No• ~~Public~~Our ~~Warrants~~immediate ~~will~~payment ~~be exercisable and we will not be obligated to issue shares~~ of ~~common~~all ~~stock~~principal unless the common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of such Public Warrants. A Public Warrant may be held by a holder in a state where an exemption is not available for issuance of shares of common stock upon an exercise, and ~~the~~accrued ~~holder will be precluded from exercising the Public Warrant. As a result~~interest, ~~the~~if ~~Public Warrant may be deprived of~~ any ~~value~~, ~~the market for the Public Warrant may be limited and the holder of the Public Warrant may not be able to exercise the Public Warrant~~ if the ~~common~~debt ~~stock~~security ~~issuable upon such exercise~~ is ~~not~~payable ~~qualified~~on ~~or exempt from qualification in the state in which the holder of the Public Warrant resides~~demand.

~~With~~• ~~the~~Covenants ~~approval~~that oflimit ~~65% of the holders of the then outstanding Public Warrants, we may amend the terms of~~ our ~~Public~~ability ~~Warrants~~to inacquire acapital ~~manner~~assets ~~that~~or ~~may~~make beadditional ~~adverse to some holders~~acquisitions.

• Our ~~Public~~inability Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to ~~cure~~obtain ~~any~~additional ~~ambiguity~~financing ~~or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding Public Warrants~~ in ~~order to make any change that adversely affects~~ the ~~interests~~future, ofif ~~the registered holders. Accordingly~~necessary, weif ~~may amend~~ the ~~terms~~debt ofsecurity ~~the~~contains ~~Public Warrants~~covenants inrestricting anour ~~adverse~~ability ~~way~~ to aobtain ~~holder~~additional iffinancing ~~holders~~while ofsuch atsecurity ~~least~~is ~~65% of the then~~ outstanding ~~Public Warrants approve such amendment~~. Examples of such adverse amendments could be amendments to increase the exercise price of the Public Warrants, shorten the exercise period, provide for redemption of Public Warrants or decrease the number of shares of common stock purchasable upon exercise of a Public Warrant.

~~Provisions~~• inUsing ~~our~~a ~~certificate~~substantial portion of ~~incorporation~~our ~~and bylaws~~cash ~~and~~flow ~~Delaware~~to ~~law~~pay ~~may~~principal ~~inhibit~~and ainterest ~~takeover~~on ofour usdebt, which ~~could~~will ~~limit~~reduce the ~~price~~funds ~~investors~~available ~~might~~for bedividends ~~willing~~on toour ~~pay~~common instock ~~the~~if ~~future for~~declared, ~~our~~expenses, ~~shares~~capital ofexpenditures, ~~common~~acquisitions ~~stock~~ and ~~could~~other ~~entrench~~general ~~management~~corporate purposes.

~~Our~~• ~~certificate~~Limitations ofon ~~incorporation~~our ~~and~~flexibility ~~bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be~~ in ~~their~~planning ~~best interests. Our board of directors is divided into two classes, each of which will generally serve~~ for aand ~~term~~reacting ofto ~~two~~changes ~~years, with only one class of directors being elected~~ in ~~each year. As a result, at a given annual meeting only half of the board of directors may be considered for election. Since~~ our ~~staggered~~business ~~board of directors may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it may entrench management~~ and ~~discourage unsolicited stockholder proposals that may be~~ in the ~~best interests~~industry ofin ~~stockholders.~~which ~~Moreover,~~we ~~our board of directors has the ability to designate the terms of any new series of preferred stock without stockholder approval~~operate.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over the prevailing market prices of our securities.26

~~Compliance~~TABLE ~~with~~OF ~~the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.~~CONTENTS

~~Section~~• ~~404~~Increased ofvulnerability ~~the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls. If we fail~~ to ~~maintain~~adverse ~~the~~changes ~~adequacy~~in ofgeneral ~~our internal controls~~economic, weindustry ~~could be subject to regulatory scrutiny, civil or criminal penalties~~ and~~/or~~ ~~stockholder~~competitive ~~litigation.~~conditions Any inability to provide reliable financial reports could harm our business. We may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of our internal controls. The development of the internal controls necessary to achieve compliance with the Sarbanes-Oxley Act may increase the time and ~~costs~~adverse ~~associated~~changes ~~with our acquisition of IDE. Furthermore, any failure to implement required new or improved controls, or difficulties encountered~~ in ~~the~~government ~~implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations~~regulation. ~~Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.~~

29• Limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

We• ~~have~~Our ~~granted~~inability ~~registration rights~~ to ~~our~~pay ~~Sponsor, officers~~dividends ~~and~~on ~~directors and other third parties, and the future exercise of such rights may adversely affect the market price of~~ our common stock.

WeAs ~~will~~of ~~bear~~March ~~the~~27, ~~cost~~2015, ofour ~~registering~~Sponsor, ~~these securities.~~officers Ifand ~~such~~directors ~~persons~~beneficially orowned ~~entities~~5,737,136 ~~exercise~~shares ~~their~~(or ~~registration~~65%) ~~rights~~of inour ~~full,~~issued ~~there~~and ~~will~~outstanding becommon anstock. ~~additional~~This 8ownership interest,~~134,671~~ ~~shares~~ together with any other acquisitions of our common stock ~~and~~(or upwarrants towhich ~~142~~are subsequently exercised),~~484~~ ~~shares~~could ofallow ~~common~~our ~~stock~~Sponsor, ~~issuable~~officers onand ~~exercise~~directors to influence the outcome of ~~warrants~~matters ~~eligible~~requiring ~~for~~stockholder ~~trading~~approval, inincluding the ~~public~~election ~~market. The~~of ~~registration~~directors and ~~availability~~approval of ~~such~~significant acorporate ~~significant~~transactions. ~~number~~Our board of ~~securities~~directors is divided into two classes, each of which will generally serve for ~~trading~~a term of two years with only one class of directors being elected in each year. Our classified board as well as the ~~public~~concentration ~~market~~of ownership with our Sponsor, officers and directors may also have anthe ~~adverse~~ effect onof delaying or preventing a change in control and may adversely affect the market price of our common stock. The interests of our Sponsor, officers and directors and your interests may not always align and taking actions which require approval of a majority of our stockholders, such as selling the company, may be more difficult to accomplish.

ItemWe 1B.may Unresolvedchoose Staffto Commentsredeem our outstanding public warrants at a time that is disadvantageous to our public warrant holders.

~~Not~~As ~~applicable~~part of the units sold in our initial public offering, we issued warrants to purchase up to 6,000,000 shares of our common stock (the “Public Warrants”). We may redeem the outstanding Public Warrants at any time after they become exercisable, in whole and not in part, at a price of $0.01 per warrant, if the last sales price of our shares of common stock equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. We may not redeem the Public Warrants unless on the date we give notice of redemption and during the entire period thereafter until the time we redeem the Public Warrants we have an effective registration statement covering the shares of common stock issuable upon the exercise of the Public Warrants and a current prospectus relating to those shares of common stock is available.

~~Item~~We 2will likely redeem the Public Warrants if the market price of our common stock reaches $17.50 ~~Properties~~per share for the necessary trading period since doing so would allow us to decrease the dilutive effect of the Public Warrants. Redemption of the Public Warrants could encourage the warrant holders to exercise the Public Warrants, whether by paying the exercise price in cash or through a cashless exercise at a time when it may be disadvantageous for the holders to do so, to sell the Public Warrants at the then current market price when they might otherwise wish to hold the Public Warrants, or to accept the nominal redemption price, which, at the time the Public Warrants are called for redemption, is likely to be substantially less than the market value of the Public Warrants. We expect most purchasers of our Public Warrants hold their securities through one or more intermediaries, and, consequently, you are unlikely to receive notice directly from us that the Public Warrants are being redeemed. If you fail to receive notice of redemption from a third party and your Public Warrants are redeemed for nominal value, you will have no recourse against us.

AsAn ofinvestor December 31,will 2012,only webe leased fiveable facilitiesto inexercise a Public Warrant if the Unitedcommon States,stock includingissuable upon such exercise has been registered or qualified or is deemed exempt under the followingsecurities manufacturing,laws service,of warehousethe andstate administrativeof facilities:residence of the holder of the Public Warrants.

Location	Description	Building Size	Lease Termination Date
Houston, Texas	Principal office of IDE — covered fabrication facility, rig yard and offices (used primarily by our drilling segment)	49,500 square feet of manufacturing/warehouse space and 3,500 square feet of office space	December 31, 2017 (1)
Houston, Texas	Principal office of IEC — warehouse and office facilities (used primarily by our electrical segment)	40,500 square feet of manufacturing/warehouse space and 8,300 square feet of office space	February 14, 2014
Spring, Texas	Executive, sales, and finance offices	7,200 square feet of office space	December 31, 2017 (1)
Houston, Texas	Principal offices of IDE Hydraulics — office and warehouse facilities (used primarily by our hydraulics group)	3,270 square feet of office and 8,730 square feet of warehouse space	March 31, 2015
Oklahoma City, Oklahoma	IEC service and warehouse (used primarily by our electrical segment)	10,000 square feet of office/ warehouse	Month to month pending lease renewal

No Public Warrants will be exercisable and we will not be obligated to issue shares of common stock unless the common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of such Public Warrants. A Public Warrant may be held by a holder in a state where an exemption is not available for issuance of shares of common stock upon an exercise, and the holder will be precluded from exercising the Public Warrant. As a result, the

~~(1) This facility is currently owned by our Chief Executive Officer, Stephen Cope, and his affiliates. See “Certain Relationships and Related Party Transactions — Leases and Lease Amendments.”~~27

30TABLE OF CONTENTS

~~Item~~Public 3.Warrant ~~Legal~~may ~~Proceedings~~be deprived of any value, the market for the Public Warrant may be limited and the holder of the Public Warrant may not be able to exercise the Public Warrant if the common stock issuable upon such exercise is not qualified or exempt from qualification in the state in which the holder of the Public Warrant resides.

FromWith timethe toapproval time,of we65% areof a party to lawsuits arising in the ordinaryholders course of ourthe business.then Weoutstanding doPublic notWarrants, believe that we aremay aamend party to any material pending legal proceedings or that it is probable that the outcometerms of anyour individualPublic actionWarrants orin groupa ofmanner similarthat actionsmay wouldbe have a material adverse effect onto oursome business, financial condition or results of operationholders.

~~Item~~Our 4Public Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. ~~Mine~~The ~~Safety~~warrant ~~Disclosures~~agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding Public Warrants in order to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the Public Warrants in an adverse way to a holder if holders of at least 65% of the then outstanding Public Warrants approve such amendment. Examples of such adverse amendments could be amendments to increase the exercise price of the Public Warrants, shorten the exercise period, provide for redemption of Public Warrants or decrease the number of shares of common stock purchasable upon exercise of a Public Warrant.

NotProvisions applicablein our certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our shares of common stock and could entrench management.

~~PART~~Our certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Our board of directors is divided into two classes, each of which will generally serve for a term of two years, with only one class of directors being elected in each year. As a result, at any given annual meeting only half of the board of directors may be considered for election. Since our staggered board of directors may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it may entrench management IIand discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our certificate of incorporation provides that our board of directors has the ability to designate the terms of any new series of preferred stock without stockholder approval.

~~Item~~We 5.are ~~Market~~also ~~for~~subject ~~Registrant’s~~to ~~Common~~anti-takeover ~~Equity~~provisions under Delaware law, ~~Related~~which ~~Stockholder~~could ~~Matters~~delay or prevent a change of control. Together these provisions may make the removal of management more difficult and ~~Issuer~~may ~~Purchases~~discourage transactions that otherwise could involve payment of ~~Equity~~a ~~Securities~~premium over the prevailing market prices of our securities.

MarketCompliance Informationwith the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

~~Our~~Section ~~common~~404 ~~stock,~~of ~~warrants~~the ~~and~~Sarbanes-Oxley ~~units~~Act ~~are each~~of ~~traded~~2002 requires that we evaluate and report on ~~the~~our ~~OTC~~system ~~Bulletin~~of ~~Board~~internal ~~under~~controls. If we fail to maintain the ~~ticker~~adequacy ~~symbols~~of ~~EPAQ~~our internal controls, ~~EPAQW~~we ~~and~~could ~~EPAQU~~be subject to regulatory scrutiny, ~~respectively~~civil or criminal penalties and/or stockholder litigation. ~~Our~~Any ~~units~~inability ~~commenced~~to ~~public~~provide reliable financial reports could harm our business. We may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of our internal controls. The development of the internal controls necessary to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs associated with ~~trading~~our onacquisition ~~June 16~~of IDE. Furthermore, ~~2011~~any failure to implement required new or improved controls, ~~and~~or difficulties encountered in the implementation of adequate controls over our ~~common~~financial ~~stock~~processes and ~~warrants~~reporting ~~commenced~~in ~~public~~the ~~trading~~future, oncould ~~August 12,~~harm ~~2011.~~our Weoperating ~~intend~~results or cause us to ~~change~~ fail to meet our ~~ticker~~reporting ~~symbols~~obligations. Inferior internal controls could also cause investors to lose confidence in ~~connection~~our ~~with~~reported ~~changing~~financial information, which could have a negative effect on the trading price of our ~~name~~securities.

	Common Stock				Warrants				Units
2012	Low		High		Low		High		Low		High
Fourth Quarter	$	10.00	$	10.24	$	0.15	$	0.50	$	10.12	$	10.50
Third Quarter	$	9.96	$	10.08	$	0.10	$	0.165	$	10.00	$	10.25
Second Quarter	$	9.85	$	9.98	$	0.10	$	0.45	$	10.01	$	10.20
First Quarter	$	9.75	$	9.85	$	0.25	$	0.45	$	10.20	$	10.20

Pursuant to a registration rights agreement, our Sponsor, officers and directors and their permitted transferees can demand that we register their shares of common stock. The registration rights will be

	Common Stock				Warrants				Units
2011	Low		High		Low		High		Low		High
Fourth Quarter	$	9.74	$	9.75	$	0.20	$	0.45	$	10.01	$	10.20
Third Quarter	$	9.50	$	10.50	$	0.20	$	1.01	$	9.98	$	10.20
Second Quarter		—		—		—		—	$	9.91	$	10.00

~~Holders~~TABLE OF CONTENTS

Onexercisable ~~March 27~~with respect to such securities at any time commencing upon the date that such shares are released from transfer restrictions. Additionally, ~~2013~~in connection with the Merger, ~~there~~we ~~were~~granted 23certain ~~holders of~~registration ~~record~~rights ofto ~~our~~former ~~common~~IDE ~~stock~~stockholders and, 1in ~~holder~~connection ofwith ~~record~~entering ofinto ~~our~~a ~~warrants~~common ~~and~~stock 1warrant ~~holder~~agreement, ofwe ~~record~~granted ofcertain ~~our~~registration ~~units~~rights to Elm Park.

~~Dividends~~We will bear the entire cost of registering these securities. If such persons or entities exercise their registration rights in full, there will be an additional 8,134,671 shares of common stock and up to 142,484 shares of common stock issuable on exercise of warrants eligible for trading in the public market. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our common stock.

~~We have not paid any cash dividends on our common stock to date.~~29

~~The~~TABLE ~~payment~~OF of cash dividends on our common stock in the future will be at the discretion of our board of directors and dependent upon our revenues and earnings, if any, capital requirements and general financial conditions. We presently intend to retain all earnings, if any, for use in our business operations.CONTENTS

~~Pursuant~~Item to the certificate of designation for our Preferred Stock, the holders of our Preferred Stock are entitled to receive, in preference to holders of our common stock, a dividend that accrues at 16% per year1B. ~~The~~UNRESOLVED ~~dividends~~STAFF are payable in additional shares of Preferred Stock. These dividends are cumulative from the date that the Preferred Stock was issued, whether or not we have earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared or paid.COMMENTS

31Not applicable.

InItem ~~addition, our debt agreements contain restrictions on the payment of dividends~~2. Our term loan and security agreement provides that we may not pay or make any distribution to our equity holders, subject to certain exceptions, until we have satisfied in full our obligations under the agreement and the agreement has been terminated. In the future, we may incur additional indebtedness, and our ability to declare dividends may be further limited by restrictive covenants that we may agree to in connection with this debt.PROPERTIES

~~Recent~~As ~~Sales~~ of ~~Unregistered~~December ~~Securities~~31, 2014, we leased the following manufacturing, service, warehouse and administrative facilities:

Shares of Common Stock and Units Issued to Our Sponsor and Our Initial Stockholders


Location	Description	Building Size	Lease Termination Date
Houston, Texas	Principal office of IDE – covered fabrication facility, rig yard and offices (used primarily by our drilling segment)	49,500 square feet of manufacturing/warehouse space and 3,500 square feet of office space	December 31, 2017⁽¹⁾
Houston, Texas	Principal office of IEC – warehouse and office facilities (used primarily by our electrical segment)	40,500 square feet of manufacturing/warehouse space and 8,300 square feet of office space	February 14, 2017
Spring, Texas	Executive, sales, and finance offices	7,200 square feet of office space	December 31, 2017⁽¹⁾
Houston, Texas	Principal offices of IDE Hydraulics – office and warehouse facilities (used primarily by our hydraulics group)	3,270 square feet of office space and 8,730 square feet of warehouse space	May 31, 2015
Oklahoma City, Oklahoma	IEC service and warehouse (used primarily by our electrical segment)	10,000 square feet of office/warehouse space	Month to month pending lease renewal

~~On January 24, 2011, we issued 4,000,000 shares of common stock~~ (~~the “Initial Shares”~~1) toThis ~~our~~facility ~~Sponsor,~~is ancurrently ~~entity~~owned ~~controlled~~ by ~~certain of~~ our ~~officers~~Vice ~~and~~Chairman ~~directors, for~~of ~~$25,000 in cash, or $0.00625 per share. On May 2, 2011,~~ our ~~Sponsor~~Board ~~sold,~~of atDirectors ~~cost, 1,000,000 Initial Shares to our officers~~ and ~~directors.~~former OnChief ~~June~~Executive 13Officer, ~~2011,~~Stephen ~~we effected a 0.75625-for-1 reverse split of our outstanding common stock~~Cope, ~~leaving our Sponsor, officers~~ and ~~directors~~his ~~with 3,025,000 Initial Shares~~affiliates. OnSee ~~June~~“Certain ~~15,~~Relationships ~~2011,~~and weRelated ~~effected~~Party aTransactions ~~0.80331-for-1~~— ~~reverse~~Leases ~~split of our outstanding common stock, leaving our Sponsor, officers~~ and ~~directors~~Lease ~~with 2,430,000 Initial Shares~~Amendments. ~~The Initial Shares included 300,000 shares that were forfeited when the underwriters in our IPO did not exercise their over-allotment option in full.~~”

OnWe ~~June~~believe ~~15,~~that ~~2011, we completed a private placement of 390,000 Placement Units to~~ our ~~Sponsor~~facilities ~~for~~are ~~$3.9~~suitable ~~million. Each Placement Unit consists of one share of common stock~~ and ~~one~~adequate ~~Placement Warrant. The Placement Warrants became exercisable~~ and ~~transferable~~that 30they ~~days~~have ~~after~~sufficient ~~the~~capacity ~~completion~~to ofmeet our ~~initial~~ current business ~~transaction and may be exercised for cash or on a “cashless” basis at the holder’s option~~requirements.

~~The~~Item ~~issuance~~3. ofLEGAL the Initial Shares and of the Placement Units were exempt from registration pursuant to 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), because neither transaction involved a public offering.PROCEEDINGS

~~PrinceRidge~~On ~~Unit~~May ~~Purchase~~6, ~~Option~~2013, Drillmec, Inc. filed a lawsuit in the 281st Judicial District Court in Harris County, Texas (Drillmec, Inc. v. Integrated Drilling Equipment Company, et. al.) against Integrated Drilling Equipment Company Holdings, Inc., Integrated Drilling Equipment Company Holdings, LLC, Integrated Drilling Equipment, LLC, Integrated Drilling Equipment Company, Stephen D. Cope and SDC Management Services, LLC. Drillmec alleges that the defendants acquired Drillmec’s drawings and technical specifications through an unrelated bidding process for offshore drilling rigs. In the pleadings, Drillmec claims that the defendants used this proprietary information in connection with our successful bid for certain PEMEX contracts and asserts causes of action for misappropriation of trade secrets, conversion, interference with prospective relations, conspiracy, unjust enrichment and unfair competition. Drillmec is seeking damages in the form of IDE’s actual profits from the PEMEX contracts and the development costs that Drillmec incurred in developing the proprietary information in question.

In ~~connection~~March ~~with our IPO~~2015, ~~we sold to PrinceRidge,~~ the ~~representative~~Company of the underwriters, for $100.00, an option to purchase up to 600,000 units at $15.00 per unit (the “Purchase Option”). The units issuable upon exercise of the Purchase Option consisting of one share of common stock and ~~one~~Drillmec ~~warrant~~entered tointo ~~purchase one share of common stock, or the same as the units offered in the IPO. This option is currently exercisable on~~ a ~~cashless~~Compromise ~~basis,~~Settlement ~~in whole or in part,~~ and ~~will~~Release ~~expire~~of onAll ~~June~~Claims ~~15, 2016~~agreement. ~~Although~~Pursuant ~~the~~to ~~Purchase Option and its underlying securities have been registered under~~ the ~~IPO registration statement~~agreement, the ~~Purchase~~Company ~~Option~~paid ~~grants~~Drillmec to$100 ~~holders~~thousand ~~demand~~ and ~~“piggy back”~~has ~~rights~~been ~~for~~released ~~five and seven years, respectively,~~ from ~~the~~all ~~effective~~claims ~~date~~relating ~~of the IPO registration statement with respect~~ to ~~the~~this ~~registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the Purchase Option~~lawsuit. We ~~will~~In ~~bear~~connection ~~all~~with ~~fees~~our ~~and~~assessment ~~expenses~~that ~~attendant~~it towas ~~registering~~probable ~~the~~that ~~securities,~~a ~~other~~settlement ~~than~~would ~~underwriting commissions which will~~ be ~~paid for~~reached byin ~~the~~2015, ~~holders~~we ~~themselves.~~recorded Wea ~~will have no obligation to~~ net ~~cash~~charge ~~settle~~in the ~~exercise~~accompanying ofconsolidated ~~the~~statement ~~Purchase~~of ~~Option~~operations orin the ~~warrants underlying~~amount ~~the Purchase Option. The holder~~ of ~~the~~$25 ~~Purchase~~thousand ~~Option~~for ~~will not be entitled to exercise~~ the ~~Purchase~~year ~~Option~~ended orDecember the warrants underlying the Purchase Option unless a registration statement covering the securities underlying the Purchase Option is effective or an exemption from registration is available. If the holder is unable to exercise the Purchase Option or underlying warrants31, ~~the~~ ~~Purchase Option or warrants~~2014, asconsisting ~~applicable, will expire worthless. The exercise price and number~~ of ~~units issuable upon exercise of the Purchase Option may be adjusted in certain circumstances including in the event of~~ a ~~stock~~$100 ~~dividend,~~thousand orlitigation ~~our recapitalization~~accrual, ~~reorganization,~~ ~~merger~~partially oroffset ~~consolidation.~~by ~~However, the Purchase Option will not be adjusted for issuances of shares of common stock at~~ a ~~price~~$75 ~~below~~thousand ~~its~~insurance ~~exercise~~recovery ~~price~~receivable. ~~Under the Merger Agreement, we are obligated to use our reasonable best efforts to purchase the Purchase Option.~~

~~Preferred Stock~~30

OnTABLE ~~December 14,~~OF 2012, we entered into a stock purchase agreement (the “Purchase Agreement”) with our Sponsor pursuant to which our Sponsor purchased 25,000 shares of Preferred Stock at a price per share of $100 for $2.5 million.CONTENTS

~~The~~On ~~issuance~~February of28, 2014, Sidewinder Drilling Inc. filed a lawsuit in the ~~Preferred~~269th ~~Stock~~Judicial ~~was exempt~~District ~~from~~Court ~~registration~~in ~~pursuant~~Harris toCounty, ~~Section~~Texas 4(aSidewinder Drilling Inc. v. Oil County Engineering Services, LTD., HYCO Canada U.L.C., and Integrated Drilling Equipment Company Holdings, Inc.)~~(2)~~. In the lawsuit, Sidewinder is seeking a judicial declaration that IDE is contractually responsible for all of the ~~Securities~~damages ~~Act~~caused ~~because~~by the ~~transaction~~dropped ~~did~~mast on Rig 103 because “Delivery” of Rig 103 had not ~~involve~~occurred aat ~~public~~the ~~offering~~time of the Rig 103 dropped mast incident. We intend to defend this litigation vigorously. This case is in the preliminary stages and it is too early to predict an outcome and therefore no provision has been recorded at December 31, 2014, for any potential liability arising from this litigation.

32On March 26, 2015, Steve Cope, the Vice Chairman of our Board of Directors and our former CEO, filed a lawsuit in the 410th Judicial District Court in Montgomery County, Texas (Steve Cope v. Integrated Drilling Equipment Company Holdings, Inc. a/k/a Integrated Drilling Equipment Company Holdings Corp.) against Integrated Drilling Equipment Company Holdings, Inc. Mr. Cope alleges that the Company has defaulted on three separate payment obligations owed to him. These payment obligations were entered into in connection with the Settlement Agreement and General Release (the “Settlement Agreement”) that we entered into with Mr. Cope on April 7, 2014, that settled any and all disagreements between the parties, including any claims arising from Mr. Cope’s employment agreement as it related to his service as Chief Executive Officer of the Company. In connection with the Settlement Agreement, we issued two promissory notes dated April 7, 2014 to Mr. Cope, one in the amount of approximately $2.1 million and one in the amount of approximately $400,000, and we also agreed to pay him approximately $300,000 in satisfaction of certain deferred payments upon satisfaction of certain conditions. Mr. Cope seeks recovery of all principal and past due interest on these payment obligations as well as attorneys’ fees and costs.

~~Elm~~Pursuant ~~Park~~to ~~Warrants~~our current forbearance agreements with the lenders under our revolving credit facility and term loan facility, we are prohibited from making any payments on the two promissory notes issued to Mr. Cope. Payments on the two promissory notes issued to Mr. Cope would create an event of default and the lenders under our revolving credit facility and term loan facility could demand payment in full on their outstanding loans. Mr. Cope’s promissory notes are subordinated to the debt under our revolving credit facility and term loan facility. As for the payment of $300,000 for certain deferred items that Mr. Cope is seeking, the Settlement Agreement states that such payment shall not be made unless the Company has received a specific amount of contracted rig orders. The Company has not achieved these conditions and therefore payment has not been made. We intend to defend this litigation vigorously.

OnFrom ~~December 14,~~time ~~2012~~to time, we ~~(the~~may ~~“Borrowers”) entered~~be ~~into~~involved ain ~~term~~other ~~loan~~litigation ~~agreement,~~matters ~~which~~arising ~~provides~~in ~~for~~the aordinary ~~$20.0~~course ~~million~~of ~~four~~our ~~year~~business. ~~senior~~Although ~~secured~~the ~~second-lien~~ultimate ~~term~~liability ~~loan~~for ~~facility (the~~these ~~“Term~~matters ~~Facility”).~~cannot Asbe ~~consideration~~determined, ~~for~~based on the ~~Term~~information ~~Facility~~currently available to us, we ~~issued~~do tonot ~~Elm~~believe ~~Park~~that ~~U.S.~~the ~~and~~resolution ~~Elm~~of ~~Park~~these ~~Canada~~other ~~warrants (the~~litigation ~~“Elm~~matters ~~Park~~to ~~Warrants”)~~which towe ~~purchase~~are upcurrently toa ~~142,484~~party ~~shares~~would ofhave ~~common~~a ~~stock~~material ~~with~~adverse aneffect ~~exercise~~on ~~price~~our business, financial condition or results of $0operation.01 ~~per~~We ~~share. The~~maintain ~~Elm~~liability ~~Park~~insurance ~~Warrants~~against ~~are~~certain ~~immediately~~risks ~~exercisable,~~arising ~~may~~out beof ~~exercised~~the onnormal acourse ~~net~~of ~~basis~~our ~~and~~business, ~~have~~subject ato ~~term~~certain ofself-insured 10retention ~~years~~limits. ~~from~~We ~~the~~have ~~date~~accruals offor certain legal ~~issuance~~and self-insurance exposures.

~~The~~Item ~~issuance of the Elm Park Warrants was exempt from registration pursuant to Section~~ 4~~(a)(2)~~. ofMINE ~~the~~SAFETY ~~Securities Act because the transaction did not involve a public offering~~DISCLOSURES.

~~Shares~~Not ofapplicable. ~~Common Stock Issued In Merger~~

Pursuant to the Merger Agreement, we issued 4,825,671 shares of our common stock to former IDE stockholders. We are holding 750,000 additional shares on behalf of the former IDE stockholders to satisfy any indemnification claims we may have under the Merger Agreement. Depending on the amount of the indemnification claims we may make, we will distribute the remaining 750,000 additional shares to the former IDE stockholders 18 months after December 14, 2012. In addition, if the trading price of our common stock exceeds certain thresholds before December 14, 2017, we will distribute up to 5,250,000 shares of our common stock that we hold to the former IDE stockholders. Specifically:31

·TABLE ~~If,~~OF before December 14, 2017, (a) the trading price of our common stock exceeds $12.00 per share for any 20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction (as defined in the Merger Agreement) occurs that values each share of our common stock at more than $12.00 per share, we will issue to the former IDE stockholders 1,312,500 shares of our common stock.CONTENTS

·PART If, before December 14, 2017, (a) the trading price of our common stock exceeds $13II.50 per share for any 20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction occurs that values each share of our common stock at more than $13.50 per share, we will issue to the former IDE stockholders an additional 1,312,500 shares of our common stock.

·Item ~~If, before December 14, 2017, (a) the trading price of our common stock exceeds $15~~5.00 ~~per~~MARKET ~~share~~FOR ~~for~~REGISTRANT’S ~~any~~COMMON ~~20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction occurs that values each share of our common stock at more than $15.00 per share~~EQUITY, weRELATED ~~will~~STOCKHOLDER ~~issue~~MATTERS toAND ~~the~~ISSUER ~~former~~PURCHASES ~~IDE~~OF ~~stockholders~~EQUITY ~~an additional 1,312,500 shares of our common stock.~~SECURITIES

·Market If, before December 14, 2017, (a) the trading price of our common stock exceeds $17.00 per share for any 20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction occurs that values each share of our common stock at more than $17.00 per share, we will issue to the former IDE stockholders an additional 1,312,500 shares of our common stock.Information

~~The~~Our ~~issuance~~common ofstock, ~~shares~~warrants toand units are each traded on the ~~former~~OTC ~~IDE stockholders~~Bulletin ~~was~~Board ~~exempt~~under ~~from~~the ~~registration~~ticker ~~pursuant~~symbols toIRIG, ~~4(a)(2)~~IRIGW, ofIRIGU, ~~the~~respectively. ~~Securities~~Our ~~Act~~units ~~because~~commenced ~~the~~public ~~transaction~~trading ~~did~~on ~~not~~June ~~involve~~16, a2011, and our common stock and warrants commenced public ~~offering~~ trading on August 12, 2011.

~~Placement~~The ~~Warrant~~table ~~Exchange~~below ~~Shares~~sets forth, for the calendar quarter indicated, the high and low bid prices of our common stock, warrants and units as reported on the OTC Bulletin Board. These bid quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

On February 25, 2013, we entered into a Placement Warrant Exchange Agreement with our Sponsor. Pursuant to this Agreement, we issued 39,000 shares of common stock to our Sponsor in exchange for cancelling our Sponsor’s Placement Warrants.


	Common Stock				Warrants				Units
2014	Low		High		Low		High		Low		High
Fourth Quarter		$0.25		$1.50		$0.04		$0.04		$0.90		$2.10
Third Quarter		$1.01		$3.15		$0.04		$0.04		$2.10		$4.00
Second Quarter		$2.50		$4.70		$0.04		$0.04		$4.00		$4.00
First Quarter		$3.00		$5.00		$0.04		$0.04		$4.00		$4.00

The issuance of the 39,000 shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act because the transaction did not involve a public offering.


	Common Stock				Warrants				Units
2013	Low		High		Low		High		Low		High
Fourth Quarter		$2.50		$4.05		$0.05		$0.10		$4.00		$4.00
Third Quarter		$2.50		$6.90		$0.10		$0.32		$4.00		$5.30
Second Quarter		$5.50		$8.75		$0.28		$0.45		$5.30		$10.50
First Quarter		$7.50		$10.02		$0.25		$0.38		$10.45		$10.50

33Holders

~~Purchases~~On March 10, 2015, there were 53 holders of ~~Equity~~record ~~Securities~~of byour ~~the~~common ~~Issuer~~stock, 1 holder of record of our warrants and ~~Affiliated Purchasers~~1 holder of record of our units.

On October 19, 2012, we announced our tender offer to purchase up to 5,520,000 shares of our issued and outstanding common stock for $10.20 per share, net to the seller in cash without interest. On December 13, 2012, the tender offer expired. We accepted for purchase and paid for all shares of common stock that were validly tendered and not withdrawn.Dividends

~~The~~We ~~following~~have ~~table~~not ~~sets~~paid ~~forth~~any ~~purchases of~~cash ~~equity~~dividends byon ~~us and~~ our ~~affiliates~~common ~~during~~stock ~~the fourth quarter of fiscal year 2012, all of which were acquired pursuant~~ to ~~the~~date. ~~tender offer described above:~~

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

December 1, 2012 – December 31, 2012

5,448,971

10.20

5,448,971

–

The payment of cash dividends on our common stock in the future will be at the discretion of our board of directors and dependent upon our revenues and earnings, if any, capital requirements and general financial conditions. We presently intend to retain all earnings, if any, for use in our business operations.

~~Item~~Pursuant 6to the certificate of designation for our Preferred Stock, the holders of our Series A, B, and C Preferred Stock are entitled to receive, in preference to holders of our common stock, dividends that accrue at the rate of 16%, 20%, and 14%, respectively, per year. ~~Selected~~The ~~Financial~~dividends ~~Data~~are payable in additional shares of Preferred Stock. These dividends are cumulative from the date that the Preferred Stock was issued, whether or not we have earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared or paid.

~~Not~~In ~~Applicable~~addition, our debt agreements contain restrictions on the payment of dividends. Our term loan and security agreement provides that we may not pay or make any distribution to our equity holders, subject to certain exceptions, until we have satisfied in full our obligations under the agreement and the agreement has been terminated. In the future, we may incur additional indebtedness, and our ability to declare dividends may be further limited by restrictive covenants that we may agree to in connection with such debt.

~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~32

~~You~~TABLE ~~should~~OF read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included elsewhere in this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements, see Risk Factors in “Item 1A.” of this report.CONTENTS

OverviewSales of Unregistered Securities

~~Our~~On ~~electrical~~January ~~segment~~24, ~~designs~~2011, ~~manufactures~~we issued 4, ~~installs~~000,000 shares of common stock (the “Initial Shares”) to our Sponsor, an entity controlled by certain of our officers and ~~services~~directors, ~~electrical~~for $25,000 in cash, or $0.00625 per share. On May 2, 2011, our Sponsor sold, at cost, 1,000,000 Initial Shares to our officers and ~~control~~directors. ~~systems~~On ~~for~~June ~~drilling~~13, ~~rigs~~2011, ~~including~~we ~~SCR~~effected ~~(silicon~~a 0.75625-~~controlled~~for-1 ~~rectifier)~~reverse ~~units~~split ~~and~~of ~~VFD (variable~~our ~~frequency~~outstanding ~~drive)~~common ~~units~~stock, asleaving ~~well~~our asSponsor, ~~electrical~~officers ~~cabling~~and directors with 3,025,000 ~~lighting~~Initial ~~systems~~Shares. On June 15, ~~closed~~2011, ~~circuit~~we ~~video~~effected ~~systems~~a 0.80331-for-1 reverse split of our outstanding common stock, ~~gas~~leaving our Sponsor, officers and ~~fire~~directors ~~detection~~with ~~systems~~2,430,000 ~~and~~Initial ~~communication~~Shares. ~~systems~~The Initial Shares included 300,000 shares that were forfeited on July 29, 2011 when the underwriters in our initial public offering (“IPO”) did not exercise their over-allotment option in full.

~~Our~~On ~~drilling~~June ~~segment~~15, is2011, we completed a ~~full~~private ~~service provider~~placement of ~~drilling~~390,000 ~~rigs~~units ~~and~~to ~~their~~our ~~components.~~Sponsor We(the ~~design,~~“Placement ~~manufacture,~~Units”) ~~and~~for ~~service~~proceeds ~~complete~~to ~~land-based~~us ~~drilling~~of ~~rigs,~~$3.9 asmillion. ~~well as~~Each ~~rig~~Placement ~~subsystems~~Unit consisted of one share of common stock and ~~parts.~~one Wewarrant ~~also~~to ~~provide~~purchase ~~drilling~~one ~~rig~~share ~~services~~of ~~including~~common ~~mechanical~~stock ~~services,~~at ~~assembly~~$11.50 ~~testing~~per share (~~rig-up/final construction~~the ~~and~~“Placement ~~commission~~Warrants”),. ~~rig~~The ~~refurbishment~~Placement Warrants became exercisable and ~~inspection,~~transferable ~~new~~30 ~~rig~~days ~~fabrication~~after ~~and~~the completion of ~~land~~our ~~rig~~initial ~~packages~~business transaction and could be exercised for cash or on a “cashless” basis at the holder’s option. ~~Additionally~~On February 25, 2013, we ~~fabricate~~entered ~~mud~~into ~~tanks~~a Placement Warrant Exchange Agreement with our Sponsor (the “Placement Warrant Exchange Agreement”). Pursuant to this agreement, ~~masts~~on ~~and~~February ~~substructures~~25, ~~dog~~2013, ~~houses~~we ~~and~~issued ~~other~~39,000 ~~products~~shares of common stock (the “Warrant Cancellation Shares”) to our Sponsor in exchange for the cancellation of our Sponsor’s Placement Warrants.

The ~~increased~~issuance ~~use~~ of ~~horizontal~~the ~~drilling and~~Initial ~~hydraulic fracturing~~Shares, orthe ~~fracking,~~Placement ~~has~~Units ~~increased~~and the ~~demand~~Warrant ~~for~~Cancellation ~~drilling~~Shares ~~rigs~~were ~~capable~~exempt offrom ~~drilling~~registration ~~under~~pursuant ~~these~~to ~~conditions.~~4(a)(2) ~~Since fracking~~of ~~has~~the ~~become~~Securities ~~more~~Act ~~widespread,~~of ~~we believe more than 1~~1933,~~000~~ ~~rigs~~as ~~have~~amended ~~been~~(the ~~manufactured~~“Securities ~~or refurbished for that purpose. By 2009~~Act”), ~~our~~because ~~rig~~none ~~electrical~~of ~~and control systems were gaining market acceptance and we had started installing our proprietary electrical systems in customer’s existing drilling rigs. Because these electrical systems are~~ the ~~key~~transactions ~~component~~involved ~~that enable the rig to operate with greater efficiency in horizontal shale drilling situations versus other competitive electrical systems, management decided to offer customers~~ a ~~complete~~public ~~rig package, including our unique electrical and control systems~~offering. ~~Later in 2009, we sold our first complete rig package.~~

34PrinceRidge Unit Purchase Option

OnIn ~~March~~connection 22with our IPO, ~~2013~~we sold to PrinceRidge, the ~~Company~~representative ~~entered into~~of ~~four~~the ~~substantially~~underwriters, ~~identical~~for $100.00, an option to purchase ~~agreements~~up ~~for~~to ~~modular~~600,000 ~~drilling~~units at $15.00 per unit (the “Purchase Option”). The units ~~with~~issuable ~~Integrated~~upon ~~Trade~~exercise ~~Systems~~of the Purchase Option consisting of one share of common stock and one warrant to purchase one share of common stock, ~~Inc~~or the same as the units offered in the IPO. This option is currently exercisable on a cashless basis, anin ~~agent~~whole or in part, and will expire on June 15, 2016. Although the Purchase Option and its underlying securities have been registered under the IPO registration statement, the Purchase Option grants to holders demand and “piggy back” rights for ~~PEMEX~~five and seven years, respectively, from the effective date of the IPO registration statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the Purchase Option. ~~The~~We ~~collective~~will ~~value~~bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. We will have no obligation to net cash settle the exercise of the ~~four~~Purchase ~~agreements~~Option or the warrants underlying the Purchase Option. The holder of the Purchase Option will not be entitled to exercise the Purchase Option or the warrants underlying the Purchase Option unless a registration statement covering the securities underlying the Purchase Option is ~~approximately~~effective ~~$354~~or ~~million~~an ~~and~~exemption ~~each~~from ~~agreement~~registration is ~~for~~available. If the ~~design,~~holder ~~construction~~is unable to exercise the Purchase Option or underlying warrants, the Purchase Option or ~~delivery~~warrants, as applicable, will expire worthless. The exercise price and ~~installation~~number of ~~one~~units ~~modular~~issuable ~~drilling~~upon ~~unit~~exercise onof ~~existing~~the ~~PEMEX~~Purchase ~~shallow~~Option ~~offshore~~may ~~platforms.~~be ~~While~~adjusted in certain circumstances including in the ~~Company~~event ~~has~~of ~~performed extensive~~a ~~subcontract~~stock ~~work~~dividend, onor ~~offshore~~our ~~platforms~~recapitalization, ~~the~~reorganization, ~~agreements~~merger ~~represent~~or consolidation. However, the ~~Company’s~~Purchase ~~first~~Option ~~offshore~~will ~~lead~~not ~~contractor~~be ~~engagement~~adjusted for issuances of shares of common stock at a price below its exercise price.

PEMEXPreferred selected the Company’s equipment based on a technical review in December 2012 and subsequently worked closely with Company on finalizing the contracts and related specifications during the first quarter of 2013. The Company believes that its rig designs for these offshore platforms will enable it to capture more bids for new drilling equipment on newly constructed platforms as well as replacing drilling equipment on existing shallow offshore platforms that may be 25 or more years’ old. On these older platforms, drilling operators are potentially looking to upgrade their platforms with newer equipment that encompass the latest drilling techniques and efficiencies.Stock

~~This~~On ~~additional~~December ~~offshore~~14, ~~platform~~2012, ~~rig~~we ~~business will~~entered ~~expand~~into a stock purchase agreement (the ~~Company’s~~“Series ~~current~~A ~~offerings~~Purchase ~~beyond~~Agreement”) with our ~~existing~~Sponsor ~~land~~pursuant ~~rig~~to ~~offerings.~~which ~~The~~our ~~size~~Sponsor ~~and~~purchased ~~scope~~25,000 shares of ~~these~~Series ~~projects will~~A ~~help~~Preferred toStock ~~solidify~~at ~~our~~a ~~existing~~price ~~land~~per ~~rig~~share ~~backlog~~of $100 for aggregate proceeds to the Company of $2.5 million.

~~Management~~On isNovember ~~currently~~14, ~~focused~~2013, ~~on improving~~ the ~~production~~Company ~~process~~entered ~~for~~into ~~complete~~a ~~rig~~Stock ~~packages~~Purchase ~~and~~Agreement ~~continuing~~(the to“Series ~~implement~~B ~~lean~~Purchase ~~manufacturing~~Agreement”) ~~processes.~~with Weour ~~also~~Sponsor, ~~plan~~pursuant to ~~leverage~~ which our ~~IEC~~Sponsor ~~division’s~~purchased ~~established~~5,000 ~~customer~~shares ~~base~~of toSeries ~~expand~~B ~~the~~Preferred ~~products~~Stock ~~and~~at ~~services~~a weprice ~~offer~~per toshare ~~our~~of ~~customers~~$100 ~~and~~for ~~are~~aggregate ~~evaluating strategies~~proceeds to ~~further~~the ~~serve~~Company ~~offshore~~of ~~and~~$0.5 ~~international markets~~million.

3533

~~Consolidated~~TABLE ~~Results~~OF ~~of Operations~~CONTENTS

	For the Years Ended December 31,
(Dollars in thousands)	2012					2011					2010
Statement of Operations Data:
Revenue:
Products	$	215,877		75.9	%	$	93,397		57.1	%	$	78,502		67.4	%
Services		68,367		24.1	%		70,223		42.9	%		37,978		32.6	%
Total revenue		284,244		100.0	%		163,620		100.0	%		116,480		100.0	%
Cost of goods sold and services:
Products		201,951		93.5	%		85,651		91.7	%		63,595		81.0	%
Services		44,773		65.5	%		49,445		70.4	%		28,877		76.0	%
Total cost of goods sold and services		246,724		86.8	%		135,096		82.6	%		92,472		79.4	%
Selling, general and administrative expense		35,014		12.3	%		19,862		12.6	%		14,311		12.5	%
Depreciation and amortization expense		1,964		0.7	%		1,245		0.8	%		793		0.7	%
Income from operations		542		0.2	%		7,417		4.5	%		8,904		7.6	%
Other (income) expense:
Interest expense		1,224		0.4	%		3,695		2.3	%		5,156		4.5	%
Interest income		—		0.0	%		(105	)	-0.1	%		(47	)	0.0	%
Other (income) expense		(186	)	-0.1	%		(51	)	0.0	%		48		0.0	%
Total other (income) expense		1,039		0.4	%		3,539		2.2	%		5,157		4.5	%
Income (loss) before income taxes		(496	)	-0.2	%		3,878		2.4	%		3,747		3.2	%
Income taxes:
Current		267		-0.1	%		92		0.1	%		156		0.1	%
Deferred		505		0.2	%		1,644		1.0	%		1,369		1.2	%
Total income taxes		772		0.3	%		1,736		1.1	%		1,525		1.3	%
Net income (loss)	$	(1,268	)	-0.4	%	$	2,142		1.3	%	$	2,222		1.9	%

On November 14, 2013, the Company also entered into a Stock Purchase Agreement (the “Series C Purchase Agreement”) with Stephen D. Cope, who at the time was our Chief Executive Officer and a director, pursuant to which Mr. Cope purchased 5,000 shares of Series C Preferred Stock at a price per share of $100 for aggregate proceeds to the Company of $0.5 million.

~~Except~~Each ~~for~~issuance ~~the components~~ of ~~cost~~shares of ~~goods~~Series ~~sold~~A ~~and~~Preferred ~~services~~Stock, ~~the~~ ~~percentages~~Series ~~above~~B ~~represent~~Preferred ~~line~~Stock ~~item~~and ~~values~~Series ~~expressed~~C asPreferred aStock ~~percentage~~was ofexempt ~~total~~from ~~revenue.~~registration ~~For~~pursuant ~~the~~to ~~components~~Section of4(a)(2) ~~cost~~ of ~~goods sold and services,~~ the ~~percentages~~Securities ~~represent~~Act ~~cost~~because ofthe ~~goods~~transaction ~~sold~~did ~~and~~not ~~services~~involve ~~related to products and services expressed as~~ a ~~percentage of~~public ~~revenue for products and services, respectively~~offering.

YearElm EndedPark December 31, 2012 Compared to Year Ended December 31, 2011Warrants

~~Revenues~~On December 14, 2012, we (the “Borrowers”) entered into a term loan agreement, which provides for a $20.0 million four year senior secured second-lien term loan facility (the “Term Facility”). As consideration for the Term Facility, on December 14, 2012, we issued to Elm Park U.S. and Elm Park Canada, the lenders under such facility, warrants (the “Elm Park Warrants”) to purchase up to 142,484 shares of common stock with an exercise price of $0.01 per share. The Elm Park Warrants are immediately exercisable, may be exercised on a net basis and have a term of 10 years from the date of issuance.

~~Revenues~~The ~~were~~issuance ~~$284~~of ~~million and $164 million for~~ the ~~fiscal~~Elm ~~years~~Park ~~2012~~Warrants ~~and~~was ~~2011,~~exempt ~~respectively,~~from anregistration ~~increase~~pursuant ofto ~~$121~~Section ~~million or 74%. This increase was driven by~~ 4(a)(2) ~~$122~~of ~~million increase~~the inSecurities ~~products~~Act ~~revenue.~~because ~~This~~the ~~significant~~transaction ~~increase~~did innot ~~products~~involve ~~revenue was driven by~~ a ~~$141~~public ~~million increase in complete rig product revenues offset by a $19 million decline in rig refurbishment revenue~~offering.

36Shares of Common Stock Issued In Merger

~~Cost~~Pursuant to the Merger Agreement, at the closing on December 14, 2012, we issued 4,825,671 shares of ~~Sales~~our common stock to former IDE stockholders. We are holding 750,000 additional shares on behalf of the former IDE stockholders to satisfy any indemnification claims we may have under the Merger Agreement. Depending on the amount of the indemnification claims we may make, we will distribute the remaining 750,000 additional shares to the former IDE stockholders. In addition, if the trading price of our common stock exceeds certain thresholds before December 14, 2017, we will distribute up to 5,250,000 shares of our common stock that we hold to the former IDE stockholders. Specifically:

~~Cost~~• ofIf, ~~Sales~~before ~~were~~December ~~$247~~14, ~~million~~2017, ~~and~~(a) ~~$135 million for~~ the ~~fiscal~~trading ~~years~~price ~~2012~~of ~~and~~our ~~2011,~~common ~~respectively,~~stock anexceeds ~~increase of~~ $~~112 million or 83%~~12.00 ~~This~~per ~~increase~~share ~~was~~for ~~primarily~~any ~~driven by~~20 ~~the~~trading ~~increased~~days ~~revenues~~within asany ~~noted~~period ~~above. As a percent~~ of ~~revenue,~~30 ~~cost~~consecutive oftrading ~~sales~~days ~~were~~or ~~87%~~(b) ofa ~~revenue~~Change ~~in 2012 versus 83%~~ of ~~revenue in~~Control ~~the~~Transaction ~~comparable~~(as ~~2011~~defined ~~fiscal year. The increase~~ in ~~cost of sales as a percentage of revenue was due to an increased cost of sales of~~ the ~~Company’s~~Merger ~~product~~Agreement) ~~sales~~occurs ~~which~~that ~~increased~~values toeach ~~94%~~share of ~~revenue~~our incommon ~~2012~~stock ~~versus~~at ~~92%~~more ofthan ~~revenue in 2011~~$12.00 ~~Services~~per ~~cost~~share, ~~of sales~~we ~~improved~~will ~~slightly~~issue ~~in 2012~~ to ~~66%~~the offormer ~~revenue~~IDE asstockholders ~~compared~~1,312,500 toshares ~~70%~~ of ~~revenue~~our incommon ~~the comparable 2011 period~~stock.

~~Selling~~• If, ~~General~~before ~~and~~December ~~Administration~~14, ~~Expenses~~2017, (a) the trading price of our common stock exceeds $13.50 per share for any 20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction occurs that values each share of our common stock at more than $13.50 per share, we will issue to the former IDE stockholders an additional 1,312,500 shares of our common stock.

~~Selling~~• If, ~~general~~before ~~and~~December ~~administration~~14, ~~expenses were~~2017, ~~$35~~(a) ~~million~~the ~~and~~trading ~~$20~~price ~~million~~of inour ~~2012~~common ~~and~~stock ~~2011~~exceeds ~~respectively, an increase of~~ $15 ~~million~~.00 ~~Salaries,~~per ~~wages,~~share ~~and~~for ~~commissions~~any ~~collectively increased~~20 $8trading ~~million~~days inwithin ~~fiscal~~any ~~year~~period ~~2012~~of ~~versus~~30 ~~2011~~consecutive astrading adays ~~result~~or of(b) ~~the~~a ~~Company’s~~Change ~~substantial~~of ~~increase~~Control inTransaction ~~sales~~occurs ~~volumes. Additionally,~~that ~~the~~values ~~Company~~each ~~incurred~~share ~~approximately~~of $3our ~~million~~common instock ~~additional~~at ~~merger~~more ~~related~~than ~~professional~~$15.00 ~~fees~~per ~~and~~share, ~~travel~~we ~~expenses in~~will ~~2012~~issue ~~versus~~to ~~2011~~the asformer ~~a result of~~ IDE’s ~~merger~~stockholders ~~with~~an ~~EAC.~~additional ~~Selling~~1,312,500 ~~general~~shares ~~and administration expenses were 12%~~ of ~~total revenue~~our incommon ~~both 2012 and 2011~~stock.

~~Depreciation~~• ~~and~~If, ~~Amortization~~before ~~Expense~~December 14, 2017, (a) the trading price of our common stock exceeds $17.00 per share for any 20 trading days within any period of 30 consecutive trading days or (b) a Change of Control Transaction occurs that values each share of our common stock at more than $17.00 per share, we will issue to the former IDE stockholders an additional 1,312,500 shares of our common stock.

~~Depreciation~~The ~~and~~issuance ~~amortization~~of ~~expense~~shares to the former IDE stockholders was ~~$1.9~~ ~~million~~exempt infrom ~~fiscal~~registration ~~year~~pursuant ~~2012~~to ~~and~~Section ~~$1.~~4(a)(2) ~~million~~of inthe Securities Act because the ~~comparable~~transaction ~~2011~~did ~~fiscal~~not ~~year~~involve a public offering.

~~Income~~On ~~from~~October ~~Operations~~31, 2013, we issued 124,217 shares of common stock to TerraNova Capital Partners Inc. and its related parties to satisfy a $1.2 million obligation for financial advisory services provided to us in connection with the December 14, 2012 merger with EAC.

Income from operations declined to $0.5 million in 2012 from $7.4 million in 2011. The $6.9 million decline primarily resulted from a $9.0 million increase in gross margin dollars generated in 2012 versus 2011 ($37.5 million versus $28.5 million respectively) offset by $15.2 million in higher selling, general and administration expenses in fiscal year 2012 versus the comparable 2011 fiscal year as noted above.34

~~Other~~TABLE ~~(Income)~~OF ~~Expense and Income Taxes~~CONTENTS

~~Total~~The ~~other~~issuance ~~expense~~of ~~was~~shares ~~$1.0~~to ~~million and~~TerraNova ~~$3.5~~Capital ~~million~~Partners inInc. ~~2012~~ and ~~2011,~~its ~~respectively.~~related ~~Net~~parties ~~interest expense (interest expense less interest income)~~ was ~~$1.2 million~~exempt ~~and~~from ~~$3.6~~registration ~~million~~pursuant into ~~2012~~Section ~~and 2011 respectively,~~ 4(a)(2) ~~decrease~~ of ~~$2.4~~the ~~million.~~Securities ~~This~~Act ~~decrease~~because ~~in net interest expense was principally due to substantially lower debt levels in 2012. Other income was $0.2 million in~~ the ~~2012~~transaction ~~fiscal~~did ~~year~~not ~~versus other~~involve ~~income~~a ofpublic $0offering.1 ~~million in fiscal year 2011.~~

IncomePlacement taxWarrant expenseExchange was $0.8 million and $1.7 million in 2012 and 2011, respectively. After adjusting for temporary and permanent income tax items, the income tax expense represented effective tax rates on income before income taxes of 35% in 2012 and 2011.Shares

~~Year~~On ~~Ended~~February ~~December~~25, 312013, ~~2011~~we ~~Compared~~entered into a Placement Warrant Exchange Agreement with our Sponsor. Pursuant to ~~Year~~this ~~Ended~~Agreement, ~~December 31~~we issued 39,000 ~~2010~~shares of common stock to our Sponsor in exchange for cancelling our Sponsor’s Placement Warrants.

~~Revenues~~The issuance of the 39,000 shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act because the transaction did not involve a public offering.

RevenuesPurchases were $164 million and $116 million for the fiscal years 2011 and 2010, respectively, an increase of $47Equity millionSecurities or 41%. This increase was driven by athe $32Issuer million increase in services revenue and aAffiliated $15 million increase in products revenue. The increase in services revenue was from a $35 million increase in refurbishment rig revenue in fiscal year 2011 versus 2010 principally from a contract with a customer to refurbish five rigs. The increase in products revenue was principally from an $11 million increase in our complete rig package revenue in fiscal year 2011 versus 2010 reflecting our growth in the sales of complete rigs.Purchasers

~~Cost~~We made no purchases of ~~Sales~~any shares of our common stock, warrants to purchase shares of common stock, or Units in the fourth quarter of 2014.

~~Cost~~Item ~~of sales was $135 million and $92 million for the fiscal years 2011 and 2010, respectively, an increase of $43 million or 47%~~6. ~~This~~SELECTED ~~increase~~FINANCIAL was primarily driven by the increased revenues as noted above. As a percent of revenue, cost of sales were 83% of revenue in 2011 versus 79% of revenue in 2010. The increase in cost of sales as a percentage of revenue was due to an increased cost of sales of our products which increased to 92% of revenue in 2011 versus 81% of products revenue in 2010. This increase in cost of sales was due to the increase in complete rig package revenue in 2011 versus 2010. These sales have a much higher cost of sales than the other product revenue line items. Services cost of sales improved slightly in 2011 to 70% of revenue as compared to 76% of revenue in the comparable 2010 period. The improvement was due to improved margins on rig up electrical service revenue. Cost of sales declined to 61% of revenue in 2011 from 75% of revenue in 2010. The rig up electrical service revenue was approximately $34 million in both fiscal years.DATA

37Not Applicable.

~~Selling, General and Administration Expenses~~35

~~Selling,~~TABLE ~~general~~OF and administration expenses were $20 million and $14 million in 2011 and 2010, respectively, resulting in an increase of $5.6 million. This increase was primarily due to increased cost of sales associated with higher revenues in 2011 as compared to 2010 and, to a lesser degree, additional expenses associated with hiring and compensating additional senior management. Selling, general and administration expenses were 12% of total revenue in both 2011 and 2010. Salary expense and unapplied manufacturing labor increased $2 million and $1 million, respectively, in 2011 versus 2010. These higher expenses are reflective of our efforts to support our complete rig revenues.CONTENTS

~~Depreciation~~Item ~~and~~7. ~~Amortization~~MANAGEMENT’S ~~Expense~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Depreciation~~Management’s Discussion and ~~amortization~~Analysis ~~expense~~of ~~was $1.2~~Financial ~~million~~Condition and Results of Operations (“MD&A”) is provided to assist readers in ~~2011~~understanding the Company’s financial performance during the periods presented and $0significant trends which may impact the future performance of the Company.8 ~~million~~This discussion should be read in conjunction with the ~~comparable~~financial ~~2010~~statements ~~fiscal~~of ~~year~~the Company and the notes to those statements included in Part II, Item 8 of this report. MD&A contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements, see Risk Factors in “Item 1A.” of this report.

Income from OperationsOverview

~~Income~~We ~~from~~provide ~~operations~~products ~~declined~~and services to ~~$7.4 million~~customers in ~~2011~~the ~~from~~oil ~~$8.9~~and ~~million~~gas inindustry ~~2010.~~both ~~The~~domestically ~~$1.5~~and ~~million decline resulted from a $4~~internationally.5 ~~million~~The ~~increase~~majority inof ~~gross~~our ~~margin~~business ~~dollars generated~~is inconducted ~~2011~~through ~~versus~~two ~~2010~~operating ~~($28.5~~segments: ~~million versus $24.0 million respectively~~(1) ~~offset~~Electrical byProducts ~~$5.6~~and ~~million~~Services ~~in higher selling, general~~ and ~~administration expenses in 2011 versus 2010~~ (~~$19.9~~2) ~~million~~Drilling ~~versus~~Products ~~$14.3~~and ~~million, respectively)~~Services.

~~Other~~Our electrical segment designs, manufactures, installs and services electrical and control systems for drilling rigs including SCR (~~Income~~silicon-controlled rectifier) ~~Expense~~units and ~~Income~~VFD ~~Taxes~~(variable frequency drive) units, as well as electrical cabling, lighting systems, closed circuit video systems, gas and fire detection systems, and communication systems.

~~Total~~Our ~~other~~drilling ~~expense~~segment ~~was~~is ~~$3.5~~a ~~million~~full ~~and $5.2~~service ~~million~~provider inof ~~2011~~drilling rigs and ~~2010~~their ~~respectively~~components. ~~Net~~We ~~interest~~design, ~~expense~~manufacture, ~~(interest~~and ~~expense~~service ~~less~~complete ~~interest~~land-based ~~income)~~drilling ~~was~~rigs, ~~$3.6~~as ~~million~~well as rig subsystems and $5parts.~~1 million~~ inWe ~~2011~~also provide drilling rig services including mechanical services, assembly testing (rig-up/final construction and ~~2010~~commission), ~~respectively~~rig refurbishment and inspection, anew ~~decrease~~rig fabrication and completion of ~~$1.5~~land ~~million~~rig packages. ~~This~~Additionally, ~~decrease~~we infabricate ~~net~~mud ~~interest~~tanks, ~~expense~~masts ~~was~~and ~~principally~~substructures, ~~due~~dog ~~to substantially~~houses ~~lower~~and ~~debt~~other ~~levels~~drilling inrig ~~2011~~related products.

~~Income~~The ~~tax~~increased ~~expense~~use ~~was~~of ~~$1.7~~horizontal ~~million~~drilling and $ hydraulic fracturing, or fracking, has increased the demand for drilling rigs capable of drilling under these conditions. Since fracking has become more widespread, we believe more than 1,000 rigs have been manufactured or refurbished for that purpose.5 ~~million~~By in2009, ~~2011~~our rig electrical and ~~2010~~control ~~respectively~~systems were gaining market acceptance and we had started installing our proprietary electrical systems in customer’s existing drilling rigs. ~~The~~Because ~~income~~these ~~tax~~electrical ~~expense~~systems ~~represented~~are ~~effective~~the ~~tax~~key ~~rates~~component onthat ~~income~~enable ~~before~~the ~~income~~rig ~~taxes of~~to ~~45%~~operate ~~and~~with ~~41%~~greater efficiency in ~~2011~~horizontal shale drilling situations versus other competitive electrical systems, management decided to offer customers a complete rig package, including our unique electrical and ~~2010~~control systems. Later in 2009, ~~respectively~~we sold our first complete rig package.

~~Segment~~The ~~Results~~Company is currently finalizing new rig designs for offshore platforms that it expects will enable the Company to capture more bids for new drilling equipment on newly constructed platforms as well as replacing drilling equipment on existing shallow offshore platforms that may be 25 or more years’ old. On these older platforms, drilling operators are potentially looking to upgrade their platforms with newer equipment that encompass the latest drilling techniques and efficiencies. The Company is currently using their new offshore platform rig designs for current bids with offshore drilling contractors. If the Company is successful in obtaining this additional offshore platform rig business, it will expand the Company’s current offerings beyond our existing land rig offerings. The size and scope of ~~Operations~~these projects will help to solidify our existing land rig backlog.

~~Year~~Management ~~Ended~~is ~~December~~currently ~~31,~~focused ~~2012~~on ~~Compared~~improving the production process for complete rig packages and continuing to ~~Year~~implement ~~Ended~~lean ~~December 31,~~manufacturing ~~2011~~processes. We also plan to leverage our IEC division’s established customer base to expand the products and services we offer to our customers and are evaluating strategies to further serve offshore and international markets.

Electrical Products & Services segment revenues were $94 million and $56 million for fiscal years 2012 and 2011, respectively, an increase of $39 million or 69%. This increase was primarily driven by higher work volumes from its major customer, as well as increased electrical volume from the production of IDE’s complete rigs. Drilling Products & Services segment revenue was $224 million and $141 million for fiscal years 2012 and 2011, respectively, an increase of $83 million, or 59%. The 2012 increase in Drilling Products & Services segment revenues was primarily driven by the increased production levels of complete new rigs.36

~~Electrical~~TABLE ~~Products~~OF & Services segment profit was $17 million and $10 million for fiscal years 2012 and 2011, respectively, an increase of $7 million or 66%. Segment profits were 18% of 2012 and 2011 segment revenues. The $7 million increase in 2012 versus 2011 segment profits was primarily driven by increased 2012 revenues. Drilling Products & Services segment profit was $1 million and $10 million for fiscal years 2012 and 2011, respectively, a decrease of $9 million or 93%. Segment profits were 0.3% and 7% of the respective 2012 and 2011 segment revenues. The decrease in 2012 profits expressed as a percentage of revenue was due to complete rig gross margin losses during the first quarter of 2012 of $6 million as a result of manufacturing inefficiencies. These losses were eliminated in subsequent periods as a result of the Company’s implementation of lean manufacturing practices. In the period from April 1 to December 31, 2012, the Company’s complete rig gross margin profits were $16 million.CONTENTS

38Consolidated Results of Operations

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010


	For the Years Ended December 31,
(Dollars in thousands)	2014					2013
Statement of Operations Data:
Revenue:
Products	$	52,240		59.8	%	$	64,373		62.0	%
Services		35,054		40.2	%		39,375		38.0	%
Total revenue		87,294		100.0	%		103,748		100.0	%
Cost of goods sold and services:
Products		39,550		75.7	%		48,672		75.6	%
Services		20,136		57.4	%		25,993		66.0	%
Total cost of goods sold and services		59,686		68.4	%		74,665		72.0	%
Selling, general and administrative expense		20,954		24.0	%		25,039		24.1	%
Impairment of intangible assets		—		0.0	%		858		0.8	%
Depreciation and amortization expense		2,117		2.4	%		2,162		2.1	%
Income (loss) from operations		4,537		5.2	%		1,024		1.0	%
Other (income) expense:
Interest expense		5,922		6.8	%		5,561		5.4	%
Other (income) expense		(584	)	(0.7	%)		(820	)	(0.8	%)
Total other (income) expense		5,338		6.1	%		4,741		4.6	%
Income (loss) before income taxes		(801	)	(0.9	%)		(3,717	)	(3.6	%)
Income taxes:
Current		65		0.1	%		70		0.1	%
Deferred		—		0.0	%		3,873		3.7	%
Total income taxes		65		0.1	%		3,943		3.8	%
Net income (loss)	$	(866	)	(1.0	%)	$	(7,660	)	(7.4	%)

~~Electrical~~Except ~~Products~~for &the ~~Services~~components ~~segment revenues~~of ~~were~~cost ~~$56~~of ~~million~~goods ~~and~~sold ~~$48 million for fiscal years 2011~~ and ~~2010~~services, ~~respectively,~~the anpercentages ~~increase~~above ofrepresent $7line ~~million~~item orvalues ~~15%.~~expressed ~~This increase~~as ~~was~~a ~~primarily~~percentage ~~driven~~of bytotal ~~additional~~revenue. ~~revenues~~For ~~related to electrical systems used in~~ the ~~production~~components of ~~our~~cost ~~complete~~of ~~rig~~goods ~~packages. Drilling~~sold ~~Products & Services segment revenues were $141 million~~ and ~~$93 million for fiscal years 2011 and 2010~~services, ~~respectively, an~~the ~~increase~~percentages ofrepresent ~~$47~~cost ~~million or 51%. The 2011 increase in Drilling Products & Services segment revenues~~ of ~~$47~~goods ~~million~~sold ~~included $21~~and ~~million~~services inrelated ~~additional~~to ~~fabrication~~products and ~~rig~~services ~~refurbishment~~expressed ~~revenues,~~as ~~$11~~a ~~million~~percentage inof ~~additional~~revenue ~~complete~~for ~~rig~~products ~~package revenues~~ and ~~$15~~ ~~million in additional other drilling product and~~ services, ~~revenues~~respectively.

ElectricalYear ProductsEnded &December Services segment profit was $10 million and $9 million for fiscal years 2011 and 201031, respectively,2014 anCompared increaseto ofYear $1Ended millionDecember or 13%. Segment profits were 18.5% and 18.9% of the respective 2011 and 2010 segment revenues. The $1 million increase in 2011 versus 2010 segment profits was primarily driven by the additional 2011 fiscal year Electrical Products & Services segment revenues. Drilling Products & Services segment profit was $10 million and $8 million for fiscal years 2011 and 201031, respectively, an increase of $2 million or 29%. Segment profits were 7.5% and 8.7% of the respective 2011 and 2010 segment revenues. The decline in 2011 profits expressed as a percentage of revenue was due to higher revenues of complete rig packages which have a lower margin than the balance of the other products within the Drilling Products & Services segment. The $2 million of additional 2011 segment profit versus 2010 was driven by increased 2011 segment revenues offset by lower 2011 profit margins as noted above.2013

Liquidity and Capital ResourcesRevenues

~~Our~~Revenues ~~primary~~were ~~source~~$87.3 ofmillion ~~liquidity~~and is$103.7 ~~cash generated~~million ~~from~~for the ~~sales~~fiscal years 2014 and 2013, respectively, a decrease of ~~our~~$16.4 ~~products~~million ~~and~~or ~~services~~16%. ~~Most~~This ofdecrease ~~the~~was ~~Company’s~~driven ~~fixed-price~~by ~~contracts~~a ~~for~~$12.1 ~~new~~million ~~land-based~~decrease ~~drilling rigs~~in ~~provide~~products ~~for~~revenue ~~progress~~and ~~payments~~a ~~throughout~~$4.3 ~~the~~million ~~manufacturing~~decrease ~~process~~in services revenue. ~~Most~~The ofsignificant ~~the~~decrease ~~Company’s~~in ~~other~~products revenue ~~producing~~was ~~contracts are~~driven ~~billed~~by ~~monthly~~a to$29.8 ~~customers~~million ~~for~~decrease ~~actual~~in ~~costs~~complete ~~plus~~rig anproduct ~~agreed margin~~revenues. ~~Assuming~~This ~~consistent~~decline ~~volumes,~~was ~~these~~partially ~~contracts~~offset ~~typically do~~by ~~not~~increases ~~require~~in ~~extensive~~fabrication ~~working~~revenues ~~capital~~of ~~resources~~$9.0 ~~Our~~million, ~~primary~~power ~~use~~systems and rig up electrical revenues of ~~cash~~$6.6 ismillion ~~cost~~and increases in hydraulics revenues of ~~sales,~~$2.4 ~~operating~~million. ~~expenses,~~The ~~interest~~$4.3 ~~expense,~~million decrease in services revenue was driven ~~working~~by ~~capital~~a ~~needs,~~$5.5 ~~purchases~~million ofdecrease ~~intangibles,~~in ~~capital~~power ~~expenditures,~~system ~~and~~services ~~repayment~~offset ofby ~~our~~a ~~debt~~$1.3 ~~obligations~~million increase in automation services revenues.

InCost 2010,of we generated sufficient funds to cover our cash obligations as well as to reduce our long-term debt by $5.8 million.Sales

InCost ~~October~~of ~~2011,~~Sales wewere ~~repaid~~$59.7 ~~all~~million ofand ~~our outstanding debt, or~~ $2074.97 million for the fiscal years 2014 and 2013, onrespectively, ~~our~~a decrease of $2515.90 million ~~Credit~~or ~~Agreement~~20%. ~~Due~~This todecrease ~~this~~was ~~cash~~primarily ~~outflow,~~driven asby ~~well~~the decreased revenues as noted above. As a ~~rapid~~percent ~~expansion~~of revenue, cost of sales were 68% of revenue in ~~our~~2014 ~~complete rig~~versus ~~business,~~72% weof ~~concurrently~~revenue ~~entered~~in ~~into~~the comparable 2013 fiscal year. The decrease in cost of sales as a ~~new~~percentage ~~$20 million~~of ~~revolving~~revenue ~~credit~~was ~~facility.~~due to a decreased

On December 14, 2012, in connection with the closing of the Merger, we entered into a $20 million term loan and security agreement, amended and restated a $20 million revolving credit and security agreement and issued 25,000 shares of Preferred Stock for $2.5 million.37

~~For~~TABLE ~~the~~OF cumulative $354 million of PEMEX contracts that were signed on March 22, 2013, the Company will receive a 20% deposit upon posting contract performance bonds and letters of credit to support the project. The final 80% contract price will be paid seven days after successful installation acceptance on the offshore platform. The performance bonds, letters of credit and payment terms on these PEMEX contracts will require the Company to raise additional working capital in order to complete the project.CONTENTS

~~The~~cost of sales of the Company’s isservices ~~currently~~sales ~~exploring~~which ~~various options~~decreased to ~~raise~~57% ~~additional~~of ~~working~~revenue ~~capital~~in 2014 versus 66% of revenue in 2013. ~~There~~This ~~can~~significant bereduction noin ~~assurances~~services ~~that~~cost ~~the~~of ~~Company~~sales ~~will~~was bedue ~~able~~to improved gross margins in all of our service revenue functions. Power systems and rig up electrical services cost of sales declined from 58% of revenues in 2013 to ~~raise~~52% ~~the~~in ~~additional~~2014, ~~working capital~~automation ~~needed~~services cost of sales declined from 70% of revenues in 2013 to ~~complete~~60% ~~the~~in ~~aforementioned~~2014, ~~PEMEX~~and ~~contracts~~rig up and refurbishment service cost of sales declined from 84% of revenues in 2013 to 79% in 2014.

39Selling, General and Administration Expenses

~~Term~~Selling, ~~Facility~~general and administration expenses were $21.0 million and $25.0 million in 2014 and 2013 respectively, a decrease of $4.1 million or 16%. Professional fees decreased $1.8 million in fiscal year 2014 versus 2013 primarily as a result of lower legal fees. In 2014 versus 2013, the Company also incurred approximately $0.9 million in reduced equipment rentals as a result of reduced production volumes and improved manufacturing efficiencies. Bad debt expense also declined $0.5 in 2014 as compared to 2013. The aforementioned expense declines were partially offset by a $0.9 million increase in salary expenses. This increase was due to $2.3 million expense charge related to the Settlement Agreement entered into with our former CEO in April 2014, partially offset by $1.4 million in lower salary expense due to headcount reductions. As the result of the significant revenue declines, selling, general and administration expenses were 24% of total revenue in both 2014 and 2013 fiscal years.

OnDepreciation December 14, 2012, we and ourAmortization subsidiaries (the “Borrowers”) entered into a term loan and security agreement with Elm Park Credit Opportunities Fund, L.P. and Elm Park Credit Opportunities Fund (Canada), L.P., as lenders, and Elm Park Capital Management, LLC, as administrative agent, which provides for a $20.0 million four year senior secured second-lien term loan facility (the “Term Facility”). Proceeds of the Term Facility were used (a) to finance a portion of the consideration payable in the Merger, (b) to repay a portion of the Borrowers’ existing indebtedness, and (c) to pay fees and expenses associated with the Merger and related transactions. This term loan and security agreement was amended on April 9, 2013.Expense

~~Interest~~Depreciation ~~Rate.~~and ~~Loans~~amortization ~~under~~expense ~~the~~was ~~Term Facility~~$2.1 ~~bear~~million ~~interest, at the Borrowers’ option, at a rate equal to the adjusted LIBOR rate or an alternate base rate, in each case, subject to a floor~~ and ~~a spread~~$2.2 ~~This~~million ~~interest is paid~~ in ~~cash.~~2014 ~~For~~and ~~LIBOR loans~~2013, ~~the floor is 3.0% and the spread will range from 8.0% to 9.0% per annum depending on the total leverage ratio. For alternate base rate loans~~respectively, ~~the~~a ~~floor~~slight isdecrease ~~4.0%~~of ~~and the spread will range from 7.~~$0~~% to 8~~.0%1 ~~per~~million ~~annum~~or ~~depending on the total leverage ratio. In addition, all loans bear additional pay-in-kind (PIK) interest at a rate of~~ 2.0% ~~per annum~~.

VoluntaryIncome Prepayment.from The Borrowers are permitted to make voluntary principal prepayments with respect to the Term Facility at any time. However, in connection with any voluntary prepayment (and in certain instances, mandatory prepayments) during the first year of the Term Facility, the Borrowers will be required to pay a make whole premium in an amount equal to the present value of all interest that but for such prepayment would have accrued through the first anniversary of the Term Facility, plus an amount equal to 3.0% of the amount being prepaid. Any principal prepayment made thereafter will be subject to a prepayment penalty in an amount equal to 3.0% in the second year of the Term Facility, 1.0% in the third year of the Term Facility and 0.0% thereafter.Operations

~~Mandatory~~Income ~~Prepayment~~from ~~and~~operations ~~Amortization. The~~increased ~~Borrowers are required~~ to ~~make~~$4.5 ~~quarterly~~million ~~amortization~~in ~~payments~~2014 ~~with~~from ~~respect to the Term Facility of~~ $~~150,000~~1.0 ~~for~~million ~~each~~in ~~calendar quarter of~~ 2013. ~~and~~The $~~300,000 each calendar quarter thereafter~~3.5 Inmillion ~~addition,~~increase ~~the~~primarily ~~Borrowers~~resulted ~~are~~from ~~required~~a to$4.1 ~~make~~million ~~mandatory~~reduction ~~prepayments~~ in ~~connection~~selling, ~~with~~general ~~specified~~and ~~events,~~administration ~~including~~expenses ~~certain~~(as ~~asset~~noted ~~sales,~~above) ~~debt~~and ~~issuances,~~an ~~equity~~impairment ~~issuances,~~charge ~~casualty~~in ~~and~~2013 ~~condemnation events~~of ~~and~~$0.9 ~~the~~million. ~~receipt~~These ofimprovements ~~extraordinary~~were ~~proceeds,~~offset asby ~~well~~$1.5 asmillion andecline ~~annual~~in ~~mandatory~~gross ~~prepayment~~margin dollars generated in an2014 ~~amount~~versus ~~equal~~2013 to($27.6 ~~50%~~million ofversus ~~certain excess~~$29.1 ~~cash~~million ~~flow~~respectively ~~for~~in ~~the~~2014 ~~previous~~versus ~~year~~2013).

GuarantorsOther and(Income) SecurityExpense Interests. The Borrowers are jointly and severallyIncome liable for the obligations under the Term Facility and any future subsidiaries of the Borrowers will be required to guarantee the payment and performance of the obligations of the Borrowers under the Term Facility. The Term Facility is secured, subject to certain permitted liens, on a second priority basis by a security interest in substantially all of each Borrower’s and each guarantor’s tangible and intangible assets.Taxes

~~Representations~~Total ~~and~~other ~~Covenants~~expense was $5.3 ~~The Term~~million ~~Facility~~and ~~contains~~$4.7 ~~representations~~million ~~and~~in ~~warranties~~2014 and ~~affirmative~~2013, ~~and~~respectively. ~~negative~~Net ~~covenants,~~interest ~~including~~expense ~~restrictions~~(interest onexpense ~~indebtedness, investments,~~less ~~sales~~interest ofincome) ~~assets,~~was ~~mergers~~$5.9 million and ~~consolidations,~~$5.6 ~~liens~~million ~~and~~in ~~dividends~~2014 and ~~other~~2013 ~~distributions.~~respectively, Inan ~~addition,~~increase ~~the~~of ~~Term~~$0.4 ~~Facility includes~~million. ~~financial~~This ~~covenants,~~slight ~~including~~increase ~~minimum~~in net ~~worth,~~interest ~~minimum~~expense ~~fixed~~was ~~charge~~principally ~~coverage~~due ~~ratio,~~to ~~minimum~~slightly ~~liquidity~~higher ~~test,~~interest ~~minimum EBITDA,~~rates ~~maximum~~in ~~total~~2014 ~~leverage~~versus ~~ratio~~2013. ~~and~~Other aincome/expense ~~limitation~~was ~~on capital expenditures~~$0.6 ~~The~~million ~~Term~~of ~~Facility~~net ~~cross-default~~other ~~provisions~~income ~~with~~ in the ~~PNC~~2014 ~~Credit~~fiscal ~~Facility~~year ~~and~~versus ~~also~~net ~~includes~~other ~~customary~~income ~~events~~ of ~~default,~~$0.8 ~~including~~million ~~upon~~in athe ~~change~~comparable of2013 ~~control~~fiscal year.

~~Amended~~Income tax expense was $0.1 million and ~~Restated~~$3.9 ~~PNC~~million ~~Credit~~in ~~Facility~~2014 and 2013, respectively. During 2014, the Company increased our valuation allowance by an additional $0.4 million for a total valuation of $5.1 million as of December 31, 2014. In 2013, the Company recorded a non-cash charge to establish a valuation allowance of $4.7 million. The valuation allowance is calculated in accordance with the provisions of Accounting Standards Codification 740, Income Taxes (ASC 740) which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance.

~~On December 14~~Currently, ~~2012,~~ the ~~Borrowers~~Company ~~entered into~~has ana ~~amended~~declining ~~and~~backlog ~~restated~~of ~~revolving~~revenue ~~credit and security agreement with PNC Bank~~projects, ~~National~~which ~~Association,~~has ascreated ~~administrative agent and the initial lender (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for~~ a ~~$20~~greater ~~million committed~~degree ~~asset-based~~of ~~revolving~~uncertainty ~~credit~~that ~~facility, with~~ a ~~sublimit~~sufficient ~~for~~level ~~letters~~ of ~~credit~~future ~~(the~~profitability ~~“Revolving~~will ~~Facility”). The~~be ~~availability~~generated ofto ~~credit~~realize ~~under~~ the ~~Revolving~~deferred ~~Credit~~tax ~~Agreement~~assets. isThis ~~subject~~declining ~~to a borrowing base~~backlog, ~~which~~along iswith ~~calculated~~the ~~based~~present ondownturn ~~percentages of~~in ~~accounts~~the ~~receivable~~oil and ~~inventory~~gas industry, ~~that~~represents ~~may~~sufficient ~~limit~~negative ~~the~~evidence ~~amount~~to ofrequire ~~borrowings~~a ~~and~~valuation ~~letters of credit otherwise available under the Revolving Facility~~allowance. The ~~commitments~~Company ~~under~~intends ~~the~~to ~~Revolving~~maintain ~~Credit~~a ~~Agreement~~valuation ~~expire~~allowance onuntil ~~June~~sufficient ~~30,~~positive ~~2016~~evidence ~~and~~exists ~~all~~to ~~loans~~support ~~made~~its ~~under the Revolving Facility mature on such date~~reversal. ~~This Revolving Credit Agreement was amended on April 9, 2013.~~

40Segment Results of Operations

InterestYear Rate.Ended LoansDecember under the Revolving Facility will bear interest31, at2014 theCompared Borrowers’ option, at a rate equal to theYear adjustedEnded LIBORDecember rate31, plus 2.50% or an alternate base rate plus 1.50%.2013

~~Termination~~Electrical ofProducts ~~Commitments.~~& ~~The Borrowers~~Services ~~will~~segment berevenues ~~permitted~~were to$61.5 ~~make~~million ~~voluntary~~and ~~prepayments~~$61.1 ~~with~~million ~~respect~~for tofiscal ~~the~~years ~~Revolving~~2014 ~~Facility at any time~~ and ~~may~~2013, ~~terminate or reduce the commitments under the Revolving Credit Facility after meeting certain notice requirements. However~~respectively, inan ~~connection with~~increase ~~any voluntary reduction or termination~~ of ~~the~~$0.4 ~~commitments~~million. ~~the~~Drilling ~~Borrowers~~Products ~~are~~& ~~required~~Services tosegment ~~pay~~revenue awas ~~fee~~$28.4 inmillion anand ~~amount equal to 3~~$49.~~0% of~~2 ~~any~~million ~~reduction~~for ~~during~~fiscal ~~the~~years ~~first~~2014 ~~year~~and of2013, ~~the Revolving Facility~~respectively, ~~2.0%~~a ofdecrease ~~any reduction during the second year~~ of ~~the Revolving Facility and 1~~$20.0%8 ofmillion, ~~any~~or ~~reduction during the third year of the Revolving Facility.~~

Mandatory Prepayments. The Borrowers are required to use insurance proceeds and the net cash proceeds from any asset sale to prepay revolving loans made under the Revolving Facility. In addition, if a default exists under the Revolving Credit Agreement, the Borrowers are required to use the net cash proceeds of certain equity and debt issuances and certain receipts received outside of the ordinary course of business to prepay revolving loans made under the Revolving Facility. Such prepayments do not result in a mandatory reduction of the commitments and can be reborrowed to the extent that borrowings are then permitted under the Revolving Credit Agreement.38

~~Guarantors~~TABLE ~~and~~OF Security Interests. The Borrowers are jointly and severally liable for the obligations owing under the Revolving Facility and any future subsidiaries of the Borrowers shall be required to guarantee the payment and performance of the obligations of the Borrowers under the Revolving Facility. The Revolving Facility is secured, subject to certain permitted liens, on a first priority basis by a security interest in substantially all of each Borrower’s and each guarantor’s tangible and intangible assets.CONTENTS

~~Representations and Covenants~~42%. The ~~Revolving~~ ~~Facility~~2014 ~~contains~~decrease ~~representations~~in ~~and~~Drilling ~~warranties~~Products ~~and~~& ~~affirmative~~Services ~~and~~segment ~~negative~~revenues ~~covenants,~~was ~~including~~primarily ~~restrictions~~driven onby ~~indebtedness, investments, sales of assets, mergers and consolidations, liens and dividends and other distributions. In addition,~~ the ~~Revolving Facility~~significantly ~~includes~~lower ~~certain~~production ~~financial~~levels covenants, including minimum net worth, minimum fixed charge coverage ratio, minimum liquidity test, minimum EBITDA, maximum total leverage ratio and a limitation on capital expenditures. The Revolving Facility also includes customary events of ~~default,~~complete ~~including~~new ~~upon a change of control~~rigs.

AsElectrical ofProducts ~~February~~& ~~28,~~Services segment profit was $16.0 million and $12.6 million for fiscal years 2014 and 2013, werespectively, a increase of $3.4 million or 27%. Segment profits were ~~not~~26% and 21% of 2014 and 2013 respective segment revenues. The $3.4 million increase in ~~compliance~~ ~~with~~2014 ~~certain~~versus ~~covenants~~2013 ofsegment ~~our~~profits ~~existing~~was ~~credit~~primarily ~~facilities~~driven by the improved margins in 2014 as noted above. OnDrilling ~~April~~Products 9,& Services segment profit or loss was $0.6 million loss and $1.3 million profit for fiscal years 2014 and 2013, werespectively, ~~amended~~a ~~both~~decrease of ~~our~~$1.9 ~~existing~~million. ~~credit~~Segment ~~agreements~~ profits (losses) were (2%) and as3% of ~~that~~the ~~date,~~respective we2014 ~~are~~and 2013 segment revenues. The decrease in ~~compliance~~2014 ~~with~~profits ~~our~~expressed ~~credit~~as ~~facilities~~a percentage of revenue was due to significantly lower revenue volumes as compared to 2013.

PreferredLiquidity Stockand PurchaseCapital AgreementResources

OnOur ~~December~~primary ~~14,~~source ~~2012,~~of weliquidity ~~entered~~is ~~into~~cash generated from the ~~Purchase~~ ~~Agreement~~sales ~~with~~of our ~~Sponsor,~~products ~~pursuant~~and toservices. ~~which~~Most ~~our~~of ~~Sponsor~~the ~~purchased~~Company’s ~~25,000~~fixed-price ~~shares~~contracts for new land-based drilling rigs provide for progress payments throughout the manufacturing process. Most of ~~Preferred~~the ~~Stock~~Company’s atother ~~$100~~revenue ~~per~~producing ~~share~~ contracts are billed monthly to customers for $2actual costs plus an agreed margin.5 ~~million~~Assuming consistent volumes, these contracts typically do not require extensive working capital resources. ~~For~~Our ~~additional~~primary ~~information~~use ~~the~~of ~~about~~cash ~~sale~~is cost of ~~our~~sales, ~~Preferred~~operating ~~Stock~~expenses, ~~see~~interest ~~“Certain~~expense, ~~Relationships~~working ~~and~~capital ~~Related~~needs, purchases of intangibles, capital ~~Transactions~~expenditures, —and ~~Preferred~~repayment ~~Stock~~of ~~Purchase~~our ~~Agreement~~debt obligations.”

~~Cash~~As ~~Flows~~of ~~for~~December 31, 2014, the ~~Years~~Company ~~Ended~~had cash and cash equivalents of approximately $1.3 million. In addition, in December 312014, ~~2012~~ the Company entered into amendments to both its Term Facility and ~~2011~~its Revolving Facility (as described further below) which, among other things, extended the maturities of these facilities to September 30, 2015 and March 31, 2015, respectively.

~~Net~~On ~~cash~~December ~~used~~14, in2012, ~~operating~~Integrated ~~activities~~Drilling ~~was $9~~Equipment Holdings Corp.8, ~~million~~a inDelaware ~~fiscal~~corporation ~~year~~(the ~~2012~~“Company”), ~~versus~~Integrated ~~net~~Drilling ~~cash~~Equipment, ~~provided~~LLC byand ~~operations~~Integrated ofDrilling ~~$25.8~~Equipment ~~million~~Company inHoldings, ~~fiscal~~LLC ~~year~~(collectively ~~2011.~~with ~~The~~the ~~$35.6~~Company, ~~decline in~~the ~~cash~~“Borrowers”) ~~flow~~entered ~~from~~into ~~operations~~a interm ~~2012~~loan ~~versus~~and ~~2011~~security ~~was~~agreement ~~primarily~~with ~~due~~Elm toPark aCredit ~~$31~~Opportunities Fund, L.7P. ~~million~~and ~~decline~~Elm inPark ~~cash~~Credit ~~generated~~Opportunities ~~from~~Fund ~~working~~(Canada), ~~capital in~~L.P., ~~2012~~as ~~versus~~lenders, ~~2011.~~and ~~The~~Elm ~~working~~Park ~~capital~~Capital ~~decline~~Management, ~~came~~LLC, ~~from~~as ~~lower~~administrative ~~customer~~agent ~~advanced~~(the ~~billing~~“Term ~~and~~Loan ~~payments~~Agreement”). inThe ~~2012~~Term ~~versus~~Loan ~~2011~~Agreement of provided for a $7520.10 million. ~~This~~four ~~decline~~year ~~was~~senior secured second-lien term loan facility (as amended, the ~~result~~“Term ofFacility”). On the ~~Company’s~~same ~~decrease~~date, inthe ~~fiscal~~Borrowers ~~year-end~~also ~~2012~~entered ~~complete~~into ~~rig~~an ~~order~~amended ~~billings~~ and ~~deposits~~restated ~~versus~~revolving ~~the~~credit ~~comparable~~and ~~2011~~security ~~year-end~~agreement ~~amount.~~with ~~This~~PNC ~~decrease~~Bank, ~~was~~National ~~offset~~Association, byas ~~$49.9~~administrative ~~million~~agent ofand ~~cash~~the ~~provided~~initial bylender ~~lower~~(the ~~accounts receivables~~“Revolving ~~and~~Credit ~~inventories~~Agreement”). asThe Revolving Credit Agreement provides for a ~~result~~$20 ofmillion ~~these~~committed ~~lower~~asset-based ~~production~~revolving ~~levels~~credit infacility, ~~December~~with ~~2012~~a ~~versus~~sublimit ~~December~~for ~~2011~~letters of credit (as amended, the “Revolving Facility”).

~~The~~On ~~Company~~October ~~invested~~17, ~~approximately $2~~2013, ~~million~~the inBorrowers ~~intangibles~~entered ~~during~~into ~~fiscal~~the ~~years~~Second ~~2012~~Amendment to the Term Facility and ~~2011.~~the ~~Capital~~Second ~~expenditures~~Amendment ~~were~~to ~~also~~the ~~approximately~~Revolving Facility to, among other things, (1) reduce the Revolving Facility to $215.0 million in(from $20.0 million), (2) amend the ~~2012~~ maturity date of the Term Facility from December 14, 2016 to September 30, 2014 and ~~2011~~the ~~fiscal~~maturity ~~years.~~date ~~There~~of ~~were~~the noRevolving ~~business~~Facility ~~purchases~~from inJune 30, 2016 to March 31, 2014, (3) delete (a) the ~~comparable~~net ~~2011~~worth ~~fiscal~~financial ~~year~~covenant, (b) the fixed charge coverage ratio, (c) the minimum liquidity test and (d) the total leverage ratio and (4) amend (a) the minimum EBITDA financial covenant and (b) the capital expenditures financial covenant.

41In connection with the Second Amendments described above, the Borrowers were required to (1) implement and comply with a cost reduction plan and (2) obtain (a) purchase orders or contracts with a value of not less than $28.0 million for the design, manufacture or servicing of one or more drilling rigs by October 31, 2013 or (b) at least $1.0 million in proceeds from the issuance of preferred stock by November 14, 2013. An event of default would have occurred under both the Term Facility and Revolving Facility if the Borrowers were unable to satisfy one of these requirements. As of October 1, 2014, the Company had implemented and was in compliance with the cost reduction plan and as of November 14, 2014, the Company had received net cash proceeds from a preferred stock investment in an aggregate amount of $1.0 million. As a result of the foregoing events, the Company was in compliance with the terms of its credit agreements.

For financing activities, in the 2012 fiscal year, the Company incurred additional net long-term borrowings of $33 million versus net repayments of long-term debt in fiscal year 2011 of $22 million. In connection with the December 14, 2012 reverse merger of Empeiria into IDE, the Company distributed $20 million to the former shareholders of IDE. During the 2011 fiscal year, we also purchased 1,000 shares of our common stock for $1.3 million from one of our principal shareholders.39

AsTABLE aOF ~~result of the foregoing activities, in the 2012 fiscal year, the Company’s cash decreased by $2.5 million versus a decrease of cash of $1.8 million in the comparable 2011 fiscal year.~~CONTENTS

InOn ~~2012~~March ~~and~~31, ~~2011~~2014, the ~~Company~~Borrowers ~~paid~~entered ~~cash~~into ~~interest~~the Third Amendment to the Term Facility and the Third Amendment to the Revolving Facility to, among other things, (1) amend the maturity date of ~~$0.8~~the ~~million~~Term Facility from September 30, 2014 to June 30, 2015 and ~~$3.3~~the ~~million~~maturity date of the Revolving Facility from March 31, ~~respectively.~~2014 ~~Cash income~~to ~~tax~~December ~~payments~~31, ~~were~~2014; ~~$0.1~~(2) ~~million~~add a covenant regarding the fixed charge coverage ratio in the ~~2012~~Credit ~~fiscal~~Facilities; ~~year~~(3) ~~versus~~amend ~~$0.~~(a) the minimum EBITDA financial covenant and (b) the capital expenditures financial covenant in the Credit Facilities; (4) amend the term loan repayment schedule in the Term Facility; (5) amend the PIK interest provision in the Term Facility to increase such interest from 2.00% ~~million~~to 4.00% (unless the Borrower’s total leverage ratio is less than 3:50:1:00, in which case such interest shall accrue at a rate of 2:00%); and (6) amend the ~~comparable~~calculation ~~2011~~of ~~fiscal~~the ~~year~~amount of revolving advances lenders are required to make under the Revolving Facility.

~~Cash~~On ~~Flows~~December 31, 2014, the Borrowers entered into the Fourth Amendment to Term Loan and Security Agreement and Forbearance Agreement (the “Fourth Term Loan Amendment”) to, among other things, (1) amend the maturity date of the Term Facility from June 30, 2015 to September 30, 2015; (2) amend the capital expenditures covenant to limit capital expenditures to not greater than (a) $2,000,000 for the ~~Years~~twelve ~~Ended~~months ended December 31, ~~2011~~2014, (b) $300,000 for the three months ended March 31, 2014 and (c) $500,000 for the nine months ended September 30, 2015; and (3) add a new covenant requiring that with respect to the Borrowers’ rig yard division business, for the period of 90 consecutive days ending March 31, 2015, and ~~2010~~for each period of 90 consecutive days ending on the last day of any month ending thereafter, the Borrowers not incur operating losses in an aggregate amount exceeding $400,000 in any such 90 consecutive day period.

~~Net~~In ~~cash~~addition, ~~provided~~the byFourth ~~operating~~Term ~~activities was~~Loan ~~$25.8~~Amendment ~~million~~provides inthat ~~fiscal~~during ~~year~~the ~~2011~~period ~~versus~~beginning ~~$10.9~~December ~~million~~31, in2014 ~~fiscal~~and ~~year~~ending ~~2010.~~on ~~The~~the ~~$14.9~~earlier ~~million~~of ~~improvement~~(a) inthe ~~cash~~occurrence ~~flow~~of a Termination Event (as defined in ~~2011 versus~~the ~~2010~~Fourth ~~was~~Term ~~primarily~~Loan ~~due~~Amendment) toor a(b) ~~$14.4~~5:00 ~~million~~pm ~~improvement~~Dallas intime ~~cash~~on ~~generated~~March ~~from~~31, ~~working~~2015, ~~capital~~the inlenders ~~2011~~under ~~versus~~the ~~2010.~~Term ~~The~~Facility ~~working capital~~agree ~~improvement~~to ~~came~~forbear from ~~$40.2~~commencing ~~million~~any Enforcement Action (as defined in the Fourth Term Loan Amendment) as a result of ~~additional~~certain ~~customer~~Existing ~~deposits~~Defaults ~~received~~(as defined in ~~2011~~the ~~versus~~Fourth ~~2010.~~Term ~~These~~Loan ~~additional~~Amendment) ~~deposits were~~or the ~~result~~Borrowers’ offailure ~~our~~to ~~significant~~comply ~~increase~~with either the fixed charge coverage ratio covenant or minimum EBITDA covenant in ~~2011~~the ofTerm ~~complete~~Loan Agreement ~~rig~~for ~~orders~~the quarters ended December 31, 2014 or March 31, 2015, so long as ~~noted~~the ~~above.~~Borrowers ~~This~~(1) ~~increase~~have at least $5,000,000 in ~~deposits~~EBITDA, ~~was~~measured ~~offset by~~monthly on a trailing twelve-month basis (with an add-back for a one-time severance payment of $232,520,120, less principal payments, made to Stephen Cope); (2) have a fixed charge coverage ratio of at least 1.0 to 1.0, ~~million~~measured ofmonthly ~~cash~~on ~~used~~a astrailing twelve-month basis (with an add-back for a ~~result~~one-time severance payment of ~~higher~~$2,520,120, ~~inventories~~less inprincipal ~~2011~~payments, ~~versus~~made ~~2010.~~to ~~Again~~Stephen Cope); (3) furnish the agent and lenders with a Forbearance Compliance Certificate, ~~these~~in ~~2011~~form ~~higher~~and ~~inventory~~substance ~~levels were~~reasonably ~~due~~satisfactory to ~~our~~the ~~higher~~agent ~~production~~and ~~levels~~lenders, within thirty days after the end of ~~complete~~each ~~rigs~~month; ~~versus~~(4) diligently pursue a financing commitment from a third party financing source, the ~~comparable~~proceeds ~~2010~~of ~~period~~which will be used to repay all obligations under the Revolving Facility; and (5) deliver a weekly status report to the agent regarding the status of all actions taken to seek such financing commitment.

WeOn ~~invested~~April ~~$2.1~~6, ~~million~~2015, inthe ~~intangibles during~~Borrowers ~~both~~entered into the ~~fiscal~~Fifth ~~years~~Amendment ~~2011~~to Term Loan and ~~2010.~~Security ~~Capital~~Agreement ~~expenditures~~and ~~were~~Forbearance ~~$2.~~Agreement (the “Fifth Term Loan Amendment”) to, among other things, (1) ~~million~~amend inthe ~~2011~~maturity date of the Term Facility from September 30, 2015 to November 30, 2015; and ~~$0.~~(2) ~~million~~amend inthe ~~2010~~capital expenditures covenant to limit capital expenditures to $350,000 for the period January 1, 2015 through May 31, 2015.

~~For~~In ~~financing~~addition, ~~activities~~the Fifth Term Loan Amendment provides that during the period beginning March 31, in2015 ~~2011~~and weending ~~repaid $21.6~~on ~~million~~the earlier of ~~long-term~~(a) ~~debt~~the ~~(net~~occurrence of ~~additional~~a ~~borrowings~~Termination Event (as defined in the Fifth Term Loan Amendment) ~~versus~~or $(b) 5.8:00 ~~million~~pm Houston time on May 31, 2015, the lenders under the Term Facility agree to forbear from commencing any Enforcement Action (as defined in the Fifth Term Loan Amendment) as a result of ~~long-term~~certain ~~debt~~Existing ~~repayments~~Defaults (as defined in ~~2010.~~the InFifth ~~2011,~~Term Loan Amendment) or the Borrowers’ failure to comply with either the fixed charge coverage ratio covenant or minimum EBITDA covenant in the Term Loan Agreement wefor ~~repurchased~~the quarter ended March 31, 2015, so long as the Borrowers (1) have at least $5,000,000 ~~shares~~in ofEBITDA, ~~its~~measured ~~common~~monthly ~~stock~~on a trailing twelve-month basis (with an add-back for a one-time severance payment of $2,520,120, less principal payments, previously made to Stephen Cope); (2) have a fixed charge coverage ratio of at least 1.30 ~~million~~to ~~from~~1.0, measured monthly on a trailing twelve-month basis (with an add-back for a one-time severance payment of ~~our~~$2,520,120, less principal ~~stockholders.~~payments, previously made to Stephen Cope); (3) furnish the agent and lenders with a Forbearance Compliance Certificate, in form and substance reasonably

~~As a result of the foregoing activities, in the 2011 fiscal year, our cash decreased by $1.8 million versus an increase of cash of $2.7 million in the comparable 2010 fiscal year.~~40

InTABLE ~~2011~~OF ~~and 2010, we paid cash interest of $3.3 million and $4.7 million, respectively. Cash income tax payments were approximately $0.2 million in both the 2011 and 2010 fiscal years.~~CONTENTS

~~Future~~acceptable ~~Cash~~to ~~Requirements~~the agent and lenders, within thirty days after the end of each month; and (4) diligently pursue options that would cause or enable the repayment in full of all obligations under the Revolving Facility, including by pursuing a financing commitment from a third party financing source.

AsThe ofFifth ~~December~~Term ~~31,~~Loan ~~2012,~~Amendment wealso ~~had~~provides ~~long-term debt,~~that ~~including~~the ~~current~~agent ~~maturities,~~under ofthe ~~$37~~Term ~~million,~~Facility ~~cash~~may ~~and~~take ~~cash~~action ~~equivalents~~to ofpreserve $2its ~~million,~~rights ~~and~~in ~~$4.7~~the ~~million~~collateral ~~available~~securing ~~under~~the ~~our amended~~Term ~~and restated $20 million revolving credit and security agreement~~Facility.

~~Based~~In onconnection ~~our~~with ~~cash~~the onFourth ~~hand~~ and ~~cash~~Fifth ~~flow from~~Term ~~operations,~~Loan weAmendments ~~believe~~described ~~that we will have the working capital resources necessary to meet our projected operational needs for fiscal year 2013. The performance bonds~~above, ~~letters of credit and payment terms under~~ the ~~PEMEX~~Borrowers ~~contracts~~are ~~will~~required ~~require the Company~~ to ~~raise~~continue ~~additional working capital in order~~ to ~~complete~~comply ~~the~~with ~~contracts on schedule in~~ the ~~second~~2015 ~~half~~cost ofreduction ~~calendar~~plan ~~2014. We~~approved ~~believe~~by ~~that we will be able to obtain additional working capital through credit arrangements, debt, or additional equity. We would expect to use this working capital to finance~~ the ~~PEMEX~~Company’s ~~contracts~~Board ~~and~~of ~~to pursue acquisitions, investments and other growth opportunities or if we experience operating losses~~Directors. ~~There can be no assurance that financing will be available.~~

~~Critical~~On ~~Accounting~~December ~~Policies~~31, 2014, the Borrowers entered into the Fourth Amendment to Amended and ~~Management~~Restated ~~Estimates~~Revolving Credit and Security Agreement and Forbearance Agreement (the “Fourth Revolving Facility Amendment”) to, among other things, (1) amend the maturity date of the Revolving Facility from December 31, 2014 to March 31, 2015; (2) amend the capital expenditures covenant to limit capital expenditures to not greater than (a) $2,000,000 for the twelve months ended December 31, 2014 and (b) $300,000 for the three months ended March 31, 2014; (3) increase the Applicable Margin for revolving advances to 5.50% (from 4.50%); (4) reduce the Letter of Credit Sublimit to $500,000 (from $2,000,000); and (5) decrease the fee applicable to the average daily face amount of each outstanding letter of credit to 3.50% (from 4.50%).

~~The~~In ~~Commission~~addition, ~~defines~~the ~~critical~~Fourth ~~accounting policies~~Revolving asFacility ~~those~~Amendment provides that ~~are~~during the period beginning December 31, 2014 and ending on the earlier of (a) the occurrence of a Termination Event (as defined in ~~management’s~~the ~~view~~Fourth Revolving Facility Amendment) or (b) 5:00 pm Houston time on March 31, ~~important~~2015, the lenders under the Revolving Facility agree to forbear from commencing any Enforcement Action (as defined in the ~~portrayal~~Fourth ofRevolving ~~our~~Facility ~~financial~~Amendment) ~~condition~~as ~~and~~a ~~results~~result of ~~operations and~~certain ~~demanding~~Existing ofDefaults ~~management’s~~(as ~~judgment.~~defined ~~Our~~in ~~discussion~~the ~~and~~Fourth ~~analysis~~Revolving ofFacility ~~financial~~Amendment) ~~condition~~or ~~and~~Borrowers’ ~~results~~failure ofto ~~operation~~comply ~~are~~with ~~based~~either the fixed charge coverage ratio covenant or onminimum ~~our~~EBITDA ~~consolidated~~covenant ~~financial~~in ~~statements~~the Revolving Credit Agreement for the quarters ended December 31, ~~which~~2014 or March 31, 2015, so long as the Borrowers (1) have ~~been~~at ~~prepared~~least $5,000,000 in ~~accordance~~EBITDA, measured monthly on a trailing twelve-month basis (with Uan add-back for a one-time severance payment of $2,520,120, less principal payments, made to Stephen Cope); (2) have a fixed charge coverage ratio of at least 1.S.0 ~~GAAP~~to 1.0, ~~The~~measured ~~preparation~~monthly on a trailing twelve-month basis (with an add-back for a one-time severance payment of ~~these~~$2,520,120, ~~financial statements~~less ~~requires~~principal uspayments, made to ~~make~~Stephen ~~estimates~~Cope); on(3) ~~experience~~furnish the agent and onlenders ~~various~~with ~~assumptions~~a ~~that~~Forbearance weCompliance ~~believe~~Certificate, ~~are~~in ~~reasonable~~form ~~under~~and substance reasonably satisfactory to the ~~circumstances~~agent and lenders, within thirty days after the ~~results~~end of ~~which~~each ~~form~~month; ~~the~~(4) ~~basis~~diligently ~~for~~pursue ~~making~~a ~~judgments~~financing ~~about~~commitment ~~the~~from ~~carrying~~a ~~values~~third party financing source, the proceeds of ~~assets~~which will be used to repay all obligations under the Revolving Facility; and ~~liabilities~~(5) ~~that~~deliver ~~are~~a ~~not~~weekly ~~readily~~status report to the agent ~~apparent~~regarding ~~from~~the ~~other~~status ~~sources.~~of ~~Actual~~all ~~results~~actions ~~may~~taken ~~differ~~to ~~from~~seek ~~those~~such ~~estimates~~financing commitment.

42On April 6, 2015, the Borrowers entered into the Fifth Amendment to Amended and Restated Revolving Credit and Security Agreement and Forbearance Agreement (the “Fifth Revolving Facility Amendment”) to, among other things, (1) amend the maturity date of the Revolving Facility from March 31, 2015 to May 31, 2015; (2) amend the capital expenditures covenant to limit capital expenditures to $350,000 for the period January 1, 2015 through May 31, 2015; (3) increase the Applicable Margin for revolving advances to 6.50% (from 5.50%); and (4) reduce the maximum amount for revolving advances to $13,500,000 (from $15,000,000).

~~Revenue~~In ~~Recognition~~addition, the Fifth Revolving Facility Amendment provides that during the period beginning March 31, 2015 and ending on the earlier of (a) the occurrence of a Termination Event (as defined in the Fifth Revolving Facility Amendment) or (b) 5:00 pm Houston time on May 31, 2015, the lenders under the Revolving Facility agree to forbear from commencing any Enforcement Action (as defined in the Fifth Revolving Facility Amendment) as a result of certain Existing Defaults (as defined in the Fifth Revolving Facility Amendment) or Borrowers’ failure to comply with either the fixed charge coverage ratio covenant or minimum EBITDA covenant in the Revolving Credit Agreement for the quarter ended March 31, 2015, so long as the Borrowers (1) have at least $5,000,000 in EBITDA, measured monthly on a trailing twelve-month basis (with an add-back for a one-time severance payment of $2,520,120, less principal payments, previously made to Stephen

We report earnings from firm-price and modified firm-price long-term contracts on the percentage-of-completion method. Earnings are recorded based on the ratio of costs incurred to-date to total estimated costs. Costs include direct material, direct labor, and job related overhead. Losses expected to be incurred on contracts are charged to operations in the period such losses are determined. A contract is considered complete when its manufacturing process is complete, the customer has been provided with all proper inspection and other required documentation, title and risk of loss has passed to the customer, collectability is reasonably assured and the product has been delivered.41

~~The~~TABLE ~~percentage-of-completion~~OF method requires us to make estimates regarding the total costs of the project, progress against the project schedule and the estimated completion date, all of which impact the amount of revenue and gross margin we recognize in each reporting period. Significant projects and their related costs and profit margins are updated and reviewed at least quarterly by our senior management. Factors that may affect future project costs and margins include weather, production inefficiencies, availability and cost of labor, materials and subcomponents and other factors. These factors can impact the accuracy of our estimates and materially impact our future reported earnings. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on contracts accounted for under ASC 605-35, Construction-Type and Production-Type Contracts are recognized in the period in which they become known. Losses expected to be incurred on jobs in progress, are charged to income as soon as such losses are known.CONTENTS

~~Allowance~~Cope); (2) have a fixed charge coverage ratio of at least 1.0 to 1.0, measured monthly on a trailing twelve-month basis (with an add-back for ~~Doubtful~~a ~~Accounts~~one-time severance payment of $2,520,120, less principal payments, previously made to Stephen Cope); (3) furnish the agent and lenders with a Forbearance Compliance Certificate, in form and substance reasonably acceptable to the agent and lenders, within thirty days after the end of each month; and (4) diligently pursue options that would cause or enable the repayment in full of all obligations under the Revolving Facility, including by pursuing a financing commitment from a third party financing source.

WeThe ~~maintain~~Fifth anRevolving ~~allowance~~Facility ~~for~~Amendment ~~doubtful~~also ~~accounts for~~provides ~~estimated~~that ~~losses~~the ~~resulting~~agent ~~from~~under the ~~inability~~Revolving ofFacility ~~our~~may ~~customers~~take action to ~~make~~preserve ~~required~~its ~~payments.~~rights Wein ~~review~~the ~~our~~collateral ~~allowance~~securing ~~for~~the ~~doubtful accounts~~Revolving onFacility, adecrease ~~quarterly~~or ~~basis.~~increase ~~Reserves~~any ~~for~~advance ~~potential~~rates ~~losses~~from ~~are~~time ~~based~~to ontime ~~our~~in ~~estimate~~agent’s ofcredit ~~the~~judgment, ~~probability~~or ofincrease, ~~collection~~modify ~~for~~the ~~certain accounts~~amount, ~~our~~timing ~~historical~~or ~~experience~~purpose of ~~bad~~any ~~debt~~reserves ~~expense~~as ~~and~~agent ~~the~~deems ~~aging~~proper offrom ~~its~~time ~~accounts receivable balances. Accounts are written-off when an account is determined~~ to notime ~~longer~~in beagent’s ~~collectable,~~credit ~~based on our past collection history, or after we have exhausted all possible means of collection~~judgment.

WeIn ~~have~~connection ~~typically~~with ~~not~~the ~~experienced~~Fourth ~~unanticipated bad~~and ~~debt~~Fifth ~~losses~~Revolving asFacility aAmendments ~~result~~described ofabove, ~~our~~the ~~business~~Borrowers ~~practices~~(1) are required to continue to comply with the 2015 cost reduction plan approved by the Company’s Board of ~~securing~~Directors ~~advance~~and ~~payments~~(2) ~~for~~were required to affirm and acknowledge the imposition of a ~~large~~$500,000 ~~percentage~~reserve against availability under the Revolving Facility (as of ~~our~~November ~~projects~~13, ~~during~~ 2014) and the ~~construction~~imposition ~~process~~of an additional reserve in the amount of $50,000 on November 17 and ~~securing~~each ~~final~~week ~~payments~~thereafter ~~from~~until ~~customers~~such ~~that~~time as the agent may ~~present~~determine ~~collectability~~in ~~issues~~its ~~prior~~sole toCredit ~~shipment~~Judgment (as defined in the Revolving Credit Agreement).

~~Inventories~~The Company’s ability to obtain additional external debt financing will be limited by the amount and terms of its existing borrowing arrangements and the fact that substantially all of its assets have been pledged as collateral for these existing arrangements. In addition, a failure to comply with the covenants under its existing debt instruments could result in an event of default. Furthermore, there are cross-default provisions in certain of the Company’s existing debt instruments such that an event of default under one agreement or instrument could result in an event of default under another. If an event of default resulted in the acceleration of all of its payment obligations under its debt instruments as of December 31, 2014, it would be required to pay its lenders an aggregate of $33.1 million. In the event of an acceleration of amounts due under its debt instruments as a result of an event of default, the Company may not have sufficient funds or may be unable to arrange for additional financing to repay its indebtedness or to make any accelerated payments, and the lenders could seek to enforce their security interests in the collateral securing such indebtedness. The Company’s failure to obtain additional external financing to fund its cash requirements would further cause noncompliance with its existing debt covenants which would have a material adverse effect on its business, prospects and financial condition. The Company also has negative working capital of $39.1 million at December 31, 2014. As a result of these factors there is substantial doubt about the Company’s ability to continue as a going concern.

InventoriesPreferred consistStock ofPurchase raw materials and finished goods and work-in-process (see Revenue Recognition). Inventories of raw materials and finished goods are stated at the lower of cost or market using the average method. Allowances for excess and obsolete inventories are determined based on our historical usage of inventory on-hand as well as our future expectations related to our manufacture of product.Agreements

~~Recent~~On ~~Accounting~~December ~~Pronouncements~~14, 2012, we entered into a stock purchase agreement with our Sponsor pursuant to which our Sponsor purchased 25,000 shares of Series A Preferred Stock at a price per share of $100 for aggregate proceeds to the Company of $2.5 million.

WeOn ~~evaluated~~November ~~recent~~14, ~~accounting~~2013, ~~pronouncements and~~the doCompany ~~not~~entered ~~believe~~into ~~the~~a ~~adoption~~Stock ofPurchase ~~any~~Agreement ~~recently~~with ~~issued~~our ~~accounting~~Sponsor, ~~standards~~pursuant ~~will~~to ~~have~~which our Sponsor purchased 5,000 shares of Series B Preferred Stock at a ~~material~~price ~~impact~~per onshare ~~our~~of ~~financial~~$100 ~~position and~~for ~~results~~aggregate proceeds to the Company of ~~operations~~$0.5 million.

~~Off-Balance~~On ~~Sheet~~November ~~Arrangements~~14, 2013, the Company also entered into a Stock Purchase Agreement with Stephen D. Cope, who at the time was our Chief Executive Officer and a director, pursuant to which Mr. Cope purchased 5,000 shares of Series C Preferred Stock at a price per share of $100 for aggregate proceeds to the Company of $0.5 million. On April 7, 2014, Mr. Cope sold all of these shares to our Sponsor at a price per share of $100, plus accrued interest.

WeCash haveFlows nofor off-balancethe sheetYears arrangementsEnded thatDecember have or are reasonably likely to have a current or future effect on its financial condition31, changes2014 inand financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.2013

~~Item~~Net 7Acash provided by operating activities was $1.1 ~~Quantitative~~million ~~and~~in ~~Qualitative~~fiscal ~~Disclosures~~year ~~About~~2014 ~~Market~~versus ~~Risk~~$2.2 million in fiscal year 2013. The $1.1 decline in cash flow from operations in 2014 versus 2013 was primarily due to a $4.2 million decline in cash generated from working capital in 2014 versus a $0.9 million increase in cash generated from working capital in 2013. This net decline in cash generated from working capital of

~~Not Applicable.~~42

43TABLE OF CONTENTS

~~Item~~$5.1 million and the decrease of $2.8 million of lower adjustments to net income were offset by a $6.8 ~~Consolidated~~million ~~Financial~~lower ~~Statements~~net ~~and~~loss ~~Supplementary~~in ~~Data~~2014 versus 2013.

~~Integrated~~The ~~Drilling~~net ~~Equipment~~decline ~~Holdings Corp~~in cash generated from working capital of $5. ~~Index December~~1 ~~31,~~million ~~2012~~primarily came from higher accounts payable and ~~2011~~customer advanced billing and payments of $21.2 million offset by lower accounts receivable and inventories of $26.3 million in 2014 versus 2013 as compared to their respective previous year’s December balances.

	Page(s)
Report of Independent Registered Public Accounting Firm	45
Consolidated Financial Statements
Consolidated Balance Sheets	46
Consolidated Statements of Operations	47
Consolidated Statements of Stockholders’ Deficit	48
Consolidated Statements of Cash Flows	49
Notes to Consolidated Financial Statements	50

The Company invested approximately $0.5 million in intangibles during fiscal year 2013. Capital expenditures were approximately $0.2 million during both 2014 and 2013 fiscal years.

44For financing activities, in the 2014 fiscal year, the Company incurred additional net long-term of borrowing $87.8 million versus net repayments of long-term debt in fiscal year 2014 of $88.4 million. In the 2013 fiscal year, the Company incurred additional net long-term of borrowing $103 million versus net repayments of long-term debt in fiscal year 2013 of $105 million.

~~Report~~As a result of ~~Independent~~the ~~Registered~~foregoing ~~Public Accounting~~activities, ~~Firm~~in the 2014 fiscal year, the Company’s cash increased by $0.3 million versus a decrease of cash of $0.6 million in the comparable 2013 fiscal year.

ToIn 2014 and 2013, the ~~Board~~Company paid cash interest of ~~Directors~~$3.3 million and ~~Stockholders~~$3.0 ~~of Integrated~~million, ~~Drilling~~respectively. ~~Equipment~~Cash ~~Holdings~~income ~~Corp~~tax payments were $0.04 million in the 2014 fiscal year versus $0.3 million in the comparable 2013 fiscal year.

InContractual our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders' deficit, and of cash flows present fairly, in all material respects, the financial position of Integrated Drilling Equipment Holdings Corp. and its subsidiaries at December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for the two years ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.Obligations

~~/s/~~We ~~PricewaterhouseCoopers~~are ~~LLP~~a party to various contractual obligations. A portion of these obligations are reflected in our financial statements, such as long-term debt, while other obligations, such as operating leases and purchase obligations, are not reflected on our balance sheet. The following is a summary of our contractual obligations as of December 31, 2014 (in thousands):

Houston,Payments Texasby Period(in thousands)

April 16, 2013


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt		$39,161		$34,364		$4,797		$—		$—
Capital leases		227		95		132		—		—
Noncancellable operating leases		3,795		1,349		2,446		—		—
Purchase commitments		7,398		7,398		—		—		—
		$50,581		$43,206		$7,375		$—		$—

45We believe that we will have the working capital resources necessary to meet our projected operational needs for fiscal year 2015 provided that we are successful in extending our current debt maturities and/or are able to obtain additional working capital through credit arrangements, debt, or additional equity. There can be no assurance that we will be able to extend our debt maturity dates and/or whether additional financing sources will be available.

IntegratedCritical DrillingAccounting EquipmentPolicies Holdings Corp. Consolidated Balance Sheets December 31, 2012 and 2011Management Estimates

	December 31,
(in thousands, except share and par value)	2012			2011
Assets
Current assets
Cash and cash equivalents	$	1,602		$	4,129
Restricted cash		503			-
Accounts receivable, net		27,393			30,698
Inventories, net		12,339			29,595
Deferred tax assets		1,036			998
Prepaid expenses and other current assets		1,041			404
Total current assets		43,914			65,824
Intangibles, net		4,429			3,714
Property, equipment and improvements, net		3,349			2,758
Deferred financing costs, net		3,012			471
Deferred tax assets		2,837			3,380
Deposits		91			81
Total assets	$	57,632		$	76,228
Liabilities and Stockholders’ Deficit
Current liabilities
Current maturities of long-term debt	$	600		$	1,667
Current portion of capital lease obligations		40			36
Trade accounts and other payables		23,712			26,308
Accrued liabilities		11,555			4,291
Customer advanced billings and payments, and other		13,320			46,643
Total current liabilities		49,227			78,945
Long-term debt, less current maturities		36,810			3,195
Capital lease obligations, net of current		33			36
Total liabilities		86,070			82,176
Commitments and contingencies (Note 13)
Stockholders’ deficit
Common stock $0.0001 and $.001 par value, respectively Authorized shares 100,000,000 and 20,000, respectively Issued shares 8,646,700 and 5,575,671, respectively		1			-
Accumulated deficit		(28,439	)		(5,948	)
Total stockholders’ deficit		(28,438	)		(5,948	)
Total liabilities and stockholders’ deficit	$	57,632		$	76,228

The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and demanding of management’s judgment. Our discussion and analysis of financial condition and results of operation are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates on experience and on various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

TheRevenue accompanying notes are an integral part of these consolidated financial statements.Recognition

46We report earnings from firm-price and modified firm-price long-term contracts on the percentage-of-completion method. Earnings are recorded based on the ratio of costs incurred to-date to total

~~Integrated Drilling Equipment Holdings Corp. Consolidated Statements of Operations December 31, 2012 and 2011~~43

	December 31,
(in thousands, except share and per share amounts)	2012			2011
Revenue
Products	$	215,877		$	93,397
Services		68,367			70,223
Total revenue		284,244			163,620
Cost of goods sold and services
Products		201,951			85,651
Services		44,773			49,445
Total cost of goods sold and services		246,724			135,096
Selling, general and administrative expense		35,014			19,862
Depreciation and amortization expense		1,964			1,245
Income from operations		542			7,417
Other (income) expense
Interest expense		1,224			3,695
Interest income		-			(105	)
Other expense		(186	)		(51	)
Income (loss) before income taxes		(496	)		3,878
Income taxes
Current		267			92
Deferred		505			1,644
Total income taxes		772			1,736
Net income (loss)	$	(1,268	)	$	2,142
Weighted average shares outstanding:
Basic and Diluted		5,727,119			5,930,409
Earnings (loss) per share:
Basic and Diluted	$	(0.22)		$	0.36

TABLE OF CONTENTS

~~The~~estimated ~~accompanying~~costs. ~~notes~~Costs include direct material, direct labor, and job related overhead. Losses expected to be incurred on contracts are ancharged ~~integral~~to ~~part~~ operations in the period such losses are determined. A contract is considered complete when its manufacturing process is complete, the customer has been provided with all proper inspection and other required documentation, title and risk of ~~these~~loss ~~consolidated~~has ~~financial~~passed ~~statements~~to the customer, collectability is reasonably assured and the product has been delivered.

47The percentage-of-completion method requires us to make estimates regarding the total costs of the project, progress against the project schedule and the estimated completion date, all of which impact the amount of revenue and gross margin we recognize in each reporting period. Significant projects and their related costs and profit margins are updated and reviewed at least quarterly by our senior management. Factors that may affect future project costs and margins include weather, production inefficiencies, availability and cost of labor, materials and subcomponents and other factors. These factors can impact the accuracy of our estimates and materially impact our future reported earnings. The cumulative impact of any revisions to estimates and the full impact of anticipated losses on contracts are recognized in the period in which they become known. Losses expected to be incurred on jobs in progress, are charged to income as soon as such losses are known.

IntegratedAllowance Drillingfor EquipmentDoubtful Holdings Corp. Consolidated Statements of Stockholder Deficit December 31, 2012 and 2011Accounts

	Shares Issued						Stock						Accumulated			Total Stockholders’
(in thousands, except share data)	Common			Preferred			Common			Preferred			Deficit			Deficit
Balances at December 31, 2010		40,618,906			24,371,345		$	41		$	24		$	(6,845	)	$	(6,780	)
Net income		-			-			-			-			2,142			2,142
Restructuring due to merger between Integrated
Drilling Equipment Company and Integrated Drilling
Equipment Company Holdings		(40,618,906	)		(24,371,345	)		(41	)		(24	)		65			-
Issuance of common shares		6,195,190			-			-			-			-			-
Repurchase of common shares		(619,519	)		-			-			-			(1,310	)		(1,310	)
Balances at December 31, 2011		5,575,671			-		$	-		$	-		$	(5,948	)	$	(5,948	)
Net loss		-			-			-			-			(1,268	)		(1,268	)
Recapitalization due to merger between Integrated Drilling Equipment and Empeiria Acquisition Corporation		3,071,029			-			1			-			(21,223	)		(21,222	)
Balances at December 31, 2012		8,646,700			-		$	1		$	-		$	(28,439	)	$	(28,438	)

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We review our allowance for doubtful accounts on a quarterly basis. Reserves for potential losses are based on our estimate of the probability of collection for certain accounts, our historical experience of bad debt expense and the aging of its accounts receivable balances. Accounts are written-off when an account is determined to no longer be collectable, based on our past collection history, or after we have exhausted all possible means of collection.

~~The~~We ~~accompanying~~have ~~notes~~typically ~~are~~not anexperienced ~~integral~~unanticipated ~~part~~ bad debt losses as a result of ~~these~~our ~~consolidated~~business ~~financial~~practices ~~statements~~of securing advance payments for a large percentage of our projects during the construction process, and securing final payments from customers that may present collectability issues prior to shipment.

48Inventories

~~Integrated~~Inventories ~~Drilling~~consist ~~Equipment~~of ~~Holdings Corp~~raw materials and finished goods and work-in-process (see Revenue Recognition). ~~Consolidated~~ ~~Statements~~Inventories of ~~Cash~~raw ~~Flows December~~materials ~~31,~~and ~~2012~~finished goods are stated at the lower of cost or market using the average method. Allowances for excess and ~~2011~~obsolete inventories are determined based on our historical usage of inventory on-hand as well as our future expectations related to our manufacture of product.

	December 31,
(in thousands)	2012			2011
Operating activities
Net income (loss)	$	(1,268	)	$	2,142
Adjustments to reconcile net income (loss) to cash provided (used in) operating activities
Depreciation and amortization expense		1,964			1,245
Deferred income tax		505			1,644
Provision for bad debts		409			112
Amortization of deferred financing costs		209			508
Unrealized gain on warrant valuation		(70	)		-
Changes in operating assets and liabilities
Trade accounts receivable		2,896			(10,261	)
Inventories		17,256			(19,487	)
Other current assets		(637	)		241
Trade accounts and other payables		(2,596	)		8,419
Accrued liabilities		4,830			(552	)
Customer advanced billings and payments		(33,323	)		41,794
Net cash used provided by (used in) operating activities		(9,825	)		25,805
Investing activities
Capital expenditures for intangibles		(1,577	)		(2,084	)
Capital expenditures for property, plant and equipment		(1,798	)		(2,054	)
Restricted cash		(503	)		-
Increase in deposits		(10	)		(14	)
Net cash used in investing activities		(3,888	)		(4,152	)
Financing activities
Issuance of long-term debt		113,500			5,000
Repayments of long-term debt		(80,972	)		(26,631	)
Payment of capital lease		(42	)		(31	)
Distribution to former IDE stockholders		(20,000	)		-
Repurchase of common stock		-			(1,310	)
Deferred financing costs		(1,300	)		(472	)
Net cash provided by (used in) financing activities		11,186			(23,444	)
Increase (decrease) in cash and cash equivalents		(2,527	)		(1,791	)
Cash and cash equivalents
Beginning of year		4,129			5,920
End of year	$	1,602		$	4,129
Supplemental cash flow disclosure
Cash paid for interest	$	824		$	3,292
Cash paid for income taxes		99			194
Noncash activity
Property and equipment acquired through capital leases	$	43		$	103
Warrants issued as financing costs		1,450			-
Interest paid-in-kind		20			-

Recent Accounting Pronouncements

~~The~~In ~~accompanying~~May ~~notes~~2014, ~~are~~the FASB issued an ~~integral~~ASU ~~part~~ relating to the revenue recognition from contracts with customers that creates a common revenue standard for GAAP and IFRS. The core principle will require recognition of ~~these~~revenue to represent the transfer of promised goods or services to customers in an amount that reflects the consideration, including costs incurred, to which the entity expects to be entitled in exchange for those goods or services. These changes are effective for interim and annual periods that begin after December 15, 2016. Early application is not permitted. We are currently evaluating the impact this will have on our consolidated financial statements.

49Off-Balance Sheet Arrangements

~~Integrated~~We ~~Drilling~~have ~~Equipment~~no ~~Holdings Corp. Notes~~off-balance sheet arrangements that have or are reasonably likely to ~~Consolidated~~have ~~Financial~~a ~~Statements December~~current 31or future effect on our financial condition, ~~2012~~changes ~~and~~in ~~2011~~financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

1Item 7A. ~~Nature~~QUANTITATIVE ofAND ~~Business~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Integrated~~Not ~~Drilling Equipment Holdings Corp~~Applicable. (“IDE”) provides products and services to customers in the oil and gas industry both domestically and internationally. The majority of our business is conducted through two operating segments (1) Electrical Products and Services and (2) Drilling Products and Services.

Our electrical segment designs, manufactures, installs and services rig electrical and control systems including SCR (silicon controlled rectifier) units and VFD (variable frequency drive) units, as well as electrical cabling, lighting systems, closed circuit video systems, gas and fire detection systems, and communication systems.44

~~Our~~TABLE ~~drilling~~OF segment is a full service provider of drilling rigs and their components. We design, manufacture, and service complete land- based drilling rigs, as well as rig subsystems and parts. We provide drilling rig services including: mechanical services, assembly testing (rig- up/final construction and commission), rig refurbishment and inspection, new rig fabrication and completion of land rig packages. Additionally, we fabricate mud tanks, masts and substructures, dog houses and other products.CONTENTS

OnItem ~~March 22, 2013, the Company entered into four substantially identical purchase agreements for modular drilling units~~8. ~~The~~CONSOLIDATED ~~collective~~FINANCIAL ~~value~~STATEMENTS ofAND ~~the~~SUPPLEMENTARY four agreements is approximately $354 million and each firm price agreement is for the design, construction, delivery, and installation of one modular drilling unit on existing shallow offshore platforms. While the Company has performed extensive subcontract work on offshore platforms, the agreements represent the Company’s first offshore lead contractor engagement.DATA

TheIntegrated accompanyingDrilling consolidatedEquipment financialHoldings statements andCorp. relatedIndex footnotesDecember are31, presented2014 inand accordance with accounting principles generally accepted in the United States of America (“GAAP”).2013

As used in the report, “we,” “our,” “us”, “the Company” and “IDE” means Integrated Drilling Equipment Holdings Corp. and, where the context requires, includes our subsidiaries.


	Page(s)
Reports of Independent Registered Public Accounting Firms		46
Consolidated Financial Statements
Consolidated Balance Sheets		48
Consolidated Statements of Operations		49
Consolidated Statements of Stockholders’ Deficit		50
Consolidated Statements of Cash Flows		51
Notes to Consolidated Financial Statements		52
Schedule II — Valuation and Qualifying Accounts		95

~~2. Merger with Empeiria Acquisition Corp.~~45

OnTABLE ~~December~~OF 14, 2012, Integrated Drilling Equipment Holdings Inc. completed the merger (the "Merger") with Empeiria Acquisition Corp. ("EAC"). The Merger was accounted for under the purchase method of accounting as a reverse acquisition. Under this method of accounting, for accounting and financial purposes, EAC was treated as the acquired company, and IDE was treated as the acquiring company. Accordingly, historical financial information for periods and dates prior to December 14, 2012, include information for IDE only.CONTENTS

TotalReport compensation received by the former IDE shareholders included $20.0 million in cash and 5,575,671 shares of IntegratedIndependent DrillingRegistered EquipmentPublic HoldingsAccounting Corp. common stock. We have withheld 750,000 shares of the stock compensation to the former IDE stockholders in the transaction to satisfy any indemnification claims we have under the Merger Agreement. Depending on the amount of the indemnification claims that we may make, we will distribute these remaining 750,000 additional shares to the former IDE stockholders 18 months after December 14, 2012. The former IDE stockholders may also be entitled to receive:Firm

·To anthe ~~additional~~Board ~~cash payment~~ of upDirectors toand ~~$10.0~~StockholdersIntegrated ~~million,~~Drilling ~~equal~~Equipment toHoldings ~~the amount by which 2013 EBITDA (as defined in the Merger Agreement) exceeds $30~~Corp.~~0 million, multiplied by 0.5.~~

·We anhave ~~additional~~audited ~~5,250,000~~the ~~shares~~accompanying ofconsolidated ~~common~~balance ~~stock~~sheet ~~that~~of weIntegrated ~~hold,~~Drilling ~~distributed~~Equipment ~~ratably~~Holdings ifCorp. (the “Company’s”), ~~stock~~as ~~price~~of ~~exceeds~~December ~~$12.00~~31, ~~$13.50~~2014, ~~$15.00~~ and ~~$17.00~~the ~~respectively~~related ~~before~~consolidated ~~December~~statements ~~14,~~of ~~2017~~operations, orchanges ifin astockholders’ ~~change~~deficit, ofand ~~control~~cash ~~transaction~~flows ~~occurs~~for ~~following~~ the ~~Merger~~year ~~that~~then ~~values~~ended. ~~the~~Our ~~Company’s~~audit ~~common~~of ~~stock~~the atconsolidated ~~more~~financial ~~than~~statements included the ~~stock~~financial ~~price~~statement ~~thresholds.~~schedule ~~For~~listed ~~example,~~in if the ~~Company’s~~index ~~stock~~appearing ~~price~~under ~~exceeds~~Item ~~$13~~15.50 ~~per~~The ~~share~~Company’s ormanagement ifis aresponsible ~~change~~for ofthese ~~control~~financial ~~transaction~~statements ~~occurs~~and ~~following~~ the ~~Merger~~financial ~~that~~statement ~~values~~schedule. ~~the~~Our ~~shares~~responsibility atis ~~more~~to ~~than~~express ~~$13.50~~an ~~per~~opinion ~~share,~~on ~~the~~these ~~former~~financial ~~IDE~~statements ~~stockholders~~and ~~will~~the financial ~~receive~~statement ~~2,625,000~~schedule ~~shares~~based on our audit.

50We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

~~This~~In ~~contingent~~our ~~consideration~~opinion, ~~has~~the ~~not~~consolidated ~~been recorded~~financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2012~~2014, ~~due~~and tothe results of its operations and its cash flows for the ~~uncertainty~~year asthen toended, ~~whether~~in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related ~~thresholds~~financial ~~will~~statement beschedule, ~~met~~when considered in ~~accordance~~relation ~~with~~ to the ~~Merger~~basic ~~Agreement~~consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

InThe ~~connection~~accompanying ~~with~~consolidated financial statements have been prepared assuming that the ~~completion~~Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s current liabilities exceed its current assets by $39.1 million and the Company incurred a net loss of $866 thousand as of and for the ~~merger~~year ended December 31, 2014, respectively. These conditions, along with other matters as set forth in Note 3, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated wefinancial ~~entered~~statements ~~into~~do not include any adjustments that might result from the ~~following~~outcome ~~financing~~of ~~transactions:~~this uncertainty.

·/s/ AWhitley ~~new~~Penn ~~$20.0 million four year secured second-lien term loan facility with Elm Park Credit Opportunities Fund~~LLPHouston, ~~L.P.~~TexasApril ~~and Elm Park Credit Opportunities Fund (Canada)~~10, ~~L.P.,~~2015 ~~as lenders, and Elm Park Capital Management, LLC, as administrative agent.~~

~~· A $20.0 million amended and restated revolving credit facility (which amended and restated IDE’s prior facility).~~46

·TABLE AOF ~~stock purchase agreement pursuant to which Empeiria Investors, LLC (our “Sponsor”) purchased an aggregate of $2.5 million of our series A preferred stock (the “Preferred Stock”).~~CONTENTS

ForReport accounting purposes the merger has been treated as a recapitalization of IDEIndependent withRegistered IDEPublic asAccounting the acquirer (reverse acquisition). The historical consolidated financial statements prior to December 14, 2012, are those of IDE and the cash distribution of $20.0 million and the assumption of the net assets of Empeiria Acquisition Corp of approximately $1.3 million have been included in the recapitalization. All share and per share amounts in the consolidated financial statements and related notes have been retrospectively adjusted to reflect the recapitalized stock splits.Firm

OnTo ~~April~~the ~~11,~~Board ~~2013,~~of ~~EAC~~Directors ~~changed~~and ~~its~~Stockholders ~~name~~ofIntegrated ~~to Integrated~~ Drilling Equipment Holdings Corp.

3In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholders’ deficit, and of cash flows present fairly, in all material respects, the financial position of Integrated Drilling Equipment Holdings Corp. ~~Summary~~and its subsidiaries at December 31, 2013, and the results of ~~Significant~~their operations and their cash flows for the year ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2013 listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting ~~Policies~~Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

~~Use~~/s/ ofPricewaterhouseCoopers ~~Estimates~~LLPHouston, TexasApril 16, 2014, except for Note 2, as to which the date is April 10, 2015

Our Consolidated Financial Statements are expressed in U.S. dollars and have been prepared by us in accordance with accounting principles generally accepted in the United States (“GAAP”). In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we review our estimates, including those related to percentage of completion and related revenue recognition, deferred revenues, and inventory valuation and reserves. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.47

~~Cash~~TABLE ~~and~~OF ~~Cash Equivalents~~CONTENTS

WeIntegrated considerDrilling allEquipment highlyHoldings liquidCorp. investmentsConsolidated withBalance an originalSheets maturityDecember of three months or less at the time of purchase to be a cash equivalent We maintain cash in bank deposit accounts31, which, at2014 times,and may exceed federally insured limits. We have not experienced any losses in such accounts.2013

Restricted Cash


	December 31,
(in thousands, except share and par value)	2014			2013
Assets
Current assets
Cash and cash equivalents	$	1,263		$	981
Restricted cash		—			83
Accounts receivable, net		20,170			13,333
Inventories, net		7,950			7,039
Deferred tax assets		50			133
Prepaid expenses and other current assets		878			782
Total current assets		30,311			22,351
Intangibles, net		1,508			2,798
Property, equipment and improvements, net		2,217			2,686
Deferred financing costs, net		364			1,517
Deposits		91			91
Total assets	$	34,491		$	29,443
Liabilities and Stockholders’ Deficit
Current liabilities
Current maturities of long-term debt	$	37,814		$	12,974
Current portion of capital lease obligations		90			64
Trade accounts and other payables		14,201			14,482
Accrued liabilities		7,425			8,654
Customer advanced billings and payments, and other		9,892			5,877
Total current liabilities		69,422			42,051
Long-term debt, less current maturities		1,346			22,746
Capital lease obligations, net of current		124			98
Deferred tax liability		50			133
Total liabilities		70,942			65,028
Commitments and contingencies (see Note 15)
Stockholders’ deficit
Common stock $0.0001 par value Authorized shares 100,000,000 Issued shares 8,809,917		1			1
Accumulated deficit		(36,452	)		(35,586	)
Total stockholders’ deficit		(36,451	)		(35,585	)
Total liabilities and stockholders’ deficit	$	34,491		$	29,443

~~Restricted~~ The ~~cash~~accompanying ~~primarily~~notes ~~consists~~are ofan ~~cash~~integral ~~proceeds set~~part ~~aside for payment~~ of ~~medical~~these ~~claims~~consolidated ~~relating~~financial ~~to our self-insurance group health program, which was implemented in 2012~~statements.

~~Fair Value of Financial Instruments~~48

~~The~~TABLE ~~Company’s~~OF financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, and long-term debt. We believe the carrying values of cash and cash equivalents, trade receivables, and trade payables to be representative of their respective fair values because of short-term maturities or expected settlement dates. The carrying value of the term debt approximates fair value due to the variable interest rate.CONTENTS

51Integrated Drilling Equipment Holdings Corp. Consolidated Statements of Operations December 31, 2014 and 2013

Accounts Receivable


	December 31,
(in thousands, except share and per share amounts)	2014			2013
Revenue
Products	$	52,240		$	64,373
Services		35,054			39,375
Total revenue		87,294			103,748
Cost of goods sold and services
Products		39,550			48,672
Services		20,136			25,993
Total cost of goods sold and services		59,686			74,665
Selling, general and administrative expense		20,954			25,039
Impairment of intangible assets		—			858
Depreciation and amortization expense		2,117			2,162
Income from operations		4,537			1,024
Other (income) expense
Interest expense		5,922			5,561
Other expense (income)		(584	)		(820	)
Loss before income taxes		(801	)		(3,717	)
Income taxes
Current		65			70
Deferred		—			3,873
Total income taxes		65			3,943
Net loss	$	(866	)	$	(7,660	)
Weighted average shares outstanding:
Basic		8,809,917			8,703,986
Diluted		8,951,650			8,846,198
Loss per share:
Basic	$	(0.10	)	$

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