EXHIBIT 99.1

FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

SPIDLE SALES & SERVICE, INC.

Report of Independent Auditors

Balance Sheets as of December 31, 2004 and 2003

Statements of Income for the Years Ended 2004 and 2003

Statements of Changes in Stockholders’ Equity for the Years Ended 2004 and 2003

Statements of Cash Flows for the Years Ended 2004 and 2003

Notes to Financial Statements

Independent Auditors’ Report

Board of Directors
Spidle Sales & Service, Inc.
Bellville, Texas

We have audited the accompanying Balance Sheets of Spidle Sales & Service, Inc. as of December 31, 2004 and 2003 and the related Statements of Income, Changes in Stockholders’ Equity and Cash Flows for the years then ended. 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 in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Spidle Sales & Service, Inc. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ WEINSTEIN SPIRA & COMPANY, P.C.

Houston, Texas

March 26, 2005

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Spidle Sales & Service, Inc.

Balance Sheets

December 31, 2004 and 2003

	For the Years Ended December 31,
	2004			2003
ASSETS
Current assets:
Cash and cash equivalents	$	133,673		$	136,420
Accounts receivable		2,495,877			1,967,146
Inventory		1,621,735			1,878,681
Other current assets		32,325			7,211
Total current assets		4,283,610			3,989,458
Property, plant and equipment		1,714,992			984,498
Deferred income tax asset		41,675			98,061
Total assets	$	6,040,277		$	5,072,017
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Payable to stockholder	$	—		$	800,000
Accounts payable		927,436			441,749
Accrued liabilities		112,828			24,521
Federal income taxes payable		156,212			63,125
Total current liabilities		1,196,476			1,329,395
Stockholders’ equity:
Common stock; no par value, 10,000 shares
authorized and issued; 7,474 shares outstanding		7,474			7,474
Retained earnings		5,670,316			4,569,137
Less: Treasury stock, 2,526 shares, at cost		(833,989	)		(833,989	)
Total stockholders’ equity		4,843,801			3,742,622
Total liabilities and stockholders’ equity	$	6,040,277		$	5,072,017

See accompanying notes to financial statements.

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Spidle Sales & Service, Inc.

Statements of Income

Years Ended December 31, 2004 and 2003

	For the Years Ended December 31,
	2004			2003
Revenues	$	16,201,202		$	11,380,658
Cost of sales		10,091,454			6,159,574
Gross margin		6,109,748			5,221,084
Selling, general and administrative expenses		4,608,680			4,303,808
Income from operations		1,501,068			917,276
Other income (expense):
Interest expense		(14,832	)		—
Gain on sale of property and equipment		13,323			—
Litigation settlement		198,147			—
Other income		30,202			25,458
Total other income (expense)		226,840			25,458
Income before federal income taxes		1,727,908			942,734
Federal income tax provision		589,359			331,338
Net income	$	1,138,549		$	611,396

See accompanying notes to financial statements.

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Spidle Sales & Service, Inc.

Statements of Changes in Stockholders’ Equity

Years Ended December 31, 2004 and 2003

	Common Stock		Retained Earnings			Treasury Stock			Total
Balance -
December 31, 2002	$	7,474	$	3,995,111		$	(833,989	)	$	3,168,596
Dividends ($5 per share)				(37,370	)					(37,370	)
Net Income				611,396						611,396
Balance -
December 31, 2003		7,474		4,569,137			(833,989	)		3,742,622
Dividends ($5 per share)				(37,370	)					(37,370	)
Net Income				1,138,549						1,138,549
Balance -
December 31, 2004	$	7,474	$	5,670,316		$	(833,989	)	$	4,843,801

See accompanying notes to financial statements.

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Spidle Sales & Service, Inc.

Statements of Cash Flows

Years Ended December 31, 2004 and 2003

	For the Years Ended December 31,
	2004			2003
Cash flows from operating activities:
Net income from continuing operations	$	1,138,549		$	611,396
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Depreciation and amortization		691,164			541,227
Deferred income tax provision (benefit)		29,272			(125,528	)
Gain on sale of property and equipment		(13,323	)		—
Change in assets and liabilities:
Accounts receivable		(528,731	)		(975,462	)
Inventories		256,946			(388,494	)
Other current assets		2,000			(7,211	)
Prepaid federal income tax		—			252,842
Accounts payable		485,687			(101,486	)
Accrued liabilities		88,307			(58,250	)
Federal income tax payable		93,087			63,125
Net cash provided by (used in) continuing operations		2,242,958			(187,841	)
Cash flows from investing activities:
Capital expenditures		(1,425,935	)		(465,897	)
Proceeds from sale of property and equipment		17,600			—
Net cash used in investing activities		(1,408,335	)		(465,897	)
Cash flows from financing activities:
Payments on payable to stockholder		(1,050,000	)		(121,800	)
Proceeds from payable to stockholder		250,000			800,000
Dividends paid		(37,370	)		(37,370	)
Net cash provided by (used in) financing activities		(837,370	)		640,830
Net decrease in cash and cash equivalents		(2,747	)		(12,908	)
Cash and cash equivalents at beginning of period		136,420			149,328
Cash and cash equivalents at end of period	$	133,673		$	136,420
Supplemental Disclosures of Cash Flow Information
Cash Paid during the year for:
Income Taxes	$	467,000		$	149,697
Interest	$	14,832

See accompanying notes to financial statements.

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Spidle Sales & Service, Inc.

Notes to Financial Statements

December 31, 2004 and 2003

Note 1 - Description of Business and Accounting Policies

Spidle Sales & Service, Inc. (the Company) maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting principles followed by the Company and the methods of applying those principles which materially affect the determination of financial position, results of operations and cash flow are summarized below:

Description of Business

The Company sells new and reconditioned drilling equipment used in gold mining, oil and gas exploration and water-well drilling. The Company also leases certain tools to companies in the above industries. The Company has focused on selling and renting equipment and tools to mining companies in the Rocky Mountain region of the United States of America. Operations are based in Vernal, Utah; Evanston, Wyoming and Bellville, Texas.

Revenue Recognition and Accounts Receivable

Revenues are recognized and accounts receivable are recorded at the time of shipment for equipment sales and as earned for rentals. Earnings are charged with a provision for doubtful accounts based on collection experience and review of the collectibility of accounts. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. At December 31, 2004 and 2003, the Company believes that all accounts are collectible and no provision for doubtful accounts has been made.

The Company has exclusive sales agreements with two vendors. These agreements provide that the Company will sell or rent only the vendors’ products for certain types of products, as specified in the agreement. In exchange for these agreements, the Company receives a commission which is reflected as sales commissions in the accompanying financial statements.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2004, the Company had no deposits in excess of federally-insured limits.

Inventory

Inventory consists principally of drilling equipment held for sale. Inventory is valued at the lower of cost on a first-in, first-out method or market.

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SPIDLE SALES & SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

December 31, 2004 and 2003

Property and Equipment

Depreciation is computed at amounts considered sufficient to amortize the cost of the assets over their estimated useful lives, using accelerated methods. Depreciation is based on the following estimated useful lives:

Rental tools	3 years
Furniture and fixtures	5 years
Transportation equipment	5 years
Buildings and improvements	10-20 years
Equipment	5 years

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate an asset’s carrying amount may not be recoverable.

Income Taxes

The Company provides deferred income taxes for the expected future tax consequences of temporary differences between the income tax bases and financial reporting bases of assets and liabilities.

Advertising

The Company expenses advertising costs as they are incurred.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 - Payable to Stockholder

At December 31, 2003, a stockholder had advanced $800,000 to the Company. The payable was unsecured, bore interest at 6%, and was due on demand. The loan was repaid in 2004.

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SPIDLE SALES & SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

December 31, 2004 and 2003

Note 3 - Federal Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate at December 31, 2004 and 2003, respectively, is as follows:

	2004		2003
Income tax provision at the statutory rate	$	587,489	$	320,530
Increase resulting from:
Nondeductible expenses		1,870		10,808
	$	589,359	$	331,338

The components of the deferred income tax assets as of December 31, 2004 and 2003, respectively, were as follows:

	2004		2003
Deferred income tax asset - current
State income tax accrual	$	27,114
Deferred income tax asset - non-current
Accelerated book depreciation		41,675	$	98,061
	$	68,789	$	98,061

Note 4 - Subsequent Event

On February 14, 2005, the Company was purchased by Flotek Industries, Inc. for $6,100,000 in cash, $1,275,000 in notes payable and 129,271 shares of Flotek Industries, Inc.’s common stock.

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