UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

(Mark One)

 

(Mark One)

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

For the Fiscal Year Ended December 31, 20122014

OR

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

 

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

Commission File No. 0-30746

 

FRONTIER OILFIELD SERVICES INC.

(Formerly TBX Resources, Inc.)

(Exact name of registrant as specified in its charter)

Texas75-2592165
Texas75-2592165

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)
 

(I.R.S. Employer503 W. Sherman Street

Identification No.)Chico, Texas

76431

3030 LBJ Freeway, Suite 1320

Dallas, Texas 75234

75234
(Address of Principal Executive Offices)Zip Code

Registrant’s telephone number, including Area Code: (972) 243-2610

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock (Title of Each Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨

Indicate by check mark whether the registrant (1) has filed all reports 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. x  Yes  ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website , if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the presiding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨  Yes  ¨  No

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. x

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¨Accelerated filer¨
Non-accelerated filer¨  (Do not check if a smaller reporting company)Smaller reporting companyx

(Do not check if a smaller reporting company)

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

The Issuer’s revenues for the most recent fiscal year were $21,706,435.

On March 27, 2013,June 30, 2014, the aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $26,352,722.approximately $1,408,118. This amount was calculated by reducing the total number of shares of the registrant’s common stock outstanding by the total number of shares of common stock held by officers and directors, and stockholders owning in excess of 5% of the registrant’s common stock, and multiplying the remainder by the average of the bid and asked price for the registrant’s common stock on March 27, 2013June 30, 2014 as reported on the Over-The-Counter Pink Sheet Market. As of March 27, 2013,23, 2015, the Company had 20,169,3835,457,486 issued and outstanding shares of common stock.

 

Documents Incorporated by Reference:

None

 

 

 


TABLE OF CONTENTS

FRONTIER OILFIELD SERVICES, INC.

INDEX

 

Part I

Item 1.

Business  
Item 1.Business1
 

Item 1A.

Risk Factors3
 
Item 1B.Risk FactorsUnresolved Staff Comments8
Item 2.Properties8
Item 3.Legal Proceedings10
Part II  4

Item 1B.

Unresolved Staff Comments10

Item 2.

Properties10

Item 3.

Legal Proceedings11

Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities10
  
Item 6.Selected Financial Data11
 

Item 6.

Selected Financial Data12

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations11
  12

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk14
  15

Item 8.

Consolidated Financial Statements and Supplemental Data15
 16

Report of independent registered public accounting firm

F-1
 

Consolidated Balance Sheets

F-2

 F-2 & F-3

Consolidated Statements of Operations

F-4
 

Consolidated Statements of Cash Flows

F-5
 

Consolidated Statements of Changes in Stockholders’ Deficit

F-7

 F-6

Consolidated Notes to Consolidated Financial Statements

F-8

  F-7

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure16
Item 9A (T).   Controls and Procedures16
Item 9B.Other Information17
Part III  17

Item 9A (T).

Controls and Procedures17

Item 9B.

Other Information18

Part III

Item 10.

Directors, Executive Officers and Corporate Governance17
  
19Item 11.Executive Compensation18
 

Item 11.

Executive Compensation20

Item 12.

Security Ownership and Certain Beneficial Owners and Management and Related Stockholder Matters20
  27

Item 13.

Certain Relationships and Related Transactions and Director Independence21
  30

Item 14.

Principal Accounting Fees and Services21
Part IV  
30Item 15.Exhibits, Financial Statement Schedules21
 

Part IVSignatures

Item 15.

 Exhibits, Financial Statement Schedules23
  30

SignaturesCertificates

 31

 


PART I

Forward Looking Statements

This annual report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of forward-looking terminology such as “may,” “can,” “believe,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “estimate,” “will,” or “continue” or the negative thereof or other variations thereon or comparable terminology.  All statements other than statements of historical fact included in this annual report on Form 10-K, including without limitation, the statements under “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding the financial position and liquidity of the Company (defined below) are forward-looking statements.  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from the Company’s expectations (“Cautionary Statements”), are disclosed in this annual report on Form 10-K, including, without limitation, in conjunction with the forward-looking statements and under the caption “Risk Factors.” In addition, important factors that could cause actual results to differ materially from those in the forward-looking statements included herein include, but are not limited to, limited working capital, limited access to capital, changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, validity of patents, technological change, dependence on key personnel, availability of key component parts, dependence on third party manufacturers, vendors, contractors, product liability, casualty to or other disruption of the production facilities, delays and disruptions in the shipment of the Company’s products, and the ability of the Company to meet its stated business goals. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements.  We do not undertake to update any forward-looking statements.

We do not have an operative web site upon which our periodic reports, proxy statements and Reports on 8KForm 8-K appear. Our reports are available on the SEC’s EDGAR system and may be viewed at http://www.sec.gov.

As used herein, references to the “Company” are to Frontier Oilfield Services, Inc. a Texas corporation and its subsidiaries (“Frontier”).

Item 1. Business

The Company and Its

Our Business

Frontier Oilfield Services, Inc. (formerly TBX Resources, Inc.) a Texas corporation (and collectively with its subsidiaries, “we”, “our”, “Frontier”, “FOSI”, or the “Company”), was organized on March 24, 1995. The accompanying consolidated financial statements include the accounts of the Company and as well as:

 Frontier acquired 51% of FIG in a step acquisition and effective September 30, 2012 Frontier acquired the remaining 49% of FIG).

The Company’s current business, through its operating subsidiaries, isoperates in the oil field servicesoilfield service industry and is primarily involved in the transportation and disposal of saltwater and other oilfield fluids in Texas. Frontier owns and operates eleven disposal wells in Texas. Six of these disposal wells are located in the Barnett Shale region in north central Texas and five of these wells are located in east Texas near the Louisiana border.

The Barnett Shale region is a highly productive shale formation with a concentration of successful oil and gas wells. These wells have been completed using hydraulic fracturing and directional drilling techniques. In east Texas, the producing oil and gas wells have typically been in place for many decades. Production stimulation techniques such as salt water flood projects are used whereby salt water is injected into a producing formation to accelerate the migration of hydrocarbons to the well bore. The oil and gas wells in the Barnett Shale and in east Texas produce commercially viable volumes of hydrocarbons in the form of crude oil and natural gas. In addition these wells produce significant volumes of salt water and other oil field fluids as a by-product of the production of hydrocarbons. The salt water and fluids must be routinely removed from the well site on a daily, semiweekly or weekly basis depending on the flow rate of the wells.

Frontier owns, operates and maintains a fleet of trucks and vacuum trailers in Texas and Oklahoma. The Company currentlyits CTT subsidiary. Frontier also owns and operates thirteen (13) permittedover thirty trucks, 50 trailers with capacities ranging from 130 barrel (“Bbl.”) up to 150 Bbl., and six 120 Bbl. capacity tank trucks. Frontier employs approximately sixty full time drivers for these transport assets and typically operates the fleet 24 hours a day up to 7 days a week depending on the volume of work available. These transport assets are used to transport and dispose salt water and other oilfield fluids in Frontier’s disposal wells and in other third-party disposal wells in Texas. the Company’s operating regions.

The Company’ssignificant quantity of wells in the Barnett Shale and east Texas regions combined with the presence of salt water and other fluids in the production process creates significant demand for transport and disposal services such as those services provided by Frontier.

Our disposal wells represent a significant competitive advantage over our competitors that do not own their disposal wells. Our customer base includes national, integrated, and independent oil and gas exploration companies operating in the Barnett Shale region and in east Texas.

We have one customer that represents approximately 53% and 52% of our revenue for the years ended December 31, 2014 and December 31, 2013, respectively. We have a Master Services Agreement (“MSA”) with nothis customer accountingthat expires on March 31, 2015. The customer has recently conducted a competitive bidding process to qualify all current vendors providing saltwater transport and disposal services for more than ten percent (10%)the customer. On March 25, 2014 we were notified by the customer that we were unsuccessful in retaining our business with the customer. Our MSA with the customer will not be renewed and will expire on March 31, 2015. Management is in the process of preparing for the implications of the Company’s gross revenues. In addition,loss of this business volume, which will be significantly lower revenues and cash flows beginning in April of 2015.

Recent Developments

On April 11, 2014, our line of credit and term loan held by Capital One Bank, N.A was purchased by an accredited investor, who is also a stockholder of the Company has a minor overriding interest in two (2) producing gas wells in Wise County, Texas and seven (7) producing gas wells in Denton County, Texas. Prior to engagingCompany. The terms of the loan now held by the stockholder are the same as outlined in the oilfield services industry Frontier was incredit agreement with Capital One Bank, N.A.

On June 10, 2014, an accredited investor who is also a stockholder purchased our note payable to Asher Enterprises, Inc. (the “Asher Note”). The accredited investor assumed the business of acquiringterms and developing oil and gas properties, providing contract services to an affiliate and sponsoring and managing joint venture oil and gas development partnerships.

Recent Developments

As of December 31, 2012, the Company was in technical default of its term loans with two financial institutions resulting from its inability to maintain two required financial ratiosconditions of the respective loanAsher Note agreement debt covenants and accordingly classified the year end note balances as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliant by the end of the second quarter of 2013.without alteration.

On September 2, 2011 Frontier, under its former name, TBX Resources, Inc. entered into30, 2014, Jimmy D. Coffman resigned from his position as an Investment Agreement with LoneStar Incomeexecutive of CTT and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000surrendered 437,500 shares of Frontier’s 2011our common stock. The surrendered shares of common stock were cancelled on October 30, 2014.

On December 27, 2014, an affiliate of an accredited investor who is also a stockholder purchased the note payable to ICON Investments (the “ICON Note”). The accredited investor assumed the terms and conditions of the ICON Note agreement without alteration.

On December 29, 2014, our Board of Directors unanimously approved the issuance of 1,125,000 shares of 2014 Series A 8%7% Convertible Preferred Stock (the “Stock”) for the sum of $5,500,000 contingent upon the Company using the proceeds of the Stock to acquire a majority 51% membership interest in FIG which through its wholly owned subsidiaries; Trinity Disposal & Trucking, LLC and Trinity Disposal Wells, LLC transports and disposes salt water and other oilfield fluids. The attributes of the Stock allowed the holder to convert the preferred share into two shares of Frontier’s common stock and a warrant for an additional share at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and Frontier completed the acquisition of 51% of FIG in June 2012 (see below). Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the common stock and 5,500,000 warrants.

On June 4, 2012, the Company completed the 51% step acquisition of FIG. The Company acquired approximately 124 membership units of FIG which brought the total membership units owned by the Company to 1,168 andan accredited investor, who is also a 51% majority interest. The fair value consideration paid by the Company for the 1,168 units was $3,877,000. More recently the Company engagedstockholder in an exchange offering under Reg. D Rule 506 to acquire the remaining 1,122 membership interests in FIG. As of September 28, 2012 the Company successfully obtained all of the remaining membership interests and issued a total of 1,869,999 shares of its common stock valued at $5,610,000 to the individual members of FIG, none of which are holders of more than five percent (5%) or more of the Company’s common stock.

On July 31, 2012, the Company through a wholly owned subsidiary, Frontier Acquisition I, Inc. completed the acquisition of Chico Coffman Tank Trucks, Inc. by acquiring all of the issued and outstanding stock of Chico Coffman Tank Trucks, Inc. (“CTT”) inclusive of its wholly owned subsidiary, Coffman Disposal, LLC, for the sum of $16,986,939, subject to possible future adjustments for earnings and share prices. The acquisition was facilitated by credit facilities loaned to the Company, in the aggregate amount of approximately $12,000,000 provided by Capital One Leverage Finance (“Capital One”) and ICON Investments (“ICON”). In this regard, the Company and its subsidiaries entered into loan agreements effective July 23, 2012 with Capital One and ICON. Pursuant to the terms of the Credit Agreement with Capital One, the lender has made available a $15 million loan commitment consisting of a revolving loan commitment of $9 million and a term loan of $6 million subject to the terms of the Credit Agreement. The Company and its subsidiaries also entered into a Term Loan, Guaranty and Security Agreement with ICONexchange for the amountextinguishment of $5 million. The Loan Agreement provides$450,000 in unsecured debt, including $191,000 for monthly interest only payments with repayment of the principal and accrued but unpaid interest owed on the Asher Note and $259,000 of unsecured payables owed to the accredited investor. This series of preferred stock was created by the filing of a certificate of designation on February 1, 2018. In addition15, 2015.

On February 12, 2015, we executed a settlement agreement in litigation which had been asserted against certain of our officers of the Company and for which we were obligated to indemnify such officers. The effect of the settlement agreement was the cancellation of two subordinated promissory notes originally totaling $3,665,263. The settlement resulted in the reduction of our indebtedness by $2,082,407. These promissory notes were owed to the preceding referenced notes the Company also assumed two notes payable in connection with theformer owners of CTT and related to our acquisition of CTT. The notes relate to CTT’s purchase of common stock shares from two former stockholders. The primary note payable in the original amount of $3,445,708 dated June 1, 2007 bears interest at 4.79% and is payable in monthly installments of $33,003 including interest, maturing December 1, 2018. The Company’s secondary note payable in the original amount of $219,555 dated June 1, 2007 bears interest at 4.79% and is payable in monthly installments of $2,488 including interest, maturing December 1, 2018. Both notes are subordinated to the Capital One and ICON notes.

Oil and Gas Wells Held By the Company

As further described in the description of properties section below we have a minor overriding interest in two producing wells in Wise County and seven producing gas wells in Denton County, Texas.

Development and Operating Activities

Economic factors prevailingconditions in the oil and gas industry change from timeare subject to time.volatility. The uncertain nature and trend of these economic conditions combined with federal and energy policystate regulatory uncertainty in the oilenergy industry requires operators to be flexible and gas business generally make flexibility of operating policies important in achieving desiredadept at adjusting operations and strategy to achieve profitability. We intend to constantly evaluate continuously all conditions and risks affecting our potentialoperating activities and to reactrespond to those conditions as we deem appropriate from time to time by engagingemploying resources in businessesareas we believe will beto have the most profitablepotential for us.

success. Over the past several months, declines in the price of crude oil and natural gas have put economic pressure on oil producers, requiring them to seek expense reductions to offset the decline in their revenues. The oil field service industry has been and will continue to be affected by the volatility in oil and natural gas prices, and may experience lower revenues as oil producers’ pressure oil field service providers for lower cost service.

The Company’s business requires capital to fund operations and growth. Management intends to conduct operations to generate sufficient capital to be used for growth of the existing operation and for reduction in debt. In addition, in order to finance future development andadequately fund operating activities, reduce current liabilities and debt, and pay interest costs, we may need to secure additional capital through business alliances withfrom third parties or other debt/debt or equity financing arrangements. However, potential investors should note that while we currently have in place two definite financing arrangement theresources. There can be no assurance that we will be able to enter into additional financing arrangements oron terms that if we are able to enter into such arrangements,acceptable. There are also no assurances that we will be able to achieve any profitability as a result of our operations.operations in the current market environment.

2

General Regulations

Both state and federal authorities regulate i) the transportation and disposal of salt water, produced fluids and drilling fluids and ii) the extraction, production, transportation, and sale of oil, gas, and minerals.fluids. The executive and legislative branches of government at both the state and federal levels have periodically proposed and considered proposals forthe establishment of controls on salt water disposal, alternative fuels, energy conservation, environmental protection, taxation of crude oil imports, limitation of crude oil imports, as well as various other related programs. If any proposals relating toprograms impacting the above subjects were to be enacted, we cannot predict what effect, if any, implementation of such proposals would have upon our operations. A listing of the more significant current state and federal statutory authority for regulation of our current operations and business are provided below.

Federal Regulatory Controls

The Company and its operations are affected by a number of federal regulations. These regulations directly affect our small amount of production activities but indirectly affect our primary activity, salt water disposal as they have an impact on our customers who are oil and gas producers and who generatebusiness. If any further legislation is promulgated related to the transport or disposal of salt water, we transport and dispose of.

Historically, the transportation and sale of natural gas in interstate commerce have been regulated by the Natural Gas Act of 1938 (the (“NGA”), the Natural Gas Policy Act of 1978 (the “NGPA”) and associated regulations by the Federal Energy Regulatory Commission (“FERC”). The Natural Gas Wellhead Decontrol Act (the “Decontrol Act”) removed, as of January 1, 1993, all remaining federal price controls from natural gas sold in “first sales.” The FERC’s jurisdiction over natural gas transportation was unaffected by the Decontrol Act.

In 1992, the FERC issued regulations requiring interstate pipelines to provide transportation, separateproduced fluids or “unbundled,” from the pipelines’ sales of gas (Order 636). This regulation fostered increased competition within all phases of the natural gas industry. In December 1992, the FERC issued Order 547, governing the issuance of blanket market sales certificates to all natural gas sellers other than interstate pipelines, and applying to non-first sales that remain subject to the FERC’s NGA jurisdiction. These orders have fostered a competitive market for natural gas by giving natural gas purchasers access to multiple supply sources at market-driven prices. Order No. 547 increased competition in markets in which we sell our natural gas.

The natural gas industry historically has been very heavily regulated; therefore, there is no assurance that the less stringent regulatory approach pursued by the FERC and Congress will continue.

Currently pending in the United States Congress is a comprehensive energy bill which among other things calls for the reduction or elimination of certain tax incentives currently in place for domestic oil companies including the tax deductions permitted for intangible costs and depletion allowances. In the eventdrilling fluids, such legislation became law the loss of these tax benefits would likelycould have a negative material effect on our operations.

Our costs of regulatory compliance are approximately $125,000 per year. In addition we are required to maintain performance bonds and certain letters of credit in favor of regulatory agencies such as the financesTexas Railroad Commission. We currently maintain approximately $100,000 in security in the form of performance bonds and letters or credit for the company. benefit of certain regulatory agencies.

Federal Regulatory Actions

Federal legislation has also been introduced which may have an affecteffect on the use of fracinghydraulic fracturing to increase oil and gas production, primarily in shales,shale formations, due to concerns primarily withrelated to potential contamination of drinking water supply contamination.supplies.

The EPAU.S. Environmental Protection Agency (“EPA”) has asserted federal regulatory authority pursuant to the federal Safe Drinking Water Act or SDWA,(“SDWA”) over certain hydraulic fracturing activities involving the use of diesel. In addition, from time to time, Congress has considered legislation to provide for federal regulation generally of hydraulic fracturing in the United States under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.

State Regulatory Controls

In each stateThe Company’s operations are located in areas where we conduct or contemplatehydraulic fracturing is employed as the primary method of establishing and developing oil and gas activities,producing wells. These areas are also where the majority of the Company’s revenues are generated as these activities are subject to various regulations. The regulations relate to the extraction, production, transportation and sale of oil and natural gas, the issuance of drilling permits, the methods of developing new production, the spacing and operation ofproducing wells the conservation of oil and natural gas reservoirsalso generate salt water and other similar aspectsfluids as by-products of the oil and gas producing process. Any regulation inhibiting or prohibiting the use of hydraulic fracturing may have a material adverse effect on our operations. In particular, the

State Regulatory Controls

The State of Texas (where we have conductedoperate) regulates the majorityoperation and permitting associated with the transport and disposal of our salt water disposal activities and oil and gas operations to date) regulates the rate of daily production allowable from both oil and gas wells on a market demand or conservation basis. At the present time, no significant portion of our production has been curtailed due to reduced allowables. Ourother produced fluids. Because are primarily engaged in salt water, produced fluids and drilling fluid disposal activities, our operations are subject to inspection and permitting by state authorities.authorities of the State of Texas. There have been recent regulatory and legislative proposals duerelated to concerns primarily with potential water supply contamination due to claims that such contamination could potentially be caused by fracinghydraulic fracturing operations.

We know of no proposed regulation or legislation that will materially impede our operations.

Environmental Regulations

Our salt water and other fluids disposal operations are subject to environmental protection regulations established by federal, state, and local agencies. To the best of our knowledge, weWe believe that we are in compliance with the applicable environmental regulations established by thethese agencies with jurisdiction over our operations. We are acutely aware that the applicableCertain environmental regulations currently in effect could have a material detrimentaladverse effect uponon our earnings capital expenditures, or prospects for profitability. Our competitorsprofitability if we received a determination from one of these agencies that our operations are subject to the same regulations and therefore, the existence of such regulations does not appear to have any material effect upon our position with respect to our competitors.in compliance. The Texas Legislature has mandated a regulatory program for the management of hazardous wastes generated during crude oil and natural gas exploration and production, gas processing, oil and gas waste reclamation, salt water disposal and transportation operations. The disposal of these wastes, as governed by the Railroad Commission of Texas, is becoming an increasing burden onsubject to the industry.supervision of state of Texas authorities. Our disposal operations are also subject to inspection and regulation by state and federal environmental authorities.

Employees

Currently, we employ 11 full timehave 83 full-time employees, with two full-time employees at our corporate office and 81 full-time employees in our corporate headquarters and 351 full time employees in our field operations for a total of 362 employees. We currently do not have any part time employees.operations.

Item 1A. Risk Factors

Business Risks

Our business volume has declined and our operations have lost a significant amount of money during the last two fiscal years.

Due to reductions in the volume of business combined with significant debt, the Company’s operations have not been profitable. We have made substantial changes in our operations including significant reductions in operating expenses and employees, the closing of our salt water disposal operations in east Texas, and sales of certain non-productive assets to raise cash to pay interest expenses and reduce debt. There can be no assurance we will be successful in returning to profitability. If we are unable to return to profitability we may be required to seek the protection of the United States Bankruptcy Court and liquidate or reorganize.

Our independent auditors have issued a report which raises the question about our ability to continue as a going concern. This report may impair our ability to raise additional financing and adversely affect the price of our common stock.

The report of our independent auditors contained in our financial statements for the year ended December 31, 2014 includes a paragraph that explains that we have been experiencing financial and liquidity concerns. Per the report, these conditions raise substantial doubt about our ability to continue as a going concern. Reports of independent auditors questioning a company’s ability to continue as a going concern are generally viewed unfavorably by analysts and investors. This report, along with our recent financial results, may make it difficult for us to raise additional debt or equity financing necessary to conduct our operations.

3

We have a significant amount of debt and our operational losses may prevent the payment of our debt when due.

We currently have a significant amount of debt outstanding which requires us to meet certain operating and financial covenants and on which we are required to pay interest and repay principal. We have failed to meet the operational or financial covenants and have failed to pay interest and principal on our debt in a timely matter and are therefore in breach of certain of our loan agreements. Our secured creditors could foreclose on their collateral which constitutes all of our assets. Due to our reduced business volume and operating losses, we have been dependent upon two of our significant shareholders who have purchased our equity and provided funds to make our debt payments. If we are unable to increase business volumes or otherwise return to profitability and we are unable to raise additional debt or equity capital, we may default on our debt and our creditors could foreclose on our assets. We would then cease operating as a going concern and you could potentially lose all of your investment in the Company.

Our future success depends upon our ability to adapt to changes in the oil services industry and successfully implement our new business strategy.

Due to thelower market prices for crude oil and other changes occurring in the oil industry, wemany of our customers are seeking to reducing their costs and to reduce their operations. We have adopted and implementedbegun implementing a revised business plan which caused the Company to change its primary focus from oil production activities to acquiring businesses and assets that are involved in the oil field services industry with an emphasis on increasing the volumes of salt water, disposal.produced fluids and drilling fluids we transport and dispose of. The Companyplanned increase in business volume may require that we reduce prices for the services we perform for our customers due to the current economic environment in the oil and gas industry. We currently has veryhave limited financial resources and there can be no assurance that we will be successful in locatinggaining additional salt water disposal businesses or assetsbusiness from new and if we are successful in locating themexisting customers at prices and terms that we will be ablewould allow us to successfully acquire them.make a profit.

Federal legislation and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays as well as adversely affect our services.

Hydraulic fracturing is an important and commonly used process for the completion of oil and natural gas wells in formations with low permeability, such as shale formations, andformations. Hydraulic fracturing involves the pressurized injection of water, sand and chemicals into rock formations to stimulate production. Due to concerns raised concerningsurrounding the potential impacts of hydraulic fracturing activities on groundwater quality, certain legislative and regulatory efforts at the federal level and in some statesproposals have been initiated in the United States to rendermake permitting, public disclosure and construction and operational compliance requirements more stringent for hydraulic fracturing. While hydraulic fracturing typically is regulated in the United States by state oil and natural gas commissions, there have been developments indicating that more federal regulatory involvement may occur.

The EPA has asserted federal regulatory authority pursuant to the federal Safe Drinking Water Act, or SDWA, over certain hydraulic fracturing activities involving the use of diesel. In addition, from time to time,the United States Congress has considered legislation to provide for federal regulation of hydraulic fracturing in the United States under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process. At the state level, several states have adopted or are considering adopting legal requirements that could impose more stringent requirements on hydraulic fracturing activities. In the event that new or more stringent federal or state legal restrictions relating to use of the hydraulic fracturing process in the United States are adopted in areas where our oil and natural gas exploration and production customers operate, those customers could incur potentially significant added costs to comply with requirements relating to permitting, construction, financial assurance, monitoring, recordkeeping, and/or plugging and abandonment, as well as could experience delays or curtailment in the pursuit of production or development activities, which could reduce demand for our produced and non-produced water disposal services.

In addition, certain domestic governmental reviews are either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. The White House Council on Environmental Quality is coordinating an administration-wide review of hydraulic fracturing practices, and a committee of the United States House of Representatives has conducted an investigation of hydraulic fracturing practices. The EPA has commenced a study of the potential environmental effects of hydraulic fracturing on drinking water and groundwater, with initial results expected to be available by late 2012 and final results by 2014. Moreover, the EPA is planning to develop effluent limitations for the treatment and discharge of wastewater resulting from hydraulic fracturing activities by 2014.activities.

Other governmental agencies, including the U.S. Department of Energy and the U.S. Department of the Interior, are evaluating various other aspects of hydraulic fracturing. These ongoing or proposed studies, depending on their degree of pursuit and any meaningful results obtained, could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory mechanisms, which events could delay or curtail production of oil and natural gas by exploration and production operations, some of which are our customers, and thus reduce or eliminate demand for our services.

We are subject to extensive and costly environmental laws and regulations that may require us to take actions that willcould adversely affect our results of operations.

All of our current and proposedOur operations are significantly affected by stringent and complex foreign, federal, provincial, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection. We could be exposed to liability for cleanup costs, natural resource damages and other damages as a result of our conductoperating activities that waswere lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties.

Environmental laws and regulations are subject to change in the future, possibly resulting in more stringent requirements. If existing regulatory requirements or enforcement policies change or are more stringently enforced, we may be required to make significant unanticipated capital and operating expenditures.

Any failure by us to comply with applicable environmental laws and regulations may result in governmental authorities taking actions against our business that could adversely impact our operations and financial condition, including the:

 

  • denial or revocation of permits or other authorizations;

  • reduction or cessation in operations; and

  • performance of site investigatory, remedial or other corrective actions.
  • There are risks inherent in reworking, completing and operating disposal wells.

    Reworking and completing saltwater disposal wells involves a degree of risk, and sometimes results in unsuccessful efforts, for a variety of reasons. The CompanyWe cannot control the outcome of operations entirely, and there can be no assurance that any operation will be successful. The results of any well operations cannot be determined in advance. Even though a disposal well is permitted to accept a certain amount of water, there is no assurance that the disposal well or any specific zone in the well will be capable in fact of absorbing any specific amount of water. A wellDisposal wells may also be ruined or rendered unusable during operations

    due to technical or mechanical difficulties. Should a well be successfully completed or perforated, there is still no assurance that the zone in which the well is completed or perforated will be able to absorb saltwater at a rate that will support profitable operations. Disposal wells can encounter problems that render the well unusable, even after a period of successful operation. There can be no assurance that the Companywe will be able to successfully rework, complete or operate any specific well, or will be able to operate sufficient wells to achieve a consistent positive cash flow or to achieve profitability.

    Our company success will likely depend uponon the continuing availability of certain disposal siteswells.

    We believe that there will be available to the Company a number of existing disposal wells and sources of locations for the drilling of new wells necessary to provide the Companyus with sufficient disposal capacity at a reasonable cost. However, there can be no assurance that disposal wells or disposal well locations will always be available or available at a reasonable cost. There can be no assurance that the Companywe will have the resources to drill and/or complete additional wells. If we are not able to obtain disposal wells or disposal well drilling locations or the wells or locations are available but their cost is no longer reasonable, the Company’sour finances would be directly impacted and itwe might not have the ability to continue as a going concern.

    The CompanyWe may not be sufficiently insured or insured in sufficient amounts or against all potential liabilities.

    The CompanyWe could incur substantial liabilities to third parties in connection with reworking or operating disposal wells. The CompanyWe may not be able to insure against all such liabilities, may carry insurance in amounts not sufficient to cover all such liabilities or may elect not to insureself-insure against such liabilities due to the premium costs involved or other reasons.due to lack of available insurance coverage. Other parties with whom the Company contractswe contract for operations may carry liability insurance, but there is no assurance that the insured risks or the level of insurance coverage obtained by such parties will be sufficient to cover all potential liability incurred bywe or such parties or the Company.incur. Further, there may be occurrences resulting in expenses or liabilities to third parties that are of a nature that cannot now or may not in the future be insured. Uninsured liabilities to third parties could reduce the funds available to the Company,us, could exceed the value of theour assets, of the Company, and could result in the complete loss of property owned by the Company.we own.

    The Company isWe are dependent upon our trucking operation and isare subject to potential liability from trucking.

    The Company’sOur primary method of collecting and transporting salt water and other fluids from its disposalour customers is by truck. Consequently, the Company haswe have a number of trucks operating on the roads and highways where potential accidents and liability may occur. While the Company insures itself fromwe insure against certain risks, there is no assurance that the Companywe will be able to obtain such insurance in the future or if available that the insurance will be adequate to cover all of any potential liability or judgment rendered which might be rendered against the Company.us. Should the Companywe not be insured or if the amount of itsour insurance beis ultimately inadequate to cover any finding of liability against the Company then it is likely that the Companywe would not be able to continue as a going concern.

    We may not be able obtain the necessary permitspermits..

    We are required to obtain certain permits, approvals or licenses in connection with our proposeddisposal well and trucking operations. We may not be able to obtain new or transferred permits, approvals or licenses on a timely basis or at all, which would result in material adverse consequences to our business and financial condition.

    Our salt water disposal operations may be subject to liability or claims of environmental damages.

    We have acquiredoperate existing salt water disposal wells and locations which have received the necessary governmental permits for drilling a disposal well. However, althoughAlthough the disposal wells have received certain governmental regulatory licenses, permits or approvals this does not shield the Companyus from potential claims from third parties claiming contamination of their water supply or other environmental damages. Remediation of environmental contamination or damages can be extremely costly and such costs, if the Company iswe are found liable, could be of such a magnitude as to cause the Companyus to cease operating as a going concern.

    5

    Our business may fail.

    There is limited operating history upon which to base an assumption that we will be able to achieve our revised business plans. Our salt water disposal operations are subject to all of the risks inherent in the establishment of a new business enterprise, including the lack of significant operating history and potential undercapitalization. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including our ability to acquire suitable assets and to maintain our existing customer base and attract new customers. There can be no assurance that we will achieve our

    projected goals or accomplish our business plans; and such failure could have a material adverse effect on the Companyour operations and itsour stockholders. If we are not able to achieve and maintain operating revenues, the Companywe could fail and you could lose your entire investment.

    We will require additional funding to implement our business plan.

    Our estimate of the amounts required to fund our acquisitions and future operations is based upon assumptions that may not prove accurate. If we do not have adequate funds to cover operating expenses and working capital requirements, we will require debt and/or equity financing sources for additional working capital. We may further leverage our assets and may use the assets as collateral to secure financing. There is no assurance that the Companywe will be able to obtain additional debt or equity funding if necessary.

    Our business depends on domestic spending by the oil and gas industry.

    Industry conditions are influenced by numerous factors over which we have no control, such as the supply of and demand for oil and gas, domestic and worldwide economic conditions, political instability in oil and gas producing countries and merger and divestiture activity among oil and gas producers. The volatility of the oil and gas industry and the consequent impact on exploration and production activity could adversely impact the level of drilling and workover activity. This reduction may cause a decline in the demand for our services or adversely affect the price of our services. In addition, reduced discovery rates of new oil and gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger oil and gas prices, to the extent existing production is not replaced and the number of producing wells for us to service declines.

    Competition may adversely affect us.

    The salt water and production fluids disposal services industry is highly competitive and fragmented and includes numerous small companies capable of competing effectively in our markets on a local basis, as well as several large companies that possess substantially greater financial and other resources than we do. Our larger competitors’ greater resources could allow those competitors to compete more effectively than we can.

    Our operations are subject to inherent risks, some of which are beyond our control.control.

    Our operations are subject to hazards inherent in the oil and gas industry, such as,including, but not limited to, accidents, blowouts, explosions, craterings, fires and oil spills. These conditions can cause:

     

    ·personal injury or loss of life;

    ·damage to or destruction of property and equipment and the environment; and

    ·suspension of operations.

    The occurrence of a significant event or adverse claim in excess of any insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations. Litigation arising from a catastrophic occurrence at a location where our equipment or services are being used may result in our being named as a defendant in lawsuits asserting largesubstantial claims.

    We may be exposed to certain regulatory and financial risks related to climate change.

    Climate change is receiving increasing attention from scientists and legislators alike. The debate is ongoing as to the extent to which our climate is changing, the potential causes of this change and its potential impacts. Some attribute global warming to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. A significant focus is being made on companies that are active producers of depleting natural resources.

    There are a number of legislative and regulatory proposals to address greenhouse gas emissions, which are in various phases of discussion or implementation. The outcome of foreign, U.S. federal, regional, provincial and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations, additional charges to fund energy efficiency activities, or other regulatory actions. These actions could:

     

    ·result in increased costs associated with our operations and our customers’ operations;

    ·increase other costs to our business;

    ·adversely impact overall drilling activity in the areas in which we plan to operate;

    ·reduce the demand for carbon-based fuels; and

    ·reduce the demand for our services.

    Any adoption of these or similar proposals by foreign, U.S. federal, regional or state governments mandating a substantial reduction in greenhouse gas emissions and implementation of the Kyoto Protocol (the Copenhagen Accord,) or other foreign, U.S. federal, regional or state requirements or other efforts to regulate greenhouse gas emissions, could have far-reaching and significant impacts on the energy industry. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address greenhouse gas emissions would impact our business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business or demand for our services.

    Currently proposed legislative changes, including changes to tax laws and regulations, could materially, negatively impact the Company,our operations and financial results, increase the costs of doing business and decrease the demand for our products.

    The current U.S. administration and Congress have proposed several new articles of legislation or legislative and administration changes, including changes to tax laws and regulations, which could have a material negative effect on our Company.operations and financial results. Some of the proposed changes that could negatively impact us are:

     

    ·cap and trade system for emissions;
    ·increase environmental limits on exploration and production activities;
    ·repeal of expensing of intangible drilling costs;
    ·increase of the amortization period for geological and geophysical costs to seven years;
    ·repeal of percentage depletion;
    ·limits on hydraulic fracturing or disposal of hydraulic fracturing fluids;
    ·repeal of the domestic manufacturing deduction for oil and natural gas production;
    ·repeal of the passive loss exception for working interests in oil and natural gas properties;
    ·repeal of the credits for enhanced oil recovery projects and production from marginal wells;
    ·repeal of the deduction for tertiary injectants;
    ·changes to the foreign tax credit limitation calculation; and
    ·changes to healthcare rules and regulations.

    cap and trade system for emissions;

    increase environmental limits on exploration and production activities;

    repeal of expensing of intangible drilling costs;

    increase of the amortization period for geological and geophysical costs to seven years;

    repeal of percentage depletion;

    limits on hydraulic fracturing or disposal of hydraulic fracturing fluids;

    repeal of the domestic manufacturing deduction for oil and natural gas production;

    repeal of the passive loss exception for working interests in oil and natural gas properties;

    repeal of the credits for enhanced oil recovery projects and production from marginal wells;

    repeal of the deduction for tertiary injectants;

    changes to the foreign tax credit limitation calculation; and

    changes to healthcare rules and regulations.

    We are subject to litigation risks that may not be covered by insurance.

    In the ordinary course of business, we become the subject of various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, employees and other matters, including potential claims from individuals due to accidents or other mishaps involving our proposed trucking operations. We maintain insurance to cover many of our potential losses, and we are subject to various self-retentions and deductibles under our insurance policies. It is possible, however, that a judgment could be rendered against us in cases in which we could be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters.

    Our concentration of customers in a single industry may impact our overall exposure to credit risk.

    All of our salt water disposal customers operate in the energy industry. This concentration of operations and customers in a single industry may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions.

    The loss of a significant customer could adversely affect our financial results.

    For 2013 and 2014, a single customer accounted for approximately 52% and 53% of our revenues. We have a Master Services Agreement with this customer that expires on March 31, 2015. Although we are engaged in renewal negotiations with this customer, to date no decision has been made. If we are not able to retain this customer’s business, our financial results could be significantly and negatively impacted and we would need to devote substantial organizational resources to replacing this business. In addition, even if we retain this business, it may not be on identical terms to those in place in prior years and our financial results could be impacted by any change in terms.

    Oil prices are volatile. A substantial decrease in oil prices could adversely affect our financial results.

    Our future financial condition is significantlymay be impacted by resultsthe level of our skim oil operations which depend upon the prices we receive for our oil processing.and natural gas market prices. Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given world geopolitical conditions. OurIn addition, our cash flow from operations is somewhat dependent on the prices that we receive for skim oil. Thisoil sold from our disposal operations. The price volatility in the oil and natural gas market also affects the amountcash flow and operations of our cash flow available for capital expenditurescustomers and ourtheir ability to borrow money or raise additional capital.purchase our services. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include:

     

    the level of consumer demand for oil;

    ·the level of consumer demand for oil and natural gas;
    ·the domestic and foreign supply of oil and natural gas;
    ·the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil and natural gas price and production controls;
    ·the price of foreign oil and natural gas;
    ·domestic governmental regulations and taxes; and
    ·the price and availability of alternative fuel sources.

     

    the domestic and foreign supply of oil;

    the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;

    the price of foreign oil;

    domestic governmental regulations and taxes;

    the price and availability of alternative fuel sources;

    These factors and the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices would reduce revenue and, as a result, could have a material adverse effect upon our financial condition, results of operations, and the carrying values of our properties. If the oil industry experiences significant price declines, we may, among other things, be unable to meet our financial obligations or make planned expenditures.

    Since the end of 1998, oil prices have gone from near historic low prices to historic highs. At the end of 1998, NYMEX oil prices were at historic lows of approximately $11.00 per Bbl, but have generally increased since that time, albeit with fluctuations. Forfluctuations.For 2011, NYMEX oil prices fluctuated but averaged $97.00 per Bbl. ForBbl and for 2012 oil prices also fluctuated but averaged approximately $94.00 per Bbl. While we attemptIn 2013 NYMEX oil prices averaged $97.91 per Bbl. Current market prices for crude oil have declined over 45% since the summer of 2014 and have recently ranged from $45 to obtain the best price for our skim oil in our marketing efforts, we cannot control these market price swings and are subject to the market volatility for this type of oil.$55 per Bbl. These price differentials relative to NYMEX prices can have as much of an impact on our profitability as does the volatility in the NYMEX oil prices.profitability.

    Loss of executive officers or other key employees and sponsors could adversely affect our business.

    Our success is dependent upon the continued services and skills of our current executive management.key employees and certain large stockholders. The loss of services or participation of any of these key personnelindividuals could have a negative impact on our business because of such personnel’stheir skills and industry experience and the difficulty of promptly finding qualified replacement personnel.replacements.

    Acquisition of entire businesses is a component of our growth strategy; our failure to complete future acquisitions successfully could reduce the earnings and slow our growth.

    Potential risks involved in the acquisition of such businesses include the inability to continue to identify business entities for acquisition or the inability to make acquisitions on terms that we consider economically acceptable. Furthermore, there is intense competition for acquisition opportunities in our industry. Competition for acquisitions may increase the cost of, or cause us to refrain from, completing acquisitions. Our strategy of completing acquisitions would be dependent upon, among other things, our ability to obtain debt and equity financing and, in some cases, regulatory approvals. Our ability to pursue our growth strategy may be hindered if we are not able to obtain financing or regulatory approvals. Our ability to grow through acquisitions and manage growth would require us to continue to invest in operational, financial and management information systems and to attract, retain, motivate and effectively manage our employees. The inability to effectively manage the integration of acquisitions could reduce our focus on subsequent acquisitions and current operations, which, in turn, could negatively impact our earnings and growth. Our financial position and results of operation may fluctuate significantly from period to period, based on whether or not significant acquisitions are completed in particular periods.

    Risks Related to Our Common Stock

    Our common stock is thinly traded which is likely to result in volatile swings in our stock price.

    Our stock is thinly traded as much of our issued and outstanding stock is held by our officers and a small number of stockholders. Consequently until our common stock is more widely held and actively traded small sales or purchases will likely cause the price of our common stock to fluctuate dramatically up or down without regard to our financial health, net worth or business prospects.

    We may issue additional shares of Preferred Stock.preferred stock.

    Pursuant to our certificate of incorporation, our board of directors has the authority to issue additional series of preferred stock and to determine the rights and restrictions of shares of those series without the approval of our stockholders. The rights of the holders of the current series of common stock may be junior to the rights of preferredcommon stock that may be issued in the future. In addition, any future series of preferred stock could be convertible into shares of our common stock, which could result in dilution to your investment.

    There may be future dilution of our Common Stock.common stock.

    We are committed tomay pursue an aggressive acquisition strategy which is likely to require the issuance of common shares as a component of the purchase price for the acquisitions. Any such issuance maywill result in dilution of our common stock. In addition, to the extent options to purchase common stock under employee and director stock option plans are exercised, holders of our common stock will be diluted. If available funds and cash generated from our operations are insufficient to satisfy our needs, we may be compelled to sell additional equity or convertible debt securities. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

    Our management controls a significant percentage of our outstanding common stock and their interests may conflict with those of our stockholders.

    Our executive officers and their affiliates beneficially own a substantial percentage of our outstanding common stock. This concentration of ownership could have the effect of delaying or preventing a change in control of the Company, or otherwise discouraging a potential acquirer from attempting to obtain control of the Company. This could have a material adverse effect on the market price of the common stock or prevent our stockholders from realizing a premium over the then prevailing market prices for their shares of common stock.

    Sales of substantial amounts of our common stock may adversely affect our stock price and make future offerings to raise more capital difficult.

    Sales of a large number of shares of our common stock in the market or the perception that sales may occur could adversely affect the trading price of our common stock. We may issue restricted securities or register additional shares of common stock in the future for our use in connection with future acquisitions. Except for volume limitations and certain other regulatory requirements applicable to affiliates, such shares may be freely tradable unless we contractually restrict their resale. The availability for sale, or sale, of the shares of common stock eligible for future sale could adversely affect the market price of our common stock.

    Item 1B. Unresolved Staff Comments.

    There are no unresolved comments from the staff of the Securities and Exchange Commission.

    Item 2. Description of Properties.

    Our principal executive offices are located in an office building at 503 W. Sherman St., Chico, Texas 76431.

    We maintain our corporate offices at 3030 LBJ Freeway, Suite 1320, Dallas, Texas 75234. The Company’s operating lease agreement as amended was extended for thirty-nine months through May 31, 2014 and currently pays a monthly base rental of $7,440.49. The Company’s continuing obligation under the base lease is approximately $129,332.

    The Company owns ten (10) acres of vacant land in Johnson County andalso own 7.055 acres inat the above address Chico, Texas on which it has five (5) buildings usedwe have 3 buildings. These facilities serve as our executive and administrative offices and headquarters for CTT operations including repair & maintenance facilities for its transportation fleet and salt water disposal operations in that area. The Companyservices business. CTT has three operating wells near Chico, Texas. Two of these well locations have small buildings for well monitoring and operations. We also ownsown 7.49 acres in Harrison County, Texas on which three (3) of itsour disposal wells are located, along with a small manufactureoffice and repair shop. In addition,shop for the Company isoperation of these wells.

    We are obligated under long-term leases for the use of land where sevensix of itsour disposal wells are located. Three of the leases are for extended periods of time. The first lease expires on February 7, 2023 (with two options to renew for an additional 10 years each). The second lease expires on December 1, 2034 with no option to renew and the third lease expires on May 31, 20222018 with no option to renew. The monthly lease paymentpayments for the disposal well leases is $10,300.total $10,800.

    Following is information concerning production

    Disposal Wells. We currently own and operate eleven disposal wells which are licensed by the State of Texas for the disposal of salt water and certain drilling fluids. We receive fees from the use of our wells from our oilown operations or by third parties who contract for the use of our disposal wells. Our disposal wells and gas wells, productive well counts and both producing and undeveloped acreage. We currently have a minor overriding interest in seven (7) Barnett Shale gas wells in Denton County, Texas and two (2) Barnett Shale gas wells in Wise County, Texas.

    Reserves Reported To Other Agencies. Wetheir locations are not required and do not file any estimates of total, proved net oil or gas reserves with reports to any federal authority or agency.

    The following information pertains to our properties as of December 31, 2012:

       Gross   Net 
       Producing   Producing 

    Name of Field or Well

      Well Count   Well Count 

    Newark East, Override Interest

       9     0.036  

    Productive Wells and Acreage

    Geographic Area

      Total Gross
    Oil Wells
       Net
    Productive
    Oil Wells
       Total Gross
    Gas Wells
       Net
    Productive
    Gas Wells
       Total
    Gross
    Developed
    Acres
       Total Net
    Developed
    Acres
     

    Wise County

       —       —       2     0.0360     224     8.06  

    Denton County

       —       —       7     0.0360     566     20.38  

    Notes:follows:

     

    1.CompanyTotal GrossWell
    Name
    Permit #LocationState

    Own/

    Lease

    Lease
    Term
    Exp.
    Lease
    Terms
    Coffman Disposal, LLC
    Trull Disposal Well, LLCTrull 111954Trull Lease, Well No. 1, Seventy Day (Congl) Field,
    Wise County, RRC District 09
    TXLease12/1/2034$1,500 per month
    Trull Well #2, LLCTrull 212180Trull Lease, (19617), Well No. 2, Seventy Day
    (Congl) Field, Wise County, RRC District 09
    TXLease12/1/2034Included in above
    Trull Well #3 LLC (in process)Trull 313300Trull (000000) Lease Boonsville Field, Wise
    County RRC District 09
    TXLeasenot completed$1,500 per month
    CSWU Well, LLCCSWU11891

    Caughlin Strawn West Unit Lease, (30288), Well No. 1202U, Caughlin (Strawn) Field, Wise County,
    RRC District 09

    TXLease5/31/2018$1,800 per month
    Brunson Well, LLCBrunson 111779

    Brunson Kenneth Lease (30152) Lease, Well
    No.1 WD, Boonsville (Bend Congl., Gas) Field,
    Wise County, RRC District 09

    TXLease6/7/2032$4,000 per month
    Brunson Well, LLCBrunson 212533

    Brunson Kenneth Lease (30152), Well No. 2
    Boonesville (Bend Congl., Gas) Field, Wise County,
    RRC District 09

    TXLease6/7/2032Included in above
    Trinity Disposal Wells, are those wells in which the Company holds an overriding interest in as of December 31, 2012.LLC
    Trinity Disposal Wells, LLCBarker - Hope17034

    Barker-Hope Lease, (016675), Well No. 4, Scottsville,
    NW (Page 6400) Field, Harrison County,
    RRC District 06

    TXLease5 year renewals$1,000 per month
    Trinity Disposal Wells, LLCRiley16157

    756 Akin Road, Waskom TX 75692; (Riley Lease,
    (14193), Well No. 1SW, Waskom (Riley 6225) Field, Harrison County, RRC District 06

    TXOwnn/an/a
    Trinity Disposal Wells, LLCShaw16705Shaw, Jim Lease, (029412), Well No. 1, Bethany (Pettit) Field, Harrison County RRC District 06TXLease5 year renewals$1,000 per month
    Trinity Disposal Wells, LLCDorsett11388Well No. 1 Blocker (Cotton Valley) Field
    Harrison County, RRC District 06
    TXOwnn/an/a
    Trinity Disposal Wells, LLCNewtF1619Newt Lease, Well No. 1 Blocker (Page) Field,
    Harrison County, Texas, District 06
    TXOwnn/an/a

     

    2.Net Productive Wells was calculated by multiplying the overriding interest held by the Company in each of the nine (9) Gross Wells and adding the resulting products.

     

    3.Total Gross Developed Acres is equal to the total surface acres of the properties in which the Company holds an overriding interest.

    4.Net Developed Acres is equal to the Total Gross Developed Acres multiplied by the percentage of the total overriding interest held by the Company in the respective properties.

    5.All acreage in which we hold an overriding interest as of December 31, 2012 have or had existing wells located thereon; thus all acreage leased by the Company may be accurately classified as developed.

    6.Acreage that has existing wells and may be classified as developed may also have additional development potential based on the number of producible zones beneath the surface acreage. A more comprehensive study of all properties currently leased by us would be required to determine precise developmental potential.

    Forfeiture of Oil and Gas Interests

    During the first quarter of the last fiscal year, we were notified the Company had forfeited its interestWe are currently attempting to sell our disposal wells in the Johnson #1-H and Johnson #2-H Joint Ventures effective September 7, 2010 for not paying a Special Assessment of $43,008 for estimated workover expenses. If we had known of the Special Assessment cash call we would have declined to participate because there was no assurance that the rework would be successful in increasing production to recoup the Special Assessment amount and extend the life of the wells. In addition, we are no longer obligated to pay the plug and abandonment costs for these wells.east Texas.

    As a result of the forfeiture, in 2011 the Company wrote-off the book value of the wells, asset retirement obligations, receivables and payables which resulted in a loss of $16,089.

    Item 3. Legal Proceedings

    On November 3, 2014, ICON Investments filed suit in Dallas County District Court, Cause No. DC-14-12819, against us and each of our subsidiaries seeking the sum of $4.3 million plus costs and attorney’s fees. ICON claimed we were in breach of the ICON Note agreement. On December 27, 2014 an affiliate of an accredited investor who is also a stockholder purchased the ICON Note from ICON Investments and the litigation with ICON Investments was terminated by agreement. The Company isaccredited investor assumed the terms and conditions of the ICON Note agreement.

    In addition, although we were not currently the subjectnamed as a party, certain of orour current and former officers were involved in any material litigation.litigation filed against them and, as a result, we were obligated to indemnify these officers. Jimmy Coffman and Elaine Coffman v. Tim P. Burroughs and Dick O’Donnell CAUSE NO. CV14-02-115 was filed in the 271st Judicial District Wise County, Texas wherein the Coffmans sought to obtain the sum of $2.1 million which they alleged was owed to them on a promissory note as a result of our purchase of CTT and its subsidiary, Coffman Disposal, LLC. The lawsuit was defended through our Directors and Officers insurance carrier, Chubb Insurance. On February 12, 2015 we executed a settlement agreement in the litigation with the Coffmans whereby the Coffmans received a cash payment from Chubb in exchange for the termination of the litigation and the cancellation of the two subordinated promissory notes with face amounts totaling $3.7 million. The settlement resulted in the reduction of our debt by $2.1 million. We paid approximately $150,000 in defense costs, which represented the amount of our deductible under our Directors and Officers insurance policy.

    We are also a named defendant, along with the previous named officers, in certain litigation styled Dynamic Technical Solutions Corp. and Ola Investments, LLC, V. Frontier Oilfield Services, Inc., Timothy Burroughs and Bernard R. “Dick” O’Donnell; CAUSE NO. CV14-04-234 in the 271st Judicial District Wise County, Texas. The plaintiffs in this matter allege they have been damaged by our failure to complete a disposal well in a joint venture between the parties. We are vigorously defending this lawsuit and believe the lawsuit is without merit.

    PART II

    Item 5. Market For Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities.

    Prices for our common stock are currently quoted in the over-the-counter Pink Sheets maintained by the National Quotation Bureau (NQB) owned Pink Sheet OTC Market, Inc. and our ticker symbol is FOSI.PK (Formerly TBXC). Prices for our stock were approved for quotation on the over-the-counter on January 27, 2001.FOSI.PK. The following table shows the high and low bid information for our common stock for each quarter during which prices for our common stock have been quoted.the indicated periods.

     

    QUARTER EXCEPT JUNE

      LOW BID   HIGH BID 

    Quarter ending February 28, 2012

      $0.50    $1.05  

    Quarter ending May 31, 2012

      $0.70    $1.30  

    Month ending June 30, 2012

      $0.80    $1.25  

    Quarter ending September 30, 2012

      $0.80    $4.50  

    Quarter ending December 31, 2012

      $1.50    $2.50  
    QUARTER LOW BID HIGH BID
    Quarter ending March 31, 2014 $0.11  $2.96 
    Quarter ending June 30, 2014 $0.18  $0.65 
    Quarter ending September 30, 2014 $0.15  $0.60 
    Quarter ending December 31, 2014 $0.60  $0.60 
             
    QUARTER  LOW BID   HIGH BID 
    Quarter ending March 31, 2013 $2.25  $2.25 
    Quarter ending June 30, 2013 $1.00  $1.00 
    Quarter ending September 30, 2013 $0.26  $0.48 
    Quarter ending December 31, 2013 $2.96  $2.96 

    QUARTER

      LOW BID   HIGH BID 

    Quarter ending February 28, 2011

      $0.01    $0.06  

    Quarter ending May 31, 2011

      $0.01    $0.09  

    Quarter ending August 31, 2011

      $0.01    $0.07  

    Quarter ending November 30, 2011

      $0.07    $1.55  

    The above information was obtained from the Pink Sheet OTC Market, Inc. web site. Because these are over-the-counter market quotations, these quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions. transactions.We have 976 shareholders1,639shareholders of record for our common stock as of December 31, 2012.2014.

    On December 29, 2014, the Board of Directors approved the issuance of 1,125,000 shares of cumulative convertible preferred stock in exchange for the cancellation of certain unsecured debt totaling $450,000 held by one of our significant stockholders. The newly issued preferred stock features a 7% cumulative dividend, payable quarterly, with payment at the option of the Company to be made in kind or in shares of common stock based on a per share valuation set at a 25% discount to the five day average closing bid price of the market price. The preferred shares were issued in January 2015 in an exempt transaction to the significant stockholder of the Company under Section 4(5) of the Securities Act of 1933, as amended.

    Item 6. Selected Financial Data

    Not applicable as we are a smaller reporting company.

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

    Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Twelve Months Ended December 31, 20122014 and November 30, 2011.2013.

    Cautionary Statement

    Statements in this report which are not purely historical facts, including statements regarding the company’s anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Act of 1934, as amended. All forward-looking statements in this report are based upon information available to us on the date of the report. Any forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from events or results described in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

    Recent Financial Developments

    AsOn April 11, 2014, our line of December 31, 2012, the Companycredit and term loan held by Capital One Bank, N.A was in technical default of its term loans with two financial institutions resulting from its inability to maintain two financial ratiospurchased by an accredited investor, who is also a stockholder of the debt covenants and accordingly classifiedCompany. The terms of the year end note balances as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliantloan now held by the endstockholder are the same as outlined in the credit agreement with Capital One Bank, N.A.

    On June 10, 2014, an accredited investor who is also a stockholder purchased our note payable to Asher Enterprises, Inc. (the “Asher Note”). The accredited investor assumed the terms and conditions of the second quarter of 2013.Asher Note agreement without alteration.

    On September 2, 201130, 2014, Jimmy D. Coffman resigned from his position as an executive of CTT and surrendered 437,500 shares of our common stock. The surrendered shares of common stock were cancelled on October 30, 2014.

    On December 27, 2014, an affiliate of an accredited investor who is also a stockholder purchased the note payable to ICON Investments (the “ICON Note”). The accredited investor assumed the terms and conditions of the ICON Note agreement without alteration.

    On December 29, 2014, our Board of Directors unanimously approved the issuance of 1,125,000 shares of 2014 Series A 7% Convertible Preferred Stock of the Company to an accredited investor, who is also a stockholder in the Company, in exchange for the extinguishment of $450,000 in unsecured debt, including $191,000 for the principal and accrued interest owed on the Asher Note and $259,000 of unsecured payables owed to the accredited investor. This series of preferred stock was created by the filing of a certificate of designation on February 15, 2015.

    On February 12, 2015, we executed a settlement agreement in litigation which had been asserted against certain of our officers of the Company and for which we were obligated to indemnify such officers. The effect of the settlement agreement was the cancellation of two subordinated promissory notes originally totaling $3,665,263. The settlement resulted in the reduction of our indebtedness by $2,082,407. These promissory notes were owed to the former owners of CTT and related to our acquisition of CTT.

    Results of Operations

    For the year ended December 31, 2014 we reported a net loss from continuing operations of $5.1 million as compared to a net loss from continuing operations of $8.7 million for the year ended December 31, 2013.

    11

    Revenue. Total revenue decreased by $18.9 million or 54% from $34.9 million for the year ended December 31, 2013 to $16.1 million for the year ended December 31, 2014.

    The decrease in net revenue for the year ended December 31, 2014 is attributable to a reduced volume of saltwater and other fluids transported and disposed. During the year ended December 31, 2014 we transported and disposed approximately 11 million Bbl. of salt water and other fluids compared to approximately 19.3 million Bbl. during the year ended December 31, 2013. Reduced volumes of transported and disposed fluids also had the effect of reducing the volume and related proceeds from the sale of oil that was collected at our disposal wells.

    Expenses.The components of our costs and expenses for the years ended December 31, 2014 and 2013 are as follows:

          %
          Increase
      2014 2013 (Decrease)
    Costs and expenses:            
    Direct costs $11,311,850  $26,485,768   -57%
    Indirect costs  3,767,346   6,191,878   -40%
    General and administrative  925,961   6,333,781   -85%
    Depreciation and amortization  2,712,440   3,591,997   -24%
                 
    Total costs and expenses $18,717,597  $42,603,424   -56%

    The decrease in the volumes of saltwater and other fluids transported and disposed of necessitated a decrease in operating expenses for the year ended December 31, 2014. The decrease in direct costs is primarily attributable to the overall reduction in salaries, wages, benefits, fuel, repairs and maintenance for the truck fleet and the cost of the use of third party disposal wells.

    The decrease in indirect costs for the year ended December 31, 2014 is the result of an overall reduction of administrative salaries and benefits, insurance costs and utilities resulting from tighter expense controls associated with the reduced volumes transported.

    The decrease in general and administrative costs for the year ended December 31, 2014 was related to reduced professional fees, property taxes, communications costs and computer expenses. Management reduced professional fees by $1.6 million to $0.4 million for the year ended December 31, 2014 compared to professional fees expense of $2.0 million for the year ended December 31, 2013. Stock compensation was reduced to $74,000 for the year ended December 31, 2014 compared to $2.4 million for the year ended December 31, 2013. General and administrative personnel and salaries were substantially reduced during the year ended December 31, 2014.

    Other (Income) Expense.Other (income) expenses for the year ended December 31, 2014 included $1.8 million of interest expense compared to $1.8 million of interest expense for the year ended December 31, 2013. In addition, other (income) expense for the year ended December 31, 2014 included a loss on the sale of non- productive assets of $0.8 million compared to a gain of approximately $0.4 million for the year ended December 31, 2013. Other (income) expense for the year ended December 31, 2013 included a gain of $2.3 million for the write-off of the contingent consideration payable associated with the acquisition of CTT and an impairment loss of property and equipment of $1.8 million related to FIG activity.

    We have not recorded federal income tax expense for the years ended December 31, 2014 and 2013 because of our net losses. Also, since there is continued uncertainty as to the realization of a deferred tax asset, we have not recorded any deferred tax benefits.

    Discontinued operations -On July 24, 2013, management and our Board of Directors elected to discontinue the operations and sell the fixed assets of Frontier under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000 shares of the Stock for the sum of $5,500,000 contingent upon the Company using the proceeds of the Stock to acquire a majority 51% membership interest in FIG which through(FIG) and its wholly owned subsidiaries;subsidiaries Trinity Disposal & Trucking, LLC and Trinity Disposal Wells, LLC transports and disposes salt water and other oilfield fluids.LLC. The attributeseffective date of the Stock allowed the holder to convert the preferred share into two sharesdiscontinuation of Frontier’s common stock and two warrants for an additional share at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and Frontier completed the acquisition of 51% of FIG in June 2012 (see below). Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the common stock and 5,500,000 warrants.

    On June 4, 2012, the Company completed the 51% step acquisition of FIG. The Company acquired approximately 124 units of FIG which brought the total units owned by the Company to 1,168 and a 51% majority interest. The cash price paidoperations was $5,080,000 less $1,203,000 borrowed from FIG that resulted in the fair value consideration for the 1,168 units of $3,877,000. More recently the Company engaged in an exchange offering under Reg. D Rule 506 to acquire the remaining 1,122 membership interests in FIG. As of September 28, 2012 the Company successfully obtained all of the remaining membership interests and issued a total of 1,869,999 shares of its common stock valued at $5,610,000 to the individual members of FIG, none of which hold 5% or more of the Company’s common stock.

    The Company through a wholly owned subsidiary, Frontier Acquisition I, Inc. completed the acquisition of CTT on July 31, 2012 by acquiring all of the issued and outstanding stock of CTT inclusive of its wholly owned subsidiary, Coffman Disposal, LLC for the sum of $16,986,939. The acquisition was facilitated by credit facilities loaned to the Company in the aggregate amount of approximately $12,000,000 provided by Capital One and ICON. In this regard, the Company and its subsidiaries entered into loan agreements effective July 23, 2012 with Capital One and ICON. Pursuant to the terms of the Credit Agreement with Capital One, the lender has made available a $15 million loan commitment consisting of a revolving loan commitment of $9 million and a term loan of $6 million subject to the terms of the Credit Agreement. The Company and its subsidiaries also entered into a Term Loan, Guaranty and Security Agreement with ICON for the amount of $5 million. The Loan Agreement provides for 14% monthly interest only payments with repayment of the principal and accrued but unpaid interest on February 1, 2018. In addition to the preceding referenced notes the Company also assumed two notes payable in connection with the acquisition of CTT. The notes relate to the CTT’s purchase of common stock shares from two former stockholders. The primary note payable in the original amount of $3,445,708 dated June 1, 2007 bears interest at 4.79% and is payable in monthly installments of $33,003 including interest, maturing December 1, 2018. The Company’s secondary note payable in2013. In the original amount of $219,555 dated June 1, 2007 bears interest at 4.79% and is payable in monthly installments of $2,488 including interest, maturing December 1, 2018. Both notes are subordinated to the Capital One and ICON notes.

    Effective November 30, 2010, Gulftex Operating forgave $433,232 in loans and advances to Frontier because we had insufficient working capital to repay them. However, during the fiscal year ended November 30, 2011 circumstances changed and the Company repaid $122,511 of the amount previously written-off. During the year ended December 31, 2012 Frontier repaid the remaining balance of $310,721 with an offset to paid-in capital.

    Other Developments

    On September 1, 2011, we entered into a services agreement with FIG. Under the agreement the Company charged FIG for a portion of administrative services and rent. For the three months ended November 30, 2011 the Company billed $31,748 for these services. For the five months ended May 31, 2012 the Company billed $70,079, at which time the agreement was terminated.

    On December 1, 2010, we entered into a services agreement with Gulftex Oil & Gas, LLC. Under the agreement the Company charged Gulftex for a portion of administrative services and rent. For the nine months ended August 31, 2011, the Company billed $24,695 for these services at which time the agreement was terminated.

    Our officers resumed drawing salaries in October of the previous fiscal year. Due to the financial condition of the Company in 2010, Tim Burroughs and Sherri Cecotti agreed, effective February 16, 2010, to draw no salary until such time as the Company had sufficient cash to sustain the operations including the payment of their salaries. The forbearance of the above officer’s salary was a complete forbearance and not a deferral. The salaries were resumed in fourth quarter of 2011. During fiscal years 2009 and 2010 one of2014, however, management elected to continue to operate these wells. Based on this decision, our officers, Bernard “Dick” O’Donnell received no cash compensation but was given 200,000 common shares in lieu of salary in 2011.financial statements have been restated to reflect the discontinued operations as continuing operations.

    Results of Operations

    12

    We recorded a net loss of $6,052,149 for the year ended December 31, 2012 as compared to a net loss of $485,031 for fiscal year ended November 30, 2011. The increase in our loss of $5,567,118 or 1,247.8% is discussed below.

    Net Revenues - Total net revenues increased $21,699,562, from $6,873 for the twelve months ended November 30, 2011 to $21,706,435 for the twelve months ended December 31, 2012. The increase in net revenues is attributable to the recent acquisitions of CTT and FIG.

    Costs and Expenses - Total costs and expenses increased $26,194,818 (7,575.6%), from $345,777 for the twelve months ended November 30, 2011 to $26,540,595 for the twelve months ended December 31, 2012.

    Direct costs for the twelve months ended December 31, 2012 were $16,550,368. The direct costs are attributable to our recent acquisitions of CTT and FIG.

    Indirect costs increased $4,198,663 for the twelve months ended December 31, 2012, from $4,741 for the twelve months ended November 30, 2011 to $4,203,404 for the twelve months ended December 31, 2012. The increase in operating expenses is attributable to our recent acquisitions of CTT and FIG.

    General and administrative expenses increased $3,303,375 (1,016.8%), from $324,888 for the twelve months ended November 30, 2011 to $3,628,263 for the twelve months ended December 31, 2012. The increase is due to higher legal and professional fees of $1,082,487, salaries and benefits of $660,432, stock compensation expense of $1,387,363 and $173,093 in other general and administrative expense categories.

    Acquisition expense of $426,943 for the twelve months ended December 31, 2012 related to the acquisition of CTT. There were no comparable expenses in 2011.

    Depreciation increased $1,731,558 from $59 for the twelve months ended November 30, 2011 to $1,731,617 for the twelve months ended December 31, 2012. The increase in depreciation expense is attributable to our recent acquisitions of CTT and FIG.

    The Company forfeited its interest in Johnson #1-H and Johnson and #2-H Joint Ventures and wrote-off the book value of the wells, asset retirement obligations, receivables and payables which resulted in a loss of $16,089 in the 2011 fiscal year. There were no such losses in the current fiscal year.

    Interest expense totaling $944,163 for the twelve months ended December 31, 2012 primarily related to the acquisition notes, line of credit note and LoneStar agreement to pay 8% interest on invested funds through June of 2012. There were no comparable expenses in 2011.

    The Company sold property and equipment during the year ended December 31, 2012 for $131,821 and wrote-off the fully depreciated values of the related assets. The gain on the transactions was $64,631. The Company also sold property and equipment during the fiscal year ended November 30, 2011for $2,220 and wrote-off the fully depreciated values of the related assets.

    The Company’s loss on its equity interest in FIG through May 31, 2012 was $169,794. FIG’s results since May 31, 2012 are reflected in the Company’s consolidated statement of operations. With the purchase of 100% of FIG in September of 2012, the Company wrote-off the value of its net profits interest totaling $284,900. The Company’s unrealized loss on its equity investment in FIG for the fiscal year ended November 30, 2011 was $148,347.

    The loss attributable to the noncontrolling interest for the twelve months ended December 31, 2012 was $156,635. There was no comparable amount in 2011.

    Provision For Income Taxes - No tax benefits were recorded for the twelve months ended December 31, 2012 and November 30, 2011 and the one month ended December 31, 2011 due to the losses we have experienced and a valuation allowance for 100% of the deferred tax assets was established because of the continued uncertainty as to the realization of this asset.

    Liquidity and Capital Resources

    Cash Flows and Liquidity

    As of December 31, 2012,2014 we had total current assets of $33,623,294 of which property, equipment and provisional goodwill amounted to $25,922,659 or 77.1% of the total. As of November 30, 2011, we had$1.6 million. Our total assets of $3,161,688 of which investments in unconsolidated affiliated company amounted to $3,136,553 or 99.2% of the total. Our revenues for the current year totaled $21,706,435 while the revenues for the previous fiscal year totaled $6,873. Our accumulated lossesliabilities as of December 31, 2012 and November 30, 2011 totaled $18,127,139 and $11,890,719, respectively. At December 31, 2012, we2014 were $14.6 million, with $10.4 million of the current portion consisting of long term debt. We had $67,824 in cash as compared to $13,871 for November 30, 2011. Asa working capital deficit of $13.1 millionas of December 31, 2012 the ratio of current assets to current liabilities was .30:1 as2014 compared to .04:1 for November 30, 2011. Long-term debt totaled $2,225,570 at December 31, 2012. We had no long-term debt at November 30, 2011. Asa working capital deficit of $13.4 million as of December 31, 2012,2013.

    Management is focused on working closely with our shareholders’ equity was $4,491,785. As of November 30, 2011 our shareholders’ equity was $2,756,452.

    current lenders to fund operations through current cash flows, and pay interest costs when excess cash becomes available. We have funded operations from cash generated from the sale of common and preferred stock and revenue from oilfield water disposal services. Our cash used in operations totaled $849,017 for the twelve months ended December 31, 2012 while our cash used for operations totaled $298,244 for the twelve months ended November 30, 2011. This represents an increase of $550,773 in cash used for operating activities. Our net capital investments totaled $1,887,759 for the current year while our net capital investments for the previous fiscal year totaled $2,611,055. Net cash provided by financing activities totaled $2,799,550 for the twelve months ended December 31, 2012 while net cash net provided by financing activities totaled

    $2,922,505 for the twelve months ended November 30, 2011. We expect that the principal source of funds in the near future will be from the sale of common stock, operations and bank financing. We are currently evaluating the operations of the companies we recently acquiredplan to determine if there are opportunities to generate additional efficiencies and synergies among acquired entities which could translate into additional revenues and reduction in operating costs.

    In the past we have primarily acquired producing oil and gas properties with opportunities for future development and contracted well operations to contractors. Currently, our primary focus is to secureseek additional capital through business alliances with third parties or other debt/debt or equity financing arrangements to acquire water disposal companies and/or assets. Any suchstabilize and improve our financial condition. Management also plans to work with our current lenders and debt holders to lower our cost of borrowing by renegotiating the terms of our existing debt and potentially offering debt holders an opportunity to exchange their debt for equity in the Company. Management will seek additional funding will be done on an “as needed” basis and will only be donefinancing in those instances in which we believe such additional expendituresfinancings will increaseassist in accomplishing our profitability. However, actual results may differ fromgoals. There can be no assurance that management’s plan and the amount may be material.will succeed.

    Our ability to secureobtain access to additional capital through business alliances with third parties or other debt/debt or equity financing arrangements to acquire companies and/or assets which will allow the Company to further operate in the water disposal segment of the oilfield services industry is strictly contingent upon our ability to locate adequate financing or equity to pay for these additional companies and/or assets.investments on commercially reasonable terms. There can be no assurance that we will be able to obtain such financing on acceptable terms.

    The following table summarizes our sources and uses of cash for the opportunityyears ended December 31, 2014 and 2013:

      For the Years Ended
      December 31, 2014 December 31, 2013
         
    Net cash used in operating activities $(1,242,926) $(8,385)
             
    Net cash provided by investing activities  704,923   (444,983)
             
    Net cash provided by (used in) financing activities  544,341   493,904 
             
    Net increase (decrease) in cash $6,338  $40,536 

    As of December 31, 2014, we had $115,000 in cash and cash equivalents, an increase of $6,000 from December 31, 2013. The increase was due to buy companies and/or assets that are suitablecash sources from investing activities related to the $0.7 million proceeds from the sale of non-productive assets. During the year ended December 31, 2014, the Company disposed of property and equipment with a cost of $2.8 million and accumulated depreciation of$1.0 million. The Company received total proceeds of $1.0 million and recognized a loss of $0.8 million. During the year ended December 31, 2013, the Company disposed of property and equipment with a cost of $3.7 million and accumulated depreciation of $1.4 million. The Company received total proceeds of $2.7 million and recognized a gain of $0.4 million.Cash provided by financing activities for the year ended December 31, 2014 was $0.9 million, which primarily related to our investment or that we may be ablesale of preferred stock for $0.7 million. The cash provided by investing and financing activities of $1.6 million was offset by cash used by operations of $1.6 million.

    Net cash used in operating activities was approximately $1.2 million for the year ended December 31, 2014. Net cash used in operating activities was approximately $8,000 for the year ended December 31, 2013. The increase is cash used from operating activities during the year ended December 31, 2014 of $1.2 million is principally due to obtain financing or equitythe $1.4 million increase in cash used to pay accounts payable and accrued liabilities during 2014.

    Net cash provided by investing activities was $0.7 million for the costsyear ended December 31, 2014, which primarily related to proceeds for sales of these additional companies and/or assets at terms that are acceptablenon-productive assets. Net cash used in investing activities was $0.4 million for the year ended December 31, 2013 which consisted of $0.6 million related to us. Additionally, if economic conditions justify the same, we may hire additional employees although we do not currently have any definite plans to make additional hires.

    The oil and gas industry is subject to various trends including the availability of capital for drilling new wells, prices received for crude oil and natural gas, sources of crude oil outside our area of operations, interest rates, and the overall healthrelease of the economy. We are not aware of any specific trends that are unusual to our company, as comparedescrow funds related to the restCTT acquisition, and $0.4 million used for capital expenditures and $0.6 million related to proceeds for sales of non-productive assets.

    Net cash provided by financing activities was $0.5 million for the oilyear ended December 31, 2014, which consisted of $1.3 million cash received from borrowings, $1.0 million in debt repayments and gas industry.$0.2 million in proceeds from preferred stock subscriptions. Net cash used in financing activities was $0.5 million for the year ended December 31, 2013, which consisted of $1.1 million of cash received from common and preferred stock sales, $0.6 million of escrow funds released related to the CTT acquisition, $1.5 million cash proceeds from borrowings and $2.7 million in debt repayments.

    13

    Item 7A. Quantitative and Qualitative Disclosures About Market Risk

    As a smaller reporting company, we are not required to complete this item.

    14

    Item 8. CONSOLIDATED FINANCIAL STATEMENTS.

    FRONTIER OILFIELD SERVICES, INC.

    (Formerly TBX Resources, Inc.)

    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

     

    PAGE

      PAGE

    Report of Independent Registered Public Accounting Firm

    F-1

    Consolidated Balance Sheets – December 31, 20122014 and 2011 and November 30, 20112013

    F-2 & F-3

    Consolidated Statements of Operations-

    For The Years Ended December 31, 20122014 and November  30, 2011 and One Month Ended December 31, 20112013

    F-4

    Consolidated Statements of Cash Flows-

    For The Years Ended December 31, 20122014 and November  30, 2011and One Month Ended December 31, 20112013

       F-5

    Consolidated Statements of Changes In Stockholders’ Equity-
    Equity (Deficit)

    For The Years Ended December 31, 20122014 and November 30, 2011 and One Month ended December 31, 20122013

    F-6F-7

    Notes to Consolidated Financial Statements

    F-8
     
    F-7

    Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    The Board of Directors and Stockholders

    Frontier Oilfield Services, Inc. and its subsidiaries

    Dallas, Texas

    We have audited the accompanying consolidated balance sheets of Frontier Oilfield Services, Inc. and its subsidiaries (the “Company”), as of December 31, 20122014 and 2011 and November 30, 20112013 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 20122014 and November 30, 2011 and for the one month period ended December 31, 2011.2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

    We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated 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 audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Frontier Oilfield Services, Inc. and its subsidiaries atas of December 31, 20122014 and 2011 and November 30, 20112013 and the results of their consolidated operations and their cash flows for the years ended December 31, 20122014 and November 30, 2011 and for the one month period ended December 31, 2011,2013, in conformity with accounting principles generally accepted in the United States of America.

    The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations since inception and has a working capital deficiency both of which raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

    /s/ Turner, Stone & Company, L.L.P.LLP

    Certified Public Accountants

    Dallas, Texas

    April 1, 2013

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

    (Formerly TBX Resources, Inc.)

    CONSOLIDATED BALANCE SHEETS

       December 31,
    2012
      November 30,
    2011
      December 31,
    2011
     

    ASSETS

        

    Current Assets:

        

    Cash

      $67,824   $13,871   $5,050  

    Certificate of deposit

       77,614    —      —    

    Accounts receivable

       3,920,008    4,057    4,457  

    Inventory, primarily parts

       320,731    —      —    

    Prepaid expenses, primarily insurance

       1,403,848    —      —    

    Deferred loan origination fees, current portion

       336,297    —      —    
      

     

     

      

     

     

      

     

     

     

    Total current assets

       6,746,244    17,928    9,507  
      

     

     

      

     

     

      

     

     

     

    Property and equipment:

        

    Property and equipment, at cost

       14,049,275    46,055    46,055  

    Less accumulated depreciation

       (1,451,674  (45,059  (45,059
      

     

     

      

     

     

      

     

     

     

    Total property and equipment

       12,597,601    996    996  
      

     

     

      

     

     

      

     

     

     

    Other asserts

        

    Investments in unconsolidated affiliated company (Notes 4 and 8)

       —      3,136,553    3,083,898  

    Restricted cash (Note 4)

       619,922    —      —    

    Provisional goodwill

       13,325,058    —      —    

    Deferred loan origination fees, net of current portion

       913,539    —      —    

    Other

       40,852    6,211    6,211  
      

     

     

      

     

     

      

     

     

     
       14,279,449    3,142,764    3,090,109  
      

     

     

      

     

     

      

     

     

     

    Total Assets

      $33,623,294   $3,161,688   $3,100,612  
      

     

     

      

     

     

      

     

     

     
    March 27, 2015

     

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

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
         
      December 31,
    2014
     December 31,
    2013
         
    ASSETS
    Current Assets:    
    Cash $114,698  $108,360 
    Restricted cash  77,614   77,614 
    Accounts receivable, net of allowance of doubtful accounts of $193,483 and $33,321, respectively  930,841   1,605,903 
    Other receivable  —     287,076 
    Inventory  197,551   214,969 
    Prepaid expenses  9,287   1,364,303 
    Current portion of capitalized loan fees  242,092   289,194 
    Total current assets  1,572,083   3,947,419 
             
    Property and equipment, at cost  17,875,469   20,691,314 
    Less: accumulated depreciation  (6,855,473)  (5,554,487)
    Property and equipment, net  11,019,996   15,136,827 
             
    Intangibles, net  3,084,698   3,491,472 
    Capitalized loan fees, net of current portion  383,204   625,296 
    Deposits  32,302   24,037 
    Total other assets  3,500,204   4,140,805 
                   Total Assets $16,092,283  $23,225,051 
             
    The accompanying notes are an integral part of these consolidated financial statements. 

    F-2


    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

    (Formerly TBX Resources, Inc.)

    CONSOLIDATED BALANCE SHEETS

     

       December 31,
    2012
      November 30,
    2011
      December 31,
    2011
     

    LIABILITIES AND STOCKHOLDERS’ EQUITY

        

    Current Liabilities:

        

    Current portion of long-term debt

      $12,727,867   $—     $—    

    Accounts payable

       4,665,616    62,855    51,050  

    Accrued liabilities

       1,063,687    3,891    3,891  

    Financed insurance premiums payable

       820,499    —      —    

    Escrow liability (Note 4)

       619,922    —      —    

    Deferred consideration payable for acquisition of CTT (Note 4)

       2,300,000    

    Advances payable from affiliate (Note 9)

       —      338,490    473,490  
      

     

     

      

     

     

      

     

     

     

    Total current liabilities

       22,197,591    405,236    528,431  
      

     

     

      

     

     

      

     

     

     

    Long-term debt, less current maturities (Note 7)

       2,225,570    —      —    

    Deferred consideration payable for acquisition of CTT (Note 4)

       4,708,348    —      —    
      

     

     

      

     

     

      

     

     

     

    Total Liabilities

       29,131,509    405,236    528,431  
      

     

     

      

     

     

      

     

     

     

    Commitments and Contingencies (Note 12)

        

    Stockholders’ Equity:

        

    Preferred stock- $.01 par value; authorized 10,000,000; no shares issued or outstanding at December 31, 2012

       —      —      —    

    Preferred stock subscriptions

       —      3,000,000    3,000,000  

    Common stock- $.01 par value; authorized 100,000,000 shares; 18,116,357 shares issued and outstanding at December 31, 2012, 8,853,288 shares issued and outstanding at December 31, 2011 and November 30, 2011

       181,163    88,532    88,532  

    Additional paid-in capital

       22,437,761    11,558,639    11,558,639  

    Accumulated deficit

       (18,127,139  (11,890,719  (12,074,990
      

     

     

      

     

     

      

     

     

     

    Total stockholders’ equity

       4,491,785    2,756,452    2,572,181  
      

     

     

      

     

     

      

     

     

     

    Total Liabilities and Stockholders’ Equity

      $33,623,294   $3,161,688   $3,100,612  
      

     

     

      

     

     

      

     

     

     
    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
         
      December 31,
    2014
     December 31,
    2013
         
    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    Current Liabilities:    
    Current maturities of long-term debt $10,363,094  $8,756,472 
    Accounts payable  3,403,263   4,738,166 
    Accrued liabilities  857,854   1,171,643 
    Financed insurance premiums payable  —     1,119,213 
    Current portion of loan from shareholder  —     1,596,000 
    Total current liabilities  14,624,211   17,381,494 
    Long-term debt, less current maturities  1,594,795   1,656,231 
    Total Liabilities  16,219,006   19,037,725 
    Commitments and Contingencies (Note 9)        
    Stockholders' Equity:        
    Preferred stock to be issued  450,000   —   
    Preferred stock 2013 Series A- $.01 par value; authorized 10,000,000;
    2,850,000 issued and outstanding as of December 31, 2014
    1,750,000  issued and outstanding as of December 31, 2013
      28,500   17,500 
    Common stock- $.01 par value; authorized 100,000,000 shares;        
    5,457,486 shares issued and outstanding at December 31, 2014        
    5,553,157 shares issued and outstanding at December 31, 2013  54,575   55,531 
    Additional paid-in capital  32,142,717   31,659,261 
    Prepaid stock compensation  —     (74,000)
    Accumulated deficit  (32,802,515)  (27,470,966)
    Total stockholders' equity (deficit)  (126,723)  4,187,326 
    Total Liabilities and Stockholders' Equity (Deficit) $16,092,283  $23,225,051 
             
    The accompanying notes are an integral part of these consolidated financial statements. 

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

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

    (Formerly TBX Resources, Inc.)

    CONSOLIDATED STATEMENTS OF OPERATIONS

     

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIESFRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF OPERATIONS
        
      For the Years Ended For the One
    Month Ended
      For the Years Ended
      Dec. 31, 2012 Nov. 30, 2011 Dec. 31, 2011  December 31,
    2014
     December 31,
    2013

    Revenues, net of discounts

      $21,706,435   $6,873   $400  
      

     

      

     

      

     

         
    Revenue, net of discounts $16,080,914  $34,951,231 

    Costs and expenses:

                

    Direct operating costs

       16,550,368    —      —      11,311,850   26,485,768 

    Indirect operating costs

       4,203,404    4,741    —      3,767,346   6,191,878 

    General and administrative

       3,628,263    324,888    132,016    925,961   6,333,781 

    Acquisition expenses

       426,943    —      —    

    Depreciation and amortization

       1,731,617    59    —      2,712,440   3,591,997 

    Loss on forfeiture of oil and gas properties

       —      16,089    —    
    Total costs and expenses  18,717,597   42,603,424 
    Operating loss  (2,636,683)  (7,652,193)
    Other (income) expense:        
    Interest expense  1,823,322   1,862,339 
    (Gain) loss on disposal of property and equipment  797,372   (369,687)
    Gain on write off of contingent consideration liability  —     (2,300,000)
    Loss on impairment of property and equipment  —     1,813,000 
    Loss on extinguishment of debt  4,453   —   
    Loss before provision for income taxes  (5,261,830)  (8,657,845)
    Provision for state income taxes  23,536   77,209 
    Net loss $(5,285,366) $(8,735,054)
      

     

      

     

      

     

             

    Total costs and expenses

       26,540,595    345,777    132,016  
      

     

      

     

      

     

     

    Operating loss

       (4,834,160  (338,904  (131,616

    Other (Income) Expense:

        

    Interest expense

       944,163    —      —    

    Gain on disposal of property and equipment

       (64,631  (2,220  —    

    Equity in loss of unconsolidated affiliated company

       169,794    148,347    52,655  

    Impairment loss on net profits interest in affiliate

       284,900    —      —    
      

     

      

     

      

     

     

    Loss Before Provision for Income Taxes

       (6,168,386  (485,031  (184,271

    Provision for state income taxes

       40,398    —      —    
      

     

      

     

      

     

     

    Net loss

       (6,208,784  (485,031  (184,271

    Less: loss attributable to noncontrolling interest

       156,635    —      —    
      

     

      

     

      

     

     

    Net Loss Attributable to Frontier Oilfield Services, Inc.

      $(6,052,149 $(485,031 $(184,271
      

     

      

     

      

     

     

    Net Loss per Common Share:

        

    Basic and Diluted

      $(0.46 $(0.09 $(0.02
    Net loss per common share - basic and diluted: $(0.92) $(1.66)
      

     

      

     

      

     

             

    Weighted Average Common Shares Outstanding:

                

    Basic and Diluted

       13,229,729    5,205,251    8,853,288    5,751,181   5,250,820 
      

     

      

     

      

     

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

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

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

    (Formerly TBX Resources, Inc.)

    CONSOLIDATED STATEMENTS OF CASH FLOWS

     

       For the Years Ended  For the One
    Month Ended
     
       Dec. 31, 2012  Nov. 30, 2011  Dec. 31, 2011 

    Cash Flows From Operating Activities:

        

    Net loss

      $(6,208,784 $(485,031 $(184,271

    Adjustments to reconcile net loss to net cash used in operating activities:

        

    Depreciation and amortization

       1,731,617    59    —    

    Issuance of common stock for services

       1,461,363    28,000    —    

    Amortization of deferred interest

       154,976    —      —    

    Equity loss of unconsolidated affiliated company

       169,794    148,347    52,655  

    Impairment loss on net profits interest in subsidiary

       284,900    —      —    

    Allocated expenses to affiliates

       (115,079  (40,970  —    

    Loss on forfeiture of oil and gas properties

       —      16,089    —    

    Gain on sale of property and equipment

       (64,631  (2,220  —    

    Changes in operating assets and liabilities other than advances from affiliates:

        

    Decrease (increase) in operating assets:

        

    Accounts receivable

       871,475    (2,011  (400

    Inventory, primarily parts

       (7,221  8,300    —    

    Prepaid expenses, primarily insurance

       543,199    —      —    

    Deposits

       6,673    —      —    

    Increase (decrease) in operating liabilities:

        

    Accounts payable

       678,918    40,872    (11,805

    Accrued liabilities

       114,715    (1,379  —    

    Financed insurance premiums payable

       (470,932  —      —    

    Deferred revenue

       —      (8,300  —    
      

     

     

      

     

     

      

     

     

     

    Net cash used in operating activities

       (849,017  (298,244  (143,821
      

     

     

      

     

     

      

     

     

     

    Cash Flows From Investing Activities:

        

    Cash used for acquisition of subsidiaries net of cash received

       (1,450,868  (2,610,000  —    

    Purchase of property and equipment

       (568,712  (1,055  —    

    Proceeds from sale property and equipment

       131,821    —      —    
      

     

     

      

     

     

      

     

     

     

    Net cash used in investing activities

       (1,887,759  (2,611,055  —    
      

     

     

      

     

     

      

     

     

     

    Cash Flows From Financing Activities:

        

    Proceeds from preferred stock subscriptions

       2,353,000    3,000,000    —    

    Common stock sales

       1,234,606    —      —    

    Payments on notes payable

       (961,337  —      —    

    Advances from affiliate

       —      45,056    135,000  

    Net change in line of credit

       818,363    —      —    

    Payments to related party

       (310,721  (122,551  —    

    Deferred loan origination fees

       (334,361  —      —    
      

     

     

      

     

     

      

     

     

     

    Net cash provided by financing activities

       2,799,550    2,922,505    135,000  
      

     

     

      

     

     

      

     

     

     

    Net increase (decrease) in cash

       62,774    13,206    (8,821

    Cash at beginning of period

       5,050    665    13,871  
      

     

     

      

     

     

      

     

     

     

    Cash at end of period

      $67,824   $13,871   $5,050  
      

     

     

      

     

     

      

     

     

     
    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
         
         
      For the Years Ended
      December 31, 2014 December 31, 2013
    Cash Flows From Operating Activities:    
    Net loss $(5,285,366) $(8,735,054)
    Adjustments to reconcile net loss to net cash used in operating activities:        
    Depreciation and amortization  2,712,440   3,591,997 
    Gain on write off of contingent consideration liability  —     (2,300,000)
    Loss on impairment of property and equipment  —     1,813,000 
    Bad debt expense  160,162   33,321 
    Issuance of common stock for services  74,000   2,609,538 
    Loss on extinguishment of debt  4,453   —   
    Payment of expenses by stockholder in exchange for purchase of preferred stock  314,743   —   
    (Gain) loss on disposal of property and equipment  797,372   (369,687)
    Amortization of capitalized loan fees  325,442   371,333 
    Changes in operating assets and liabilities:        
    Decrease (increase) in operating assets:        
    Accounts receivable  514,900   2,280,784 
    Other receivable  287,076   (287,076)
    Inventory  17,418   105,762 
    Prepaid expenses  1,355,016   389,545 
    Deposits  (8,265)  70,961 
    Increase (decrease) in operating liabilities:        
    Accounts payable  (1,033,132)  72,548 
    Accrued liabilities  (359,972)  45,929 
    Financed insurance premiums payable  (1,119,213)  298,714 
    Net cash used in operating activities  (1,242,926)  (8,385)
             
    Cash Flows From Investing Activities:        
    Purchase of property and equipment  —     (430,980)
    Proceeds from sale of property and equipment  704,923   605,919 
    Release of escrow funds  —     (619,922)
    Net cash provided by (used in) investing activities  704,923   (444,983)
             
    The accompanying notes are an integral part of these consolidated financial statements (continued).   
             

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

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
         
      For the Years Ended
      December 31, 2014 December 31, 2013
    Cash Flows From Financing Activities:    
    Proceeds from preferred stock issuance $216,257  $700,000 
    Net proceeds from stockholder loans  1,381,309   1,246,000 
    Net change in line of credit  (931,181)  (1,086,707)
    Proceeds on long term debt  —     220,490 
    Payments on long term debt  (122,044)  (1,606,194)
    Payments from restricted cash account  —     619,922 
    Proceeds from common stock sales  —     400,393 
    Net cash provided by financing activities  544,341   493,904 
             
    Net increase in cash  6,338   40,536 
    Cash at beginning of the year  108,360   67,824 
    Cash at end of the year $114,698  $108,360 
             
    Supplemental Cash Flow Disclosures 
    Interest paid $1,183,224  $1,278,935 
             
    Supplemental Schedule of Non-Cash Investing and Financing Activities
    Convertible notes conversion $53,500  $—   
    Retirement of notes payable in exchange of preferred stock issuance $359,000  $—   
    Cumulative dividend payable recorded in accrued liabilities $46,183  $37,027 
    Retirement of financed insurance premiums payable with proceeds from shareholder loan $—    $350,000 
    Disposal of property and equipment paid directly to lenders $308,870  $1,765,969 
    Settlement of contingent consideration payable for acquisition of CTT $—    $4,708,348 
    Beneficial conversion features of Asher Note $—    $72,235 
             
    The accompanying notes are an integral part of these consolidated financial statements.   

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES
    STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIT)
                       
                       
      Preferred Stock Preferred     Additional Prepaid   Total
      2013 Series A 7% Stock Common Stock Paid-In Stock Accumulated Stockholders’
      Shares Amount To Be Issued Shares Par Value Capital Compensation Deficit Equity (Deficit)
                       
    Balance December 31, 2012  —    $—    $—     4,529,090  $45,291  $23,122,487  $—    $(18,698,885) $4,468,893 
    Sales of common stock  —     —     —     93,575   936   399,457   —     —     400,393 
    Shares issued for services  —     —     —     492,925   4,929   2,678,609   (74,000)  —     2,609,538 
    Settlement of deferred compensation payable  —     —     —     437,500   4,375   4,703,973   —     —     4,708,348 
    Convertible note - beneficial conversion features  —     —     —     —     —     72,235   —     —     72,235 
    Preferred stock sales  1,750,000   17,500   —     —     —     682,500   —     —     700,000 
    Shares rounding due to reverse split  —     —     —     67   —     —     —     —     —   
    Dividends  —     —     —     —     —     —     —     (37,027)  (37,027)
    Net loss  —     —     —     —     —     —     —     (8,735,054)  (8,735,054)
    Balance - December 31, 2013  1,750,000   17,500   —     5,553,157   55,531   31,659,261   (74,000)  (27,470,966)  4,187,326 
    Preferred stock sales  1,100,000   11,000   450,000   —     —     429,000   —     —     890,000 
    Shares issued for services  —     —     —     —     —     —     74,000   —     74,000 
    Conversion of convertible note to common stock  —     —     —     341,829   3,419   50,081   —     —     53,500 
    Common stock cancellation  —     —     —     (437,500)  (4,375)  4,375   —     —     —   
    Dividends  —     —     —     —     —     —     —     (46,183)  (46,183)
    Net Loss  —     —     —     —     —     —     —     (5,285,366)  (5,285,366)
    Balance December 31, 2014  2,850,000  $28,500  $450,000   5,457,486  $54,575  $32,142,717  $—    $(32,802,515) $(126,723)
                                         
    The accompanying notes are an integral part of these consolidated financial statements.

    F-7

    FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

    (Formerly TBX Resources, Inc.)

    STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY

     

       Preferred
    Stock
    Subscriptions
      Preferred Stock
    Series A 8%
      Common Stock   Additional
    Paid-In
    Capital
      Accumulated
    Deficit
      Loss
    Attributable to
    Noncontrolling
    Interest
      Total
    Stockholders’

    Equity
     
       Shares  Amount  Shares   Par
    Value
          

    Balance November 30, 2010

      $—      $—      4,027,442    $40,274    $11,363,172   $(11,405,688 $—     $(2,242

    Affiliate debt repayment with stock

       —      —      —      355,846     3,558     49,819    —      —      53,377  

    Shares issued for services

       —      —      —      400,000     4,000     24,000    —      —      28,000  

    Affiliate net profits interest

       —      —      —      4,070,000     40,700     244,200    —      —      284,900  

    Affiliate debt repayment

       —       —      —       —       (122,551  —      —      (122,551

    Preferred stock subscriptions

       3,000,000    —      —      —       —       —      —      —      3,000,000  

    Rounding

       —      —      —      —       —       (1  —      —      (1

    Net Loss

       —      —      —      —       —       —      (485,031  —      (485,031
      

     

     

      

     

     

      

     

     

      

     

     

       

     

     

       

     

     

      

     

     

      

     

     

      

     

     

     

    Balance November 30, 2011

       3,000,000    —      —      8,853,288     88,532     11,558,639    (11,890,719  —      2,756,452  

    Rounding

       —      —      —      —       —       —      1    —      1  

    Net loss

       —      —      —      —       —       —      (184,272  —      (184,272
      

     

     

      

     

     

      

     

     

      

     

     

       

     

     

       

     

     

      

     

     

      

     

     

      

     

     

     

    Balance December 31, 2011

       3,000,000    —      —      8,853,288     88,532     11,558,639    (12,074,990  —      2,572,181  

    Preferred stock subscriptions

       2,500,000    —      —      —       —       —      —      —      2,500,000  

    Issuance of preferred stock

       (5,500,000  2,750,000    5,500,000    —       —       —      —      —      —    

    Conversion of preferred stock to common stock with warrants

       —      (2,750,000  (5,500,000  5,500,000     55,000     5,445,000    —      —      —    

    Purchase of 51% interest in FIG

       —      —      —      —       —       —      —      3,243,140    3,243,140  

    Shares issued for services

       —      —      —      1,070,000     10,700     1,450,663    —      —      1,461,363  

    Purchase of 49% interest in FIG

       —      —      —      1,869,999     18,700     3,067,805    —      (3,086,505  —    

    Repayment of previous forgiven debt of affiliate

       —      —      —      —       —       (310,721  —      —      (310,721

    Sales of common stock

       —      —      —      823,070     8,231     1,226,375    —      —      1,234,606  

    Net Loss

       —      —      —      —       —       —      (6,052,149  (156,635  (6,208,784
      

     

     

      

     

     

      

     

     

      

     

     

       

     

     

       

     

     

      

     

     

      

     

     

      

     

     

     

    Balance December 31, 2012

      $—      —     $—      18,116,357    $181,163    $22,437,761   $(18,127,139 $—     $4,491,785  
      

     

     

      

     

     

      

     

     

      

     

     

       

     

     

       

     

     

      

     

     

      

     

     

      

     

     

     

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

    FRONTIER OILFIELD SERVICES, INC.

    (Formerly TBX Resources, Inc.)

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    1.

    BUSINESS ACTIVITIES:

    Frontier Oilfield Services, Inc. (formerly TBX Resources, Inc.) a Texas corporation (and collectively with its subsidiaries, “we”, “our”, “Frontier��“Frontier”, “FOSI”, or the “Company”), was organized on March 24, 1995. The accompanying consolidated financial statements include the accounts of the Company and Frontier Acquisition I, Inc., and its subsidiary Chico Coffman Tank Trucks, Inc. (CTT was acquired effective July 31, 2012),(CTT) and its subsidiary Coffman Disposal, LLC, and Frontier Income and Growth, LLC (FIG was merged into Frontier effective May 31, 2012)(FIG) and its subsidiarysubsidiaries Trinity Disposal & Trucking, LLC (TDT) and its subsidiary Trinity Disposal Wells, LLC. (effective May 31, 2012 Frontier acquired 51% of FIG in a step acquisition and effective September 30, 2012 Frontier acquired the remaining 49% of FIG)LLC (Note 11).

    The Company’s current

    Frontier operates its business through its subsidiaries, is in the oil fieldoilfield service industry includingand is primarily involved in the transportation and disposal of salt watersaltwater and other oil fieldoilfield fluids in Texas and Oklahoma.Texas. The Company currently owns and operates thirteeneleven disposal wells in Texas.Texas, six within the Barnett Shale in North Texas and five in east Texas near the Louisiana state line. The Company’s customer base includescustomers include national, integrated, and independent oil and gas exploration companies. In addition,

    2.GOING CONCERN:

    The Company’s financial statements are prepared using U.S. generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of the date of this report, the Company has generated losses from operations, has an accumulated deficit and a minor overriding interest in 2 producing gas wells in Wise County, Texasworking capital deficiency. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

    In order to continue as a going concern and 7 producing gas wells in Denton County, Texas. Frontier previously was inachieve a profitable level of operations, the businessCompany will need, among other things, to reduce its operating expenses, reduce debt, reduce the cost of acquiringits debt, raise additional capital resources and developing oil and gas properties, providing contract servicesdevelop additional sources of revenue sufficient to an affiliate and sponsoring and managing joint venture oil and gas development partnerships.meet its operating expenses. The Company’s continuation as a going concern is dependent upon the achievement of profitable operations from the Company’s business.

    The accompanying financial statements do not include any adjustments that might be necessary if the Company changed its fiscal year from November 30this unable to December 31st effective January 1, 2012.continue as a going concern.

    2.

    3.

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    Principles of Consolidation

    The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

    Reclassifications

    Certain amounts in the comparative consolidated financial statements have been reclassified from financial statements previously presented to conform to the presentation of the December 31, 2012 financial statements. The Company previously presented “cost of revenue” which includes costs and expenses directly attributable to the production of revenue. The Company reclassified those items of costs and expenses to “direct costs” in the current statement of operations. In addition, the Company reclassified “operating expenses”, which includes all costs and expenses at the subsidiary level not directly related to the production of income, to “indirect costs” in the current statement of operations.

    Non-controlling Interests

    The Company adopted American Standards Codification (ASC) Topic 810,Consolidation, to account for the non-controlling interest in FIG. ASC 810 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent’s ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. ASC 810 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interests of the non-controlling owner.

    Use of Estimates

    The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from previously estimated amounts.

    Revenue Recognition

    The Company recognizes revenues in accordance with (ASC 605),Revenue Recognition,when services are rendered, field tickets are approved, signed and Staff Accounting Bulletin No 104,received, and accordingly all of the following criteria must be met for revenues to be recognized: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyerwhen payment is fixed and determinable and collectability is reasonably assured. The majority of the Company’s revenue results from agreements with customers and revenues are generated upon performance of contracted services. Transportation and disposal rates are generally based on a fixed fee per barrel of disposal water or, in certain circumstances transportation is based on an hourly rate. Revenue is recognized based on the number of barrels transported or disposed or at hourly rates for transportation. Rates for other services are based on negotiated rates with the Company’s customers and revenue is recognized when the services have been performed. The Company extends short-term, unsecured credit to its customers for amounts invoiced.

    Cash

    For purposes of the consolidated statements of cash flows, cash includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. Under the terms of its Credit Agreement and the affirmative covenants, theThe Company is obligated to maintain all deposits with Capital One Bank, N.A.in one financial institution. The Federal Deposit Insurance Corporation providedprovides coverage for interest bearingall accounts of up to $250,000 and unlimited coverage for non-interest bearing transaction accounts through December 31, 2012.$250,000. As of December 31, 20122014 and 2011 and November 30, 2011,2013, none of the Company’s cash was in excess of federally insured limits.

    Restricted Cash

    Restricted cash represents certificates of deposit used as collateral for letters of credit issued in favor of the Texas Railroad Commission as required pursuant to the Texas Railroad Commission’s regulations. The letters of credit provide evidence of financial responsibility for the operation of the disposal wells owned by the Company.  Restricted cash is not generally available to the Company until the respective letters of credit are cancelled or terminated undrawn.

    F-8

    Accounts Receivable

    The Company performs periodic credit evaluations of its customers’ financial condition and extends credit to virtually all of its customers on an uncollateralized basis. Credit losses to date have been insignificant and within management’s expectations. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal accounts receivable are due 30 to 45 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are evaluated for collectability based on individual credit evaluation and specific circumstances of the customer. As of December 31, 20122014 and 20112013, the Company’s allowance for doubtful accounts was $193,483 and November 30, 2011, the Company had not identified any significant customer balances which it believes are uncollectible. Included in accounts receivable is accrued revenue for work completed but not yet billed totaling approximately $512,000.$33,321, respectively.

    At December 31, 2012,2014 and 2013, the Company had the following customer concentrations.

     

     Percentage of Revenue Percentage of Accounts
    Receivable
      Percentage of
    Revenues
     Percentage of
    Accounts
    Receivable
      2014 2013 2014 2013

    Customer A

       44  34  53%  52%  22%  31%

    Customer B

       23  27  *   14%  *   * 
    Customer C  14%  *   29%  14%
    Customer D  *   *   *   13%
                    
    * Less than 10%* Less than 10%  

    The Company had no such concentrations for the fiscal year ended November 30, 2011 and the one month ended December 31, 2011.

    Parts Inventory

    Parts inventory consists of replacement parts for the Company’s vehicles and transports and is stated at the lower of cost or market. Cost is determined using the average cost method, which generally matches current costs of inventory consumed in operations due to its monthly turnover.method.

    Property and Equipment

    The Company’s property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets for financial reporting purposes. Maintenance and repair costs are expensed when incurred, while major improvements are capitalized.

    The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are charged or credited to income in the respective period. The estimated useful lives are as follows:

     

    Asset Description
    Asset Description Estimated Useful Life Cost
    Land Non-depreciable $225,000 
    Trucks and equipment 5-7 years  7,529,483 
    Disposal wells 5-14 years  9,046,686 
    Buildings and improvements 15 - 39 years  474,900 
    Office furniture and equipment 5-7 years  60,175 
    Disposal well under construction Non-depreciable  539,225 
    Total property and equipment, at cost   17,875,469 
    Less: accumulated depreciation    (6,855,473)
    Property and equipment, net   $11,019,996 

    Estimated Useful Life

    Trucks and equipment

    5-7 years

    Disposal wells

    5-14 years

    Buildings and improvements

    15-39 years

    Office furniture and equipment

    5-7 years

    During the periodyear ended December 31, 2012,2014, the Company disposed of property and equipment with a cost of $396,562$2,815,845 and accumulated depreciation of $325,001.of$1,004,679. The Company received total proceeds of $131,821$704,923 and recognized a gainloss of $64,631$797,372 in the accompanying consolidated statements of operations. During the year ended November 30, 2011,December 31, 2013, the Company forfeited its interest in Johnson #1-H and Johnson and #2-H Joint Ventures and wrote-off the book valuedisposed of the wells, asset retirement obligations, receivables and payables which resulted in a loss of $16,089. The Company did not dispose of any property and equipment forwith a cost of $3,702,087 and accumulated depreciation of $1,393,744. The Company received total proceeds of $2,678,029 and recognized a gain of $369,687 in the one month period ended December 31, 2011.accompanying consolidated statements of operations.

    F-9

    Long-Lived Assets

    The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. As of December 31, 2012 and 2011 and November 30, 2011,In 2013, the Company haddetermined that it would not identified any such impairment.

    Goodwill and Other Intangible Assets

    Goodwill resultedbe able to fully recover the carrying amount of its disposal wells from FIG. In accordance with the acquisitionsguidance for the impairment of FIG and CTT and representslong-lived assets, the difference betweenCompany recorded an impairment charge of $1.8millionin 2013 to adjust the purchase price and the faircarrying value of the identifiable tangible and intangibleasset to our estimate of its fair value. No impairment charges were recorded in 2014. We estimated that fair value using the comparable sales method. The impairment charge impacted the loss from discontinued operations, net assets. Goodwill and indefinite lived intangible assets are not amortized, but rather tested for impairment on an annual basis or more often if events or circumstances indicate a potential impairment exists. Definite lived intangible assets are reviewed for impairment whenever events or changesof income taxes line in circumstances indicate that the carrying amountsour consolidated statement of such assets may not be recoverable. As of December 31, 2012, the Company had not identified any impairment with respect to its goodwill or other intangible assets.operations.

    Asset retirement obligations

    ASC Topic 410,Asset Retirement and Environmental Obligations, requires companies to recognize a liability for an asset retirement obligation (ARO) at fair value in the period in which the obligation is incurred, if a reasonable estimate of fair value can be made. This obligation relates to the future costs of plugging and abandoning the Company’s salt water disposal wells, the removal of equipment and facilities, and returning such land to its original condition.

    The Company has not recorded an ARO for the future estimated reclamation costs associated with the operation of the Company’s thirteen water disposal wells. The Company is not able to determine the estimated life of its wells and is unable to determine a reasonable estimate of the fair value associated with this liability. The Company believes that any such liability would not be material to the consolidated financial statements taken as a whole.

    Equity Instruments Issued for Goods and Services

    The Company measures the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. That cost is recognized in the consolidated financial statements over the period during which the employee is required to provide services in exchange for the award with a corresponding increase in additional paid-in capital.

    Fair Value Measurements

    The ASC Topic 820,Fair Value Measurements and Disclosures,defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

    The previous owner of CTT was granted the right to receive additional consideration based on specified earnings targets at the end of the contingency period, which is July 31, 2013, as specified in the contract. The fair value of the earnings based contingent liability will be determined based on earnings from August 1, 2012 through July 31, 2013. Based on CTT’s earnings through December 31, 2012 and the forecast of earnings through July 31, 2013, the fair value of the earnings based contingent liability of $2,300,000 (recorded at the acquisition date) has not changed as of December 31, 2012. Future gains and losses on the re-measurement of the earnings based contingent liability, if any, will be included in other income or expense.

    The fair value measurement of the Company’s contingent liability consists of the following:

       Level 1   Level 2   Level 3   Total 

    Liabilities

            

    Earnings based deferred consideration liability related to the CTT acquisition

      $—      $—      $2,300,000    $2,300,000  
      

     

     

       

     

     

       

     

     

       

     

     

     

    There were no transfers between the three levels during twelve months ended December 31, 2012.

    Fair Value of Financial Instruments

    In accordance with the reporting requirements of ASC Topic 825,Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments. The estimatedCompany does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor gains or losses reported in the statements of cash, accounts receivable and accounts payable, and accrued liabilities approximate their carrying amounts dueoperations that are attributable to the short maturity of these instruments. The carrying value ofchange in unrealized gains or losses relating to those assets and liabilities still held during the Company’s long-term debt also approximates fair value since these instruments bear a market rate of interest. None of these instruments are held for trading purposes.years ended December 31, 2014 and 2013.

    Income Taxes

    Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax expense is the tax payable for the year plus or minus the change during the period in deferred tax assets and liabilities.

    Earnings Per Share (EPS)

    Basic earnings per common share are calculated by dividing net income or loss by the weighted average number of shares outstanding during the year. Diluted earnings per common share are calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive stock options.options and warrants. The computation of diluted EPS does not assume conversion, exercise, or contingent issuance of shares that would have an antidilutive effect on earnings per common share. Anti-dilution results from an increase in earnings per share or reduction in loss per share from the inclusion of potentially dilutive shares in EPS calculations. Currently there are 150,000 stock options, which have been excluded from EPS, outstanding that could potentially have a dilutive effect on EPS in the future. The table below sets forth the reconciliation for net loss and weighted average shares used for calculating basic and diluted earnings per share.

      Years Ended December 31,
      2014 2013
    Earnings (numerator)    
    Net loss $(5,285,366) $(8,735,054)
    Preferred stock dividends  (46,183)  (37,027)
    Net loss loss available to common shareholders $(5,331,549) $(8,772,081)
             
    Shares (denominator)        
    Weighted average common shares outstanding (basic)  5,751,181   5,250,820 
             
    Earnings (loss) per share from continuing operations        
    Basic and Diluted $(0.93) $(1.67)

    3. Reverse Stock Split

    On November 1, 2013 the Company affected a four-to-one reverse stock split. All information in this Annual Report on Form 10-K relating to the number of shares, price per share and per share amounts gives retroactive effect to the four-to-one reverse stock split of our capital stock.

    4.

    RECENT ACCOUNTING PRONOUNCEMENTS:

    During the twelve monthsyear ended December 31, 2012,2014 and through March 27, 2015, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FASB).FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results. The Company will monitor these emerging issues to assess any potential future impact on its consolidated financial statements.

    4. BUSINESS ACQUISITIONS:

    Acquisition of Frontier Income and Growth, LLC

    As of December 31 and November 30, 2011 the Company’s investments in FIG totaled $3,083,898 and $3,136,533, respectively, and was accounted for under the equity method of accounting. The investments reflect a $284,900 net profits interest and a $3,000,000 equity interest less the Company’s share of FIG’s losses. The loss for the month of December 2011 was $52,655. The Company’s equity interest and net profits interest in FIG at December 31 and November 30, 2011 was 34.84 % and 43.52%, respectively. In September 2012, due to the 49% acquisition of FIG, the Company recorded an impairment loss of $284,900 in FIG’s net profit interest.

    On June 4, 2012, the Company completed the 51% step acquisition of FIG. The Company acquired approximately 124 units of FIG which brought the total units owned by the Company to 1,168 and a 51% majority interest. The cash price paid was $5,080,000 less $1,203,000 borrowed from FIG that resulted in the fair value consideration for the 1,168 units of $3,877,000.

    The transaction has been accounted for using the acquisition method of accounting which requires that, among other things, assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date. The Company has not finalized the determination of the fair values of the assets acquired and liabilities assumed and, therefore, the provisional amounts set forth are subject to adjustment when the valuations are completed. Under U.S. Generally Accepted Accounting Principles, companies have up to one year following an acquisition to finalize acquisition accounting.

    The following details the fair value of the consideration transferred to effect the acquisition of FIG:

     

    Cash consideration

      $3,877,000  
      

     

     

     

    The following is a preliminary valuation of the net assets acquired by the Company in the acquisition, reconciled to the total fair value of the consideration transferred:

    5.INTANGIBLE ASSETS:

     

    Cash

        $907,132  

    Accounts receivable and accrued revenue

         1,794,260  

    Inventory

         61,905  

    Property and equipment (net)

         5,690,681  

    Deposits

         25,960  

    Other assets

         1,026,903  

    Notes payable

         (2,346,973

    Accounts payable and accrued expenses

         (881,216
        

     

     

     

    Book value of net assets acquired as of May 31, 2012

         6,278,652  

    Fair value adjustment to:

        

    Increase in property, plant & equipment

       340,000    

    Goodwill

       501,487    
      

     

     

       

    Total fair value adjustments

         841,487  

    Noncontrolling interest adjustment

         (3,243,139
        

     

     

     

    Fair value of consideration transferred

        $3,877,000  
        

     

     

     

    In accordance with ASC Topic 805,Business Combinations, the application of purchase accounting requires that the total purchase price be allocated to the fair value of identifiable assets acquired and liabilities assumed based on their fair values at the acquisition date, with amounts exceeding the fair values recorded as goodwill. Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The allocation process requires, among other things, an analysis of acquired fixed assets, contracts, and contingencies to identify and record the fair value of all assets acquired and liabilities assumed. The Company has not completed the determination of the fair value of assets acquired and liabilities assumed, accordingly; management has not made adjustments to the provisional fair values for the assets acquired and liabilities assumed. In addition the Company has not made a determination as to the deductibility of all or a portion of goodwill for tax purposes.

    In September 2012, the Company acquired the remaining 49% ownership of FIG. The transaction was valued at $5,610,000 (See Note 8). The following is a preliminary valuation of the net book value of the noncontrolling interest acquired by the Company in the transaction reconciled to the total fair value of the consideration transferred:

    Net book value of the noncontrolling interest

      $3,086,505  

    Reduction to additional paid in capital

       2,523,495  
      

     

     

     

    Fair value of consideration transferred

      $5,610,000  
      

     

     

     

    The primary reason for the acquisition was to increase the Company’s position in the oil field service industry by transporting and disposing of salt water and other oil field fluids in Texas.

    Revenues and net loss for the seven months ended December 31, 2012 were $5,328,897 and $965,557, respectively.

    Acquisition of Chico Coffman Tank Trucks, Inc.

    The Company through a wholly owned subsidiary, Frontier Acquisition I, Inc. completedconnection with the acquisition of CTT, on July 31, 2012 by acquiring all of the issued and outstanding stock of CTT inclusive of its wholly owned subsidiary, Coffman Disposal, LLC for the sum of $16,986,939. The acquisition was financed by credit facilities loaned to the Company inacquired intangible assets consisting of disposal well permits and customer relationships. The Company valued the aggregate amount of $12,000,000 provided by Capital One and ICON (See Note 7). Also, the Company established an escrow account from the seller’s cash proceeds to pay for potential liabilities arising from business activities prior the purchase of CTT such as final net working capital adjustments. The escrow agent distributed $350,000 plus accrued interest less any pending unpaid claims to the seller on January 23, 2013. On July 24, 2013 the escrow agent will distribute to the seller the then remaining balance, if any, less unpaid claims.

    The transaction has been accounted fordisposal well permits using the acquisition method of accounting which requires that, among other things, assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date.build-out (Greenfield) valuation technique. The Company has not finalized the determination of the fair values of the assets acquired and liabilities assumed and, therefore, the provisional amounts set forth are subject to adjustment when the valuations are completed. Under U.S. Generally Accepted Accounting Principles, companies have up to one year following an acquisition to finalize acquisition accounting.

    The following details the preliminary fair value of the consideration transferred to effect the acquisition of CTT:

    Cash and debt consideration

      $9,978,591    

    Earnings based deferred considertion liability

       2,300,000    

    Share based deferred consideration liability

       4,708,348    
      

     

     

       

    Total fair value consideration

        $16,986,939  
        

     

     

     

    The following is a preliminary valuation of the net assets acquiredcustomer relationships were valued by the Company inusing the acquisition, reconciled to the total fair value of the consideration transferred:excess earnings valuation technique.

     

    Cash

        $78,135  

    Accounts receivable

         3,023,355  

    Inventory

         251,605  

    Prepaid expenses

         655,616  

    Property and equipment (net)

         7,226,164  

    Other assets

         15,356  

    Accounts payable and accrued expenses

         (4,682,095

    Financed insurance premiums

         (81,024

    Notes payable

         (2,323,744
        

     

     

     

    Book value of net assets acquired as of July 31, 2012

         4,163,368  

    Fair value adjustment to:

        

    Goodwill

      $12,823,571    
      

     

     

       
         12,823,571  
        

     

     

     

    Fair value of consideration transferred

        $16,986,939  
        

     

     

     

    In accordance with ASC Topic 805,Business Combinations, the application of purchase accounting requires that the total purchase price be allocated to the fair value of identifiableDisposal well permits and customer relationships are considered definite-life intangible assets acquired and liabilities assumed based onwhich are amortizable over their fair values at the acquisition date, with amounts exceeding the fair values recorded as goodwill. Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The allocation process requires, among other things, an analysis of acquired fixed assets, contracts, and contingencies to identify and record the fair value of all assets acquired and liabilities assumed. The Company has not completed the determination of the fair value of assets acquired and liabilities assumed, accordingly; management has not made adjustments to the provisional fair values for the assets acquired and liabilities assumed. In addition the Company has not made a determination as to the deductibility of all or a portion of goodwill for tax purposes.estimated useful life.

    The primary reason for the acquisition was to increase the Company’s position in the oil field service industry by transporting and disposingintangible assets, net of salt water and other oil field fluids in Texas and Oklahoma.

    Revenues and net income for the five months ended December 31, 2012 were $16,375,629 and $42,414, respectively.

    5. UNAUDITED PRO FORMA CONSOLIDATED REVEUNES AND LOSS:

    The following summary presents unaudited pro forma consolidated results of operations as if Frontier Income and Growth, LLC and Chico Coffman Tank Trucks, Inc. (the “Acquired Companies”) acquisitions described above had occurred on January 1, 2011. The unaudited pro forma consolidated results of operations combines the historical results of operations of the Company and the Acquired Companies for the years ended December 31, 2012 and 2011, and gives effect to certain adjustments, including the non-recurring acquisition related costs incurred by the Company, and interest expense on acquisition related debt.

    The unaudited pro forma condensed results of operations has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisitions actually taken place on January 1, 2011, and should not be taken as indicative of future consolidated operating results.

       For the Years Ended December 31, 
       2012  2011 

    Revenues, net of discounts

      $49,557,114   $46,611,245  
      

     

     

      

     

     

     

    Net loss

      $(5,638,439 $(2,219,995
      

     

     

      

     

     

     

    Net loss per share - basic

      $(0.43 $(0.25
      

     

     

      

     

     

     

    6.GOODWILL:

    The following table presents details of the Company’s preliminary purchased goodwillamortization as of December 31, 2012:2014 and 2013 were as follows:

     

    Balance as of December 31, 2011

        $—    

    Additions:

        

    Acquisition of Frontier Income and Growth, LLC

       501,487    

    Acquisition of Chico Coffman Tank Trucks, Inc.

       12,823,571    
      

     

     

       

    Total additions

         13,325,058  
        

     

     

     

    Balance as of December 31, 2012

        $13,325,058  
        

     

     

     
      December 31, 2014
        Accumulated   Weighted Average
      Gross Amortization Net Useful Life
    Intangible assets:        
    Disposal well permits $2,093,867  $(506,018) $1,587,849   10 years 
    Customer relationships  1,973,867   (477,018)  1,496,849   10 years 
      $4,067,734  $(983,036) $3,084,698     
                     
      December 31, 2013
           Accumulated        Weighted Average 
       Gross   Amortization    Net    Useful Life
    Intangible assets:                
    Disposal well permits $2,093,867  $(296,631) $1,797,236   10 years 
    Customer relationships  1,973,867   (279,631)  1,694,236   10 years 
      $4,067,734  $(576,262) $3,491,472     

    7.LONG-TERM DEBT:

    Long-term debt, netFuture amortization expense for definite-life intangible assets as of December 31, 2012 was2014 is as follows:

     

    Revolving credit facility and term loan (a)

      $7,267,532  

    ICON term note (a)

       5,000,000  

    Notes payable (b)

       2,163,298  

    Installment notes (c)

       522,607  
      

     

     

     

    Total debt

       14,953,437  

    Less current portion

       (12,727,867
      

     

     

     

    Total long-term debt

      $2,225,570  
      

     

     

     
    Periods
    Ending
    December 31,
      
    2015 $406,776 
    2016  406,776 
    2017  406,776 
    2018  406,776 
    2019  406,776 
    Thereafter  1,050,818 
      $3,084,698 

    6.

    LONG-TERM DEBT:

    Long-term debt as of December 31, 2014 and 2013 were as follows:

      December 31, December 31, 
      2014 2013 
          
    Revolving credit facility and term loan (a) $2,510,963  $3,767,585 
    ICON term note (b)  4,330,820   4,223,996 
    Loans from stockholder (f)  2,870,484   1,596,000 
    Notes payable (c)  2,082,407   2,082,407 
    Installment notes (d)  163,215   221,467 
    Convertible note (e)     117,246 
        Total debt  11,957,889   12,008,701 
        Less current portion  (10,363,094)  (10,352,472)
        Total long-term debt $1,594,795  $1,656,229 

    In connection with the acquisition of CTT, the Company and its subsidiaries entered into loan agreements effective July 23, 2012 with Capital One Leverage FinanceBusiness Credit Corp. (Capital One)(the “Senior Loan Facility”) and ICON Investments (ICON) the proceeds of which were primarily used for the cash portion of the acquisition.

    On April 11, 2014 an accredited investor, who is also a significant stockholder in the Company, purchased the Senior Loan Facility from Capital One and assumed all the existing terms and conditions of the Credit Agreement and Forbearance Agreements. As of December 31, 2014, certain principal and accrued interest balances on the Senior Loan Facility are past due and the lenders had not exercised their rights under these agreements.

    a.

    Pursuant to the terms of the Credit Agreement, Capital One made available a $15 million loan commitment consisting of a revolving loan commitment of $9 million and a term loan commitment of $6 million subject to the terms of the Credit Agreement. The Credit AgreementSenior Loan Facility has a maturity date of July 23, 2017 and provides for variablea default interest payments calculated by applying arate which is the base rate in whichplus the Company has the option to choose between prime or LIBOR rate,applicable margin plus a margin2% (6.75% and 7.75%, respectively as of 1.5% to 3.25% depending on the loan and the interest rate elected by the Company.December 31, 2014). The term loan portion of the Credit AgreementSenior Loan Facility requires monthly payments of $100,000 plus interest with the balance of the loan plus unpaid interest due on July 23, 2017.interest. The Credit AgreementSenior Loan Facility also provides for the payment of an unused commitment fee of .375% per annum. The loans are secured by all of

    the Company’s properties and assets except for its disposal wells wherein Capital Onethe Senior Loan Facility has a subordinated loansecured position to ICON. Pursuant to the terms of the Credit Agreement and the affirmative covenants, the Company is obligated to maintain all deposits with Capital One Bank, N.A.

    The Credit Agreement contains certain restrictive debt covenants that require the Company to maintain a certain ratio and restrictions commencing with the month ending December 31, 2012. The major requirements are that the Company must maintain a monthly Fixed Charge Coverage Ratio each month that cannot be less than 1.0 to 1.0, a rolling twelve month Leverage Ratio determined on the last day of each month that cannot be greater the 4.50 to 1.0 and the Company cannot incur capital expenditures that exceeds $3 million in any fiscal year. As of December 31, 2012,2014, the Company was not in technical default resulting fromcompliance with its inability to maintain two financial ratiosdebt covenants under the Senior Loan Facility and the lender had not exercised their rights under the ICON agreement. The outstanding balance of the Senior Loan Facility is included in current liabilities at December 31, 2014 due to the fact that the Company was not in compliance with its debt covenants and accordingly classified the entire note balance as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliant by the end of the second quarter of 2013.covenants.

    b.The Company and its subsidiaries entered into a Term Loan, Guaranty and Security Agreement on July 23, 2012 with ICON forin the amount of $5 million. The Loan Agreement provides for an annual interest rate of 14% with monthly payments of interest only paymentsand with repayment of the principal and all accrued but unpaid interest due on February 1, 2018. ICON hashad a senior secured position on the Company’s disposal wells and a subordinated position to Capital Onethe Senior Loan Facility on all other Company properties and assets. On December 27, 2014 an affiliate of an accredited investor who is also a stockholder purchased the note payable to ICON. The covenants inaccredited investor assumed the terms and conditions of the ICON Note are in all material respects the same as in the Capital One Credit Agreement. Asnote agreement.As of December 31, 2012,2014, the Company was not in technical default resulting fromcompliance with its inability to maintain two financial ratiosdebt covenants under the ICON note and the lender had not exercised their rights under the ICON agreement. The outstanding balance of the ICON note is included in current liabilities at December 31, 2014 due to the fact that the Company was not in compliance with its debt covenants and accordingly classified the entire note balance as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliant by the end of the second quarter of 2013.covenants.

    b.c.The Company assumed two notes payable totaling $2,323,744 in connection with the acquisition of CTT. The notes relatewere related to the CTT’s purchase of common stock shares from two of its former stockholders. The primary note payable, dated June 1, 2007, in the original amount of $3,445,708 dated June 1, 2007 bearswith interest at 4.79% and is, was payable in monthly installments of $33,003 including interest, maturing December 1, 2018. The Company’s secondary note payable in the original amount of $219,555 dated June 1, 2007 bearshad interest at 4.79% and iswas payable in monthly installments of $2,488 including interest, maturing December 1, 2018. Both notes arewere subordinated to the Capital OneSenior Loan Facility and ICON notes. On February 12, 2015 the Company executed a settlement agreement in the litigation with the holders of the two notes payable (Note 12). The effect of the settlement agreement is the cancellation of the two notes payable totaling $3.7 million. The settlement resulted in the reduction of the Company’s indebtedness by $2.1 million. The promissory notes were owed to the former owners of CTT and related to the Company’s acquisition of CTT.

    c.d.The Company’sCompany has an installment loans are comprisedloan with a principal balance of 3 installment loans with principal balances ranging from $80,241approximately $163,215 which was used to $279,615 foracquire property and equipment usedfor use in the Company’s operations. At December 31, 2012, the loans have various maturity datesThe loan matures in September 2017 and has an interest rates ranging from 5.99% to 6.74%rate of 5.69% and require monthly minimum payments of $5,377.

    e.On August 15, 2013, the Company entered into a convertible note agreement with Asher Enterprises, Inc. in the amount of $153,500 with a stated interest rate of 8% per annum and effective interest rate of 70% per annum. The note was convertible into shares of the Company’s common stock, at the discretion of the holder, commencing 180 days following the date of the note at a conversion price per share equal to a discount of 35% from the average of the lowest three closing prices for the Company’s stock during the ten days prior to the conversion date. The Company evaluated the note and determined that the conversion option does not constitute a derivative liability for financial reporting purposes. The beneficial conversion feature discount resulting from the conversion price of $0.34, below the market price on August 15, 2013 of $0.53, resulted in a discount of $72,235 of which all of the balance was amortized during the nine months ended September 30, 2014. In 2014, the Company issued 341,372 shares to Asher Enterprises, Inc. in partial payment of the convertible note. This conversion resulted in a principal reduction of $53,500 in the convertible note balance of the Company. The conversion resulted in loss on extinguishment of debt of $4,453. On June 10, 2014 an accredited investor, who is also a stockholder in the Company purchased the note from Asher Enterprises, Inc. and assumed all the existing terms and conditions of the note agreement. On December 31, 2014, the holder of the note agreed to convert the note into 2014 Series A Convertible Preferred Stock of the Company. The Series A Convertible Preferred Stock was issued in January of 2015.

    f.On May 27, 2014 an accredited investor, who is also a stockholder in the Company, entered into a loan agreement with the Company for the amount of $2,783,484. As of December 31, 2014 and 2013 the principal balance of the note was $2,783,484 and $1,596,000, respectively. The note bears interest at 9% per annum. The terms of the note requires the cash payment of one half of the interest cost monthly (4.5% per annum), and the remaining half is accrued as payment in kind interest. The note and all accrued interest are due and payable in November 2015.

    g.On March 21, 2014 the CEO of the Company, who is also a stockholder in the Company entered into a promissory note agreement whereby the CEO loaned the Company $87,000. The promissory note has an interest rate of 7% per annum. The note was to have been repaid in installments throughout the year ended December 31, 2014 with a portion of the repayment conditioned upon the sale of certain of the Company’s disposal wells. The principle and interest ranging from $2,930on the note payable to $5,377.the CEO is past due according to its terms.

    Future maturities of long-term debt as of December 31, 20122014 are as follows:

     

    Years Ending

    December 31,

        

    2013

      $12,727,867  

    2014

       484,903  

    2015

       475,995  

    2016

       472,626  

    2017

       445,366  

    Thereafter

       346,680  
      

     

     

     
      $14,953,437  
      

     

     

     

    F-13

    Years Ending  
    December 31,  
    2015 $10,363,094 
    2016 $418,928 
    2017 $430,326 
    2018 $398,864 
    2019 $346,677 
      $11,957,889 

    7.

    8.EQUITY TRANSACTIONS:

     

    a.On September 2, 2011 Frontier, under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000During the year ended December 31, 2014, the Company issued 1,100,000 shares of Frontier’s 20112013 Series A 8%Convertible Preferred Stock (the “Stock”) for the sum of $5,500,000 contingent upon Frontier using the proceeds of the Stockand 2,200,000 warrants to acquire a majority 51% membership interest in Frontier Income and Growth, LLC, a salt water transportation and disposal company. The attributes of the Stock allowed the holder to convert the preferred shares into two shares of Frontier’s common stock and a warrant for two additional shares at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and Frontier completed the acquisition of 51% of FIG in June 2012. Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the Company’s common stock, for $440,000. The preferred stock features a 7% cumulative dividend, payable quarterly. The amount of dividends in arrears for all preferred stock was $83,210 at December 31, 2014. The warrant features provide that 2 warrants may be exercised to purchase one share of common stock at a strike price of $0.20 per share with an expiration date of September 20, 2014. All of the warrants outstanding expired prior to December 31, 2014.

    b.During the year ended December 31, 2014, the Board of Directors agreed to issue shares of 2014 Series A 7% Preferred Stock in exchange for the cancellation of $450,000 of the Company’s unsecured debt held by one of the Company’s significant stockholders. These shares of 2014 Series A 7% Preferred Stock were issued in February 2015. This preferred stock features a 7% cumulative dividend, payable quarterly.

    c.On November 1, 2013 the Board of Directors voted for a four-to-one reverse split of the Company’s common stock.

    d.During the year ended December 31, 2013, the Company issued 1,750,000 shares of 2013 Series A Convertible Preferred Stock and 5,500,000 warrants.3,500,000 warrants for $700,000. The preferred stock features a 7% cumulative dividend, payable quarterly. The warrant features provide that 2 warrants may be exercised to purchase one share of common stock at a strike price of $0.20 per share with a term of 12-24 months from the date of issuance. The weighted average fair value for the warrants was estimated using the Black-Scholes option valuation model. The value of the warrants was calculated to be $4,065,385$503,774 that was recorded to additional paid-in capital. In connection with the conversion of the preferred stock into common stock on July 12, 2012, the Company agreed to pay LoneStar 8% interest on its investment from January 1, 2012 through June 30, 2012. The amount of interest was calculated to be $154,263 that is included in interest expense at December 31, 2012.Black-Scholes option valuation model inputs used are as follows:

     

    Average expected life in yearsb.1
    Average risk-free interest rateAs stated above, Frontier acquired a majority 51% membership interest in FIG, a salt water transportation and disposal company. More recently the Company engaged in an exchange offering under Reg. D Rule 506 to acquire the remaining 1,122 membership interests in FIG. As of September 28, 2012 the Company successfully obtained all of the remaining membership interests and issued a total of 1,869,999 shares of its common stock to the individual members of FIG valued at $5,610,000 (see Note 4).4.00%

    9. RELATED PARTY TRANSACTIONS:

    The Company conducts substantial transactions with Frontier Income and Growth, LLC (FIG) and Gulftex Oil & Gas, LLC (Gulftex). These related party transactions have a significant impact on the financial condition and operations of the Company. If these transactions were conducted with third parties, the financial condition and operations of the Company could be materially different from reported results.

    Average volatilitya.75%
    Dividend yieldDuring the twelve months ended December 31, 2012 and November 30, 2011 the Company received cash advances from FIG totaling $1,516,773 and $390,000, respectively. The Company also received $135,000 in December of 2011. Advances from FIG are offset by allocated and direct expenses paid by the Company (see Note 9b below). The balance due FIG as of December 31, 2012 and November and December 31, 2011 is $2,699,984, $338,490 and $473,490, respectively. The balance due FIG at December 31, 2012 was eliminated in consolidation.7%

     

    b.On September 1, 2011 the Company entered into a service agreement with FIG. Under the agreement Frontier charged FIG for a portion of administrative services and rent. For the twelve months ended December 31, 2012 the Company billed $70,079 for these services that is recorded as an offset to general and administrative expense. In addition the Company paid consulting fees billable to FIG totaling $45,000 for the twelve months ended December 31, 2012 that was also recorded as an offset to general and administrative expense. For the twelve months ended November 30, 2011 the Company billed $31,748 for administrative services that is recorded as an offset to general and administrative expense. The Company did not bill FIG for services for the month of December 2011. The total of these billings were used to reduce the advances payable from FIG, which was eliminated in consolidation (see Note 9a above).The Agreement was terminated effective May 31, 2012.

    c.The Company previously charged Gulftex rent for a portion of the Company’s office space and Gulftex charged the Company administrative expenses as it related to its operations. The Company billed Gulftex for rent totaling $15,211 and Gulftex charged the Company $7,500 for administrative expenses for the nine months ended August 31, 2011.The Agreement was terminated on December 31, 2011. There were no advances received from Gulftex in 2012.

    d.During the year ended December 31, 2012, the Company repaid Gulftex the balance of $310,721 of loans previously forgiven and recorded a charge to paid-in-capital.
    8.

    10.STOCK BASED COMPENSATION:

     

    a.The Company executed a new Employment Agreement effective December 1, 2011 with its President Mr. Tim Burroughs for one year. Thereafter, the Agreement automatically renews for successive one (1) year terms unless terminated as provided for in the Employment Agreement. Among other items, the Agreement provides that Mr. Burroughs has the contractual right to the issuance of certain common stock of the Company for services rendered; 100,000 shares of the Company’s common stock will be set aside for distribution to Mr. Burroughs on a per annual basis beginning 90 days from the date of the employment agreement (25,000 common shares to be issued each quarter). For the twelve months ended December 31, 2012, the Company recorded compensation expense of $157,250 with an offsetting credit to stockholders’ equity. In addition Mr. Burroughs will receive the following annual stock grant and options.

    Under the terms of the Company’s employment agreement with Mr. O’Donnell, Mr. O’Donnell receives a grant of 6,250 shares of the Company’s common stock per quarter and a grant of 1 share of the Company’s common stock times the number of years of completed service issued annually. In addition, Mr. O’Donnell receives options to purchase up to 15,000 of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for the option is up to two years from its date of issuance, at which time the option expires. Two officers who joined the Company in the first quarter of 2013 received a grant of certain restricted common stock shares as a sign-on bonus. The granted shares were vested proportionally each quarter for the calendar year ended December 31, 2013. Additionally, each Director, except for Mr. O’Donnell, is awarded 6,250 shares of the Company’s common stock per calendar quarter (issued at the beginning of each quarter). During the year ended December 31, 2014 the Company suspended all further stock grants to officers and directors due to the Company’s poor economic performance.

    Summary Stock Compensation Table

    The following table sets forth the Company’s paid or accrued stock compensation expense to its officers, directors and employees.

     

    i.Grant: Mr. Burroughs shall annually receive 5,000 common shares of the Company’s common stock times his number of years completed service to the Company to a maximum of 100,000 shares. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $122,188 with an offsetting credit to additional paid-in-capital.
            Securities  
        Stock Non-Vested Underlying  
      Stock Options Stock Non-Vested  
      Awards Awards Awards (1) Stock (1) Total
               
    Year ended December 31, 2014 $74,000  $—    $—     —    $74,000 
                         
    Year ended December 31, 2013 $1,664,163  $101,400  $641,500   605,000  $2,407,063 

     

    ii.Options: Mr. Burroughs shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $39,900 with an offsetting credit to additional paid-in-capital.

    The Company did not record stock based compensation expense for the month ended December 31, 2011.

    b.The Company executed a new Employment Agreement effective December 1, 2011 with its Executive Vice President Mr. Bernard Richard O’Donnell for one year. Thereafter, the Agreement automatically renews for successive one (1) year terms unless terminated as provided for in the Employment Agreement. Among other items, the Agreement provides that Mr. O’Donnell has the contractual right to the issuance of certain common stock of the Company for services rendered; 100,000 shares of the Company’s common stock will be set aside for distribution to Mr. O’Donnell on a per annual basis beginning 90 days from the date of the employment agreement (25,000 common shares to be issued each quarter). For the twelve months ended December 31, 2012, the Company recorded compensation expense of $157,250 with an offsetting credit to stockholders’ equity.

    i.Grant: Mr. O’Donnell shall annually receive 5,000 common shares of the Company common stock times his number of years completed service to the Company to a maximum of 100,000 shares. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $47,976 with an offsetting credit to additional paid-in-capital.

    ii.Options: Mr. O’Donnell shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $39,900 with an offsetting credit to additional paid-in-capital.

    The Company did not record stock based compensation expense for the month ended December 31, 2011.

    c.

    The Company executed an Employment Agreement effective January 1, 2012 with its Vice President and the Chief Financial Officer Mr. Kenneth K. Conte for one year. Thereafter, the agreement automatically renews for successive one (1) year terms unless terminated as provided

    for in the Employment Agreement. Among other items, the Agreement provides that Mr. Conte has the contractual right to the issuance of certain common stock of the Company for services rendered; 100,000 shares of the Company’s common stock will be set aside for distribution to Mr. Conte on a per annual basis beginning 90 days from the date of the employment agreement (25,000 common shares to be issued each quarter). For the twelve months ended December 31, 2012, the Company recorded compensation expense of $149,250. In addition Mr. Conte received a grant of 300,000 common shares as a sign on bonus for his services as Chief Financial Officer of the Company. However the granted shares will not be vested in Mr. Conte until such time as he has been continuously employed by the Company for a period of one year from the date of the Agreement. The value of the sign on bonus shares was $255,000 that was recorded as compensation expense for the twelve months ended December 31, 2012.

    d.The Company executed an Employment Agreement effective June 1, 2012 with Mr. Charles David York President of Trinity Disposal & Trucking, LLC (TDT) and Director of Field Operations for Frontier for one year. Thereafter, the Agreement will automatically renew for successive one (1) year terms unless terminated as provided for in the Employment Agreement. Among other items, the Agreement provides that Mr. York has the contractual right to the issuance of certain common stock of the Company for services rendered; 100,000 shares of the Company’s common stock will be set aside for distribution to Mr. York on a per annual basis beginning 90 days from the date of the employment agreement (25,000 common shares to be issued each quarter). For the twelve months ended December 31, 2012, the Company recorded compensation expense of $104,750 with an offsetting credit to stockholders’ equity. In addition Mr. York will receive the following annual stock grant and options.

    i.Grants: Mr. York shall receive a grant of 50,000 shares of the Company’s common stock as a sign on bonus for his services as president of TDT. In addition, Mr. York shall annually receive 5,000 common shares of the Company’s common stock times his number of years completed service to the Company to a maximum of 100,000 shares. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $60,000 with an offsetting credit to stockholders’ equity.

    ii.Options: Mr. York shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period. For the twelve months ended December 31, 2012, the Company recorded compensation expense of $24,900 with an offsetting credit to additional paid-in-capital.

    e.Each Director, except for Mr. O’Donnell, is awarded 25,000 shares of the Company’s common stock per calendar quarter (issued at the beginning of each quarter). For the twelve months ended December 31, 2012, the Company recorded compensation expense of $257,000 with an offsetting credit to stockholders’ equity.

    f.The Company executed a contract on January 12, 2012 for consulting and marketing services. Under the terms of the contract a portion of the fees to be paid are in the form of the Company’s common stock. For the twelve months ended December 31, 2012, the Company recorded professional fees of $46,000 with an offsetting credit to stockholders’ equity.

    A summary of the status of the Company’s option grants as of November 30, 2011, December 31, 2011,2014 and December 31, 20122013 and the changes during the periods then ended is presented below:

     

         Weighted Average  
              Remaining      Remaining Aggregate
          Weighted-Average   Contractual Term    Weighted-Average Contractual Term Intrinsic
      Shares   Exercise Price   (in Years)  Shares Exercise Price (in Years) Value

    Outstanding November 30, 2011

       —       —      
    Outstanding December 31, 2012  150,000  $1.54   0.64  $231,600 

    Granted

       —       —        150,000   1.62   1.57   242,850 

    Exercised

       —       —        —     —     —     —   

    Forfeited

       —       —        —     —     —     —   
      

     

       

     

       

     

     

    Outstanding December 31, 2011

       —       —       —    
    Outstanding December 31, 2013  300,000   1.58   1.11   474,450 

    Granted

       150,000    $1.54     1.64    —     —     —     —   

    Exercised

       —       —        —     —     —     —   

    Forfeited

       —       —        (150,000)  1.54   0.36   (231,600)
      

     

       

     

       

     

     

    Outstanding December 31, 2012

       150,000    $1.54     1.64  
      

     

       

     

       

     

     
    Outstanding December 31, 2014  150,000  $1.58   1.11  $242,850 

    The weighted average fair value at the grant date of grant for options yearduring the years ended December 31, 20122014 and 2013 was estimated using the Black-Scholes option valuation model with the following inputs:

     

    Average expected life in years

    2

    Average risk-free interest rate

    2.002.00%

    Average volatility

    7575%

    Dividend yield

    00%

    Risk-free interest rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the expected life of the options as published by the Federal Reserve. The expected volatility was based upon historical data and other relevant factors such as the Company’s changes in historical volatility, capital structure, and its daily trading volumes.

    In calculating the expected life of stock options, the Company determines the amount of time from grant date to contractual term date for vested options. In developing the expected life assumption, all amounts of time are weighted by the number of underlying options.

    A summary of the status of the Company’s vested and nonvestednon-vested option grants at November 30, 2011, December 31, 2011, and December 31, 20122014 and the weighted average grant date fair value is presented below:

     

       Weighted Average Weighted Average
          Weighted Average   Weighted Average    Grant Date Grant Date
          Grant Date   Grant Date  Shares Fair Value per Share Fair Value
      Shares   Fair Value per Share   Fair Value 

    Total November 30, 2011

       —       —       —    

    Vested

       —       —       —      150,000  $0.68  $101,400 

    Nonvested

       —       —       —      —     —     —   
      

     

       

     

       

     

     

    Total December 31, 2011

       —       —       —    

    Vested

       150,000    $.70    $105,000  

    Nonvested

       —       —       —    
      

     

       

     

       

     

     

    Total December 31, 2012

       150,000    $.70    $105,000  
      

     

       

     

       

     

     
    Total  150,000  $0.68  $101,400 

    As of December 31, 2012, December 31, 2011 and November 30, 2011, there were no unrecognized compensation expenses related to the non-vested stock grant.

    F-15

    911. .

    EMPLOYEE BENEFIT PLAN:PLAN

    CTT sponsors a 401(k) defined contribution plan covering substantially all employees. CTT is required and generally matches contributions up to a maximum of 4% of the participant’s earnings. The matching contributions for the five monthsyear ended December 31, 2014 and 2013 were $29,519 and $45,853, respectively.

    10.

    COMMITMENTS AND CONTINGENCIES:

    1. During the year ended December 31, 2012 were $28,308.a complaint was filed with the Texas Railroad Commission (RRC) regarding the operation of one of Trinity Disposal Wells, LLC’s wells in East Texas. The complaint requested that the RRC terminate the well injection permit on the basis that the Company violated the terms of the permit by failing to confine injection fluids to the permitted interval and that the escape of such fluids is causing waste and poses a threat to fresh water. The Company answered the complaint and presented expert testimony contradicting the claim. On May 24, 2013, the RRC dismissed the complaint and ruled in favor of the Company.

    12.COMMITMENTS AND CONTINGENCIES:

    a.During the year ended December 31, 2012 a complaint was filed with the Texas Railroad Commission (RRC) regarding the operation of one of our wells in East Texas. The compliant requested that the RRC terminate the well injection permit on the basis that the Company violated the terms of the permit by failing to confine injection fluids to the permitted interval and that the escape of such fluids is causing waste and poses a threat to fresh water. The Company answered the complaint and presented expert testimony contradicting the claim. As of the date of this report the RRC has not made a final determination on the merits of the complaint. The RRC ordered the Company to shut-down the well until there is an official ruling on the complaint. If the RRC rules in favor of the complainant the Company will write down the value of the disposal well and related assets to its estimated salvage value which at December 31, 2012 was $160,000 and record a loss on the impairment of $120,641.

    b.The Company is obligated for $1,558,900 under long-term leases for the use of land where seven of its disposal wells are located. Four of the leases expire between 2016 and 2017. Three of the leases are for extended periods of time. The first lease expires on February 7, 2023 (with two options to renew for an additional 10 years each). The second lease expires on December 1, 2034 with no option to renew and the third lease expires on May 31, 2022 with no option to renew. The monthly lease payment for the disposal well leases is $10,300.

    Years Ending
    December 31,

        

    2013

      $123,600  

    2014

       123,600  

    2015

       123,600  

    2016

       123,600  

    2017

       116,100  

    Thereafter

       948,400  
      

     

     

     
      $1,558,900  
      

     

     

     

    1. The Company is also obligated for $129,332$1,307,700 under an operating lease agreementlong-term leases for rentthe use of land where seven of its office space in Dallas, Texas. The termdisposal wells are located. Three of the leases are for extended periods of time. The first lease is from Marchexpires on February 7, 2023 (with two options to renew for an additional 10 years each).The second lease expires on December 1, 2011 through2034 with no option to renew and the third lease expires on May 31, 2014.2018 with one year renewal options. The average monthly base lease payment overfor the remaining term of the leasedisposal well leases is $7,608.$10,800. Rent expense for the twelve months ended December 31, 20122014 and November 30, 20112013 was $162,996 and one month ended December 31, 2012 was $66,345, $51,415 and $5,349,$97,998, respectively. The followingFollowing is a schedule of lease payments by year:

    Years Ending
    December 31,
     Disposal Well
    2015 $123,600 
    2016  123,600 
    2017  116,100 
    2018  105,600 
    2019  105,600 
    Thereafter  733,200 
      $1,307,700 

    1. A share based deferred consideration liability was recorded as part of the CTT purchase consideration based on the Stock Purchase Agreement dated June 29, 2012. The previous owner of CTT received $4,708,348 in consideration in the form of common shares with a right to receive additional common shares if the share price of the company falls below $4.00 per share at the end of the measurement period, which was January 25, 2014, as specified in the stock purchase agreement. The share based deferred consideration liability was settled on May 1, 2013 and the Company issued an additional 143,228 shares of common stock in full satisfaction of the Company’s liability. A total of 437,500 common shares were issued to settle the liability.

    1. Earnings based deferred consideration liability was recorded as part of the CTT purchase consideration based on the Stock Purchase Agreement dated June 29, 2012 which was amended on May 1, 2013. The previous owner of CTT was granted the right to receive additional consideration based on specified earnings targets at the end of the measurement period, which ends on June 30, 2014, as specified in the amended agreement dated May 1, 2013. Based on CTT’s earnings through December 31, 2013, the fair value of the earnings based contingent liability of $2,300,000 (recorded at the acquisition date) has changed as of December 31, 2013 and the additional consideration based upon specific earnings targets were not achieved and therefore the contingent liability of $2,300,000 has been cancelled and the gain was included in other income (expense) for the year ended December 31, 2013.

    1. Although not named directly in the litigation the Company was obligated to indemnify one of its current officers and one of its former officers in certain litigation filed against them; Jimmy Coffman and Elaine Coffman v. Tim P. Burroughs And Dick O’Donnell CAUSE NO. CV14-02-115 in the 271st Judicial District Wise County, Texas. In this suit the Coffmans sought to obtain the sum of $2,082,407 which they alleged was owed them on two promissory notes associated with the Company’s purchase of Chico Coffman Tank Trucks, Inc. and its subsidiary, Coffman Disposal, LLC. This amount is recorded as note payable. The lawsuit was being defended through the Company’s Directors and Officers insurance carrier, Chubb Insurance. On February 12, 2015 the Company executed a settlement agreement in the litigation with the Coffmans. The effect of the settlement agreement is the cancellation of two subordinated promissory notes originally totaling $3.7 million. The settlement resulted in the reduction of the Company’s indebtedness by $2.1 million. The promissory notes were owed to the former owners of CTT and related to the Company’s acquisition of CTT. The Company paid $150,000 in defense costs which represented the amount of the Company’s deductible under its Directors and Officers insurance policy.

    1. The Company is a named defendant along with the previously named officers in certain litigation; Dynamic Technical Solutions Corp. and Ola Investments, LLC, V. Frontier Oilfield Services, Inc., Timothy Burroughs and Bernard R. “Dick” O’Donnell; CAUSE NO. CV14-04-234 in the 271st Judicial District Wise County, Texas wherein the Plaintiffs allege they have been damaged by the failure of the Company to complete a disposal well in a joint venture between the parties in the sum of $300,000. The Company is defending the lawsuit and believes the lawsuit is without merit.

    1. From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs and legal costs associated with these matters when they become probable and the amount can be reasonably estimated. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows

    11.

    INCOME TAXES:

     

    Years Ending
    December 31,

        

    2013

      $90,945  

    2014

       38,387  
      

     

     

     
      $129,332  
      

     

     

     

    c.The share based deferred liability was recorded as part of the CTT purchase consideration. The previous owner of CTT received $4,708,348 in consideration in form of common shares with a right to receive additional common shares if the share price of the Company falls below $4.00 per share at the end of the contract period, which is January 25, 2014, as specified in the Agreement. As of December 31, 2012, the total estimated shares for the share based deferred compensation liability was 2,478,078 shares of which 1,177,087 shares have been issued.

    d.The earnings based deferred consideration liability was recorded as part of the CTT purchase consideration. The previous owner of CTT was granted the right to receive additional consideration based on specified earnings targets at the end of the measurement period, which is July 31, 2013, as specified in the agreement. The Company is currently negotiating with the former owner to amend the Stock Purchase Agreement that would reset the earnings targets with the same payouts. Based on the current negations, the fair value of the earnings based contingent liability of $2,300,000 (recorded at the acquisition date) is considered unchanged as of December 31, 2012. Future gains and losses on the re-measurement of the earnings based contingent liability will be included in other income or expense.

    13. INCOME TAXES:

    The Company computes income taxes using the asset and liability approach. The Company currently has no issue that creates timing differences that would mandate deferred tax expense. Due to the uncertainty as to the utilization of net operating loss carryforwards, an evaluationa valuation allowance has been made to the extent of any tax benefit that net operating losses may generate. No provision for income taxes has been recorded for the twelve months ended December 31, 20122014 due to the Company’s net operating loss carryforward from 2011.

    The Company changed from the cash to accrual method of accounting for income tax reporting purposes beginning December 1, 2011.prior years.

    The following table reconciles income tax expense and rate base on the statutory rate to the Company’s income tax expense.

     

      Year Ended December 31, 2012 Year Ended November 30, 2011 Month Ended December 31, 2011  Year Ended December 31, 2014 Year Ended December 31, 2013
      Amount Percentage Amount Percentage Amount Percentage  Amount Percentage Amount Percentage

    Computed “expected” income tax benefit

      $(2,104,113  35.00 $(169,761  35.00 $(46,066  35.00 $(1,841,641)  35.00  $(3,031,996)  35.00 

    Increase (decrease) in income taxes resulting from:

                           
    Expiration of unused net operating loss  1,711,914   (32.53)  —     —   

    Permanent differences

       (142,395  2.37  5,631    -1.16  —      0.00  1,191   (0.02)  11,065   (0.13)

    State taxes, net of Federal benefit

       (14,139  0.24  —      0.00  —      0.00
    State taxes, net of federal benefit  15,299   (2.60)  (25,273)  0.29 

    Changes in valuation allowance

       2,260,647    -37.61  164,130    -33.84  46,066    -35.00  136,773   (0.29)  3,118,413   (36.00)
      

     

      

     

      

     

      

     

      

     

      

     

     

    Total tax provision

      $—      0.00 $—      0.00 $—      0.00
      

     

      

     

      

     

      

     

      

     

      

     

     
    Provision for federal and state income tax $23,536   (0.44) $72,209   (0.84)

    Deferred Income Taxes

    Deferred income taxes primarily represent the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of our deferred taxes are as follows:

     

      Years Ended Month Ended  Years Ended December 31,
      Dec. 31, 2012 Nov. 30, 2011 Dec. 31, 2011  2014 2013

    Deferred tax assets (liabilities):

            

    Net operating loss carryforward

      $6,133,144   $3,385,000    3,431,066   $11,449,134  $9,305,353 
    Expiration of unused net operating loss  (1,711,914)  —   
    Bad debt allowance  17,500   —   

    Stock based compensation

       36,645    —      —      98,035   72,135 

    Depreciation and amortization

       (402,111  39    —      (1,567,032)  (1,228,538)

    Loss on investment in affiliate

       —      51,921    —    

    Other

       —      24,040    —    
      

     

      

     

      

     

     

    Total deferred tax assets

       5,767,678    3,461,000    3,431,066    8,285,723   8,148,950 

    Valuation allowance

       (5,767,678  (3,461,000  (3,431,066  (8,285,723)  (8,148,950)
      

     

      

     

      

     

     

    Net deferred tax assets

      $—     $—     $—     $—    $—   
      

     

      

     

      

     

     

    At December 31, 20122014 and November 30, 2011, we have2013, the Company has net operating loss carryforwardscarry forwards of approximately $17.5$27.8 million and $9.7$21.7 million, respectively, remaining for federal income tax purposes. Net operating loss carryforwardscarry forwards may be used in future years to offset taxable income subject to compliance with Section 382 of the Internal Revenue Code as indicatedCode. The federal net operating loss carry forwards will expire in 2019 through 2034.

    12.

    SUBSEQUENT EVENTS

    On February 12, 2015 the Company executed a settlement agreement in the litigation with the Coffmans whereby the Coffmans received a cash payment from Chubb in exchange for the termination of the litigation and the cancellation of two subordinated promissory notes with face amounts originally totaling $ 3.7 million. The settlement resulted in the reduction of the Company’s debt by $2.1 million. The Company paid $150,000 in defense costs which represented the amount of the Company’s deductible under its Directors and Officers insurance policy.

    On March 25, 2015 the Company was notified by its largest customer that the Company was unsuccessful in a competitive bidding process conducted by the following schedule:

    Year of
    Expiration

      Amount 

    2018

      $933,746  

    2019

       1,638,940  

    2020

       1,432,476  

    2021

       1,749,230  

    2022

       700,556  

    2023

       660,093  

    2025

       1,180,449  

    2026

       736,789  

    2028

       352,108  

    2030

       288,235  

    2032

       7,850,645  
      

     

     

     
      $17,523,267  
      

     

     

     

    14. SUBSEQUENT EVENTS:

    The Company sold 257,995 shares of its common stockcustomer to existing stockholders for $378,293.

    The Company executed an Employment Agreement with Ms. Sherri Cecottiselect vendors for the positions of Vice President of Human Resourcescustomers’ saltwater transport and Corporate Secretary effective January 1, 2013.disposal service. The Agreement is for one year fromCompany’s current MSA with the commencement date. Thereafter, the Agreement automatically renews for successive one (1) year terms unless terminated as provided for in the Employment Agreement. Among other items, the Agreement provides that Ms. Cecotti shall receive 5,000 shares of common stock times her number of years completed service to the Company to a maximum of 100,000 shares. In addition Ms. Cecotti will receive a grant of 50,000 shares of common stock of the Company as a bonus for her services. However, the granted sharescustomer expires on March 31. 2015 and will not be vested until such time as the Executive has been continuously employedrenewed. The customer represented 53% and 52%, respectively, of the Company’s revenues for one year.

    Quarterly Financial Data (Unaudited):the years ended December 31, 2014 and December 31, 2013. Management is in the process of preparing for the implications of the loss of this business volume, which at a minimum will be substantially lower revenues and cash flows beginning in April of 2015.

     

                 Net Loss per 
              Net Loss  Share 
       Total   Operating  Attributable  Attributable 
       Revenues   Loss1  to Frontier  to Frontier 

    2012

          

    lst Quarter

      $1,609    $(496,664 $(647,622 $(0.07

    2nd Quarter

       701     (810,314  (881,805  (0.09

    3rd Quarter

       9,841,682     (1,718,602  (2,538,253  (0.18

    4th Quarter

       11,862,443     (1,808,580  (1,984,469  (0.12
      

     

     

       

     

     

      

     

     

      

     

     

     

    Total

      $21,706,435    $(4,834,160 $(6,052,149 $(0.46
      

     

     

       

     

     

      

     

     

      

     

     

     

    2011

          

    lst Quarter

      $1,490    $(51,744 $(51,744 $(0.01

    2nd Quarter

       931     (20,009  (20,009  (0.01

    3rd Quarter

       3,505     (8,923  (8,923  —    

    4th Quarter

       947     (258,228  (404,355  (0.07
      

     

     

       

     

     

      

     

     

      

     

     

     

    Total

      $6,873    $(338,904 $(485,031 $(0.09
      

     

     

       

     

     

      

     

     

      

     

     

     

     

    1

    Operating loss is net revenues less direct and indirect costs, general and administrative, acquisition expenses, depreciation and loss on forfeiture of properties.

    F-18

    Item 9. Changes In and Disagreements with Accountants and Financial Disclosure.

    None.

    NONE

    Item 9A. Controls and Procedures.

    Evaluation of Disclosure Controls and Procedures

    Our management includingevaluated, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act)Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this annual report (the “Evaluation Date”). Based on such evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of the Evaluation Date, to ensure that information required to be disclosed in reports that we file or submit under that Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, in a manner that allows timely decisions regarding required disclosures.

    Management’s Annual Report on Internal Control Over Financial Reporting

    The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in rule 13a-15(f) o the Exchange Act. The Company’s internal control system is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that:

    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

    Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

    Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

    Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    An evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s procedures and internal control over financial reporting as of December 31, 2002.Form 10-K. In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework. Based on that evaluation, the Company’s management, including theour CEO, and CFO, concluded that the Company’sour internal controls over financial reporting were not effective in that there was a material weakness as of December 31, 2012.2014.

    A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’sour internal controls.

    The Company’s managementManagement has identified a material weakness in the effectiveness of internal control over financial reporting related to a shortage of resources in the accounting department required to assure appropriate segregation of duties with employees having appropriate accounting qualifications related to

    the Company’s our unique industry accounting and disclosure rules. Management has outsourced certain financial functions to mitigate the material weakness in internal control over financial reporting. In addition, the Company intends to improve uponWe are also reviewing its closing proceduresfinance and financial reporting routine to identify and account for transactions that may be material to the interim or annual financial statements on a timely basis. In addition, Management has authorized the purchase of a new accounting and financial reporting system and once implemented should significantly improve its internal control over financial reporting.staffing requirements.

    Attestation Report of the Registered Public Accounting Firm

    This annual reportAnnual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’sour independent registered public accounting firm pursuant to temporary rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act, wherein non-accelerated filers are exempt from Sarbanes-Oxley internal control audit requirements.SEC that permit us to provide only management’s report in this Annual Report.

    Changes in Internal Controls over Financial Reporting

    There were no changes in our internal control over financial reporting,Limitations on the Effectiveness of Controls.

    Our management, including the CEO, does not expect that occurred during the year ended December 31, 2012, that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

    Inherent Limitations of Internal Controls

    There are inherent limitations to the effectiveness of any system ofits disclosure controls or its internal controls will prevent all errors and procedures, including the possibility of human error and the circumvention and overriding of controls and procedures.all fraud. A control system, no matter how well conceived and operated, can provide only provide reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of thea control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effectiveall control system, misstatements due to errorsystems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, may occur and not beif any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human errorbecause of simple errors or mistake.mistakes. Additionally, controls no matter how well designed, couldcan be circumvented by the individual acts of specificsome persons, withinby collusion of two or more people, or by management override of the organization.control. The design of any system of controls also is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectivesgoals under all potential future conditions.

    Management is aware that there isconditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a lack of segregation of duties and accounting personnel with appropriate qualifications at the Companycost-effective control system, misstatements due to error or fraud may occur and not be detected.

    Scope of the small numberControls Evaluation.

    The CEO evaluation of employees dealing with general administrativeour disclosure controls and financial matters.the company’s internal controls included a review of the controls objectives and design, the controls implementation by the company and the effect of the controls on the information generated for use in this report. In the course of the Controls Evaluation, the CEO sought to identify data errors, controls problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, was being undertaken. This constitutestype of evaluation is to be done on a deficiencyquarterly basis so that the conclusions concerning controls effectiveness can be reported in our quarterly reports on Form 10-Q and annual report on Form 10-K. Our internal controls are also evaluated on an ongoing basis byother personnel in the company’s organization and by our independent auditors in connection with their audit. The overall goals of these various evaluation activities are to monitor our disclosure controls and our internal controls and to make modifications as necessary; the company’s intent in this regard is that the disclosure controls and the internal controls will be maintained as dynamic systems that change (reflecting improvements and corrections) as conditions warrant.

    Among other matters, the company sought in its evaluation to determine whether there were any “significant deficiencies” or “material weaknesses” in our internal controls, or whether we had identified any acts of fraud involving personnel who have a significant role in the our internal controls. Management has decided that consideringThis information was important both for the employees involved,controls evaluation generally and because item 5 in the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management periodically reevaluates this situation. In lightSection 302 Certifications of the Company’s current cash flow situation,CEO requires that the CompanyCEO disclose that information to the Audit Committee of our Board and to our independent auditors and report on related matters in this section of the Report. In the professional auditing literature, “significant deficiencies” represent control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the consolidated financial statements. A “material weakness” is defined in the auditing literature as a particularly serious significant deficiency where the internal control does not intendreduce to increase staffinga relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to mitigate the current lackconsolidated financial statements and not be detected within a timely period by employees in the normal course of segregation of duties withinperforming their assigned functions. We also sought to deal with other controls matters in the general administrativecontrols evaluation, and financial functions. However, whenin each case if a problem was identified, the cash flow situation improves,company considered what revision, improvement and/or correction to make in accordance with the Company intends to increase personnel with appropriate accounting qualifications to mitigate the current lack of segregation of duties within the general administrative and financial functions.on-going procedures.

    Item 9B. Other Information.Information

    None.

    On May 23, 2014, the Company issued 1,100,000 shares of cumulative convertible preferred stock and 2,200,000 warrants to purchase shares of the Company’s common stock, for $440,000.

    On June 30, 2014, Kenneth K. Conte, the Company’s Chief Financial Officer, resigned from his position as Chief Financial Officer and terminated his employment with the Company effective immediately.

    PART III

    Item 10.Directors, Executive Officers and Corporate Governance.

    Our current executive officers and directors, their ages and present positions with Frontier are identified below. Our directors hold office until the next annual meeting of the shareholders following their election or appointment and until their successors have been duly elected and qualified. Our officers are elected by and serve at the pleasure of our Board of Directors.

     

    NAME AGE POSITION

    Tim Burroughs

    Donald Ray Lawhorne
     53President and Chief Executive Officer

    Kenneth K. Conte

    5471 Chief FinancialExecutive Officer, Director

    Dick O’Donnell

     6971 Executive Vice President, Director

    David York

    John L. Stimpson
     55Director of Field Operations

    Frank J. Iannelli

    49Chief Operating Officer

    Stephen P. Carson

    57Vice President and General Counsel

    Sherri Cecotti

    48Secretary/Treasurer

    Daniel R. Robinson

    64Director

    Donald Ray Lawhorne

    6945 Director

    TIM BURROUGHS

    DONALD RAY LAWHORNE is the Presidenta Director and was named Chairman and Chief Executive Officer and founder of Frontier Oilfield Services, Inc. Mr. Burroughs has been our Chief Executive Officer and Chief Financial Officer since our company’s inception in 1995 to December 31, 2011. On January 1, 2012 Mr. Burroughs relinquished his position as Chief Financial Officer with the addition of Mr. Conte to the Company (see below). Prior to founding our company, Mr. Burroughs worked for several Dallas/Ft. Worth area based energy companies. Mr. Burroughs also studied business administration at Texas Christian University in Ft. Worth, Texas. Mr. Burroughs spends 100% of his professional time devoted to our business.

    Mr. Burroughs is a 50% owner of Gulftex Oil & Gas, LLC, an oil and gas operating company that was billed for services by Frontier and from which Mr. Burroughs benefited financially. Gultex no longer receives services from Frontier. See “Certain Relationships and Related Transactions.”

    KENNETH K. CONTE was named Vice President and Chief Financial Officer of Frontier Oilfield Services, Inc., effective January 1, 2012. From June 1, 2010 until November 2011 Conte served as Executive Vice President and CFO of NYTEX Energy Holdings, Inc. Dallas, TX. Prior to joining NYTEX and since December 2005, Conte served as Managing Director and Head of Mergers & Acquisitions for National Securities Corporation, formerly vFinance Investments, Inc., New York, NY. From September 2003 to December 2005, Conte served as CEO and CFO of Windsor Technology, LLC, Rochester, NY. From April 2001 to December 2005, Conte also served as Managing Partner of Argilus Investment Banking, Rochester, NY. Furthermore, from December 1998 to April 2001, Conte served as Senior Vice President — Investment Banking for McDonald Investments, Inc., in Cleveland, Ohio. Mr. Conte has also held management positions at the Corporate Banking and Finance Group for Key Bank in Rochester, at Shawmut’s LBO fund, and at The Chase Manhattan Bank.

    Mr. Conte obtained his MBA in Finance at the William E. Simon Graduate School of Business Administration at the University of Rochester; and a BBA in Accounting from Niagara University.

    BERNARD R. O’DONNELL is the Executive Vice President for our Company. Mr. O’Donnell began with the Company in April 2005. From April 2005 to December 31, 2010 Mr. O’Donnell was also the President and managing principal for Euro American Capital Corporation, a FINRA licensed broker dealer. He has over 33 years of diversified experience in financial sales, investment banking and brokerage operations.

    CHARLES DAVID YORK is President of Trinity Disposal & Trucking and Director of Field Operations for Frontier. Mr. York has over thirty years of oil field experience with exploration, drilling and operating companies. More recently he has overseen the day-to-day operations of TDT/TDW since March of 2010. From 2004 through February of 2010, Mr. York was a 50% owner of Gulftex Operating, Inc. and oversaw the drilling and completion of 42 wells in the Barnett Shale for a number of major oil companies/operators and also managed the day-to-day field operations. Prior to that he worked in various capacities for several exploration and operating oil companies in East and South Texas. Mr. York studied business administration at the University of Texas at Edinburg.

    SHERRI CECOTTI is the Secretary-Treasurer and joined our company in February 2002. Prior to joining our company Ms. Cecotti was employed by the Expo Design Center/Home Depot, from 1999 to 2002 as a store manager and in the central installations office. From 1992-1998 Ms. Cecotti was operations manager for Marshall Fields in Dallas, Texas.

    FRANK J. IANNELLI is the Chief Operating Officer of Frontier Oilfield Services, Inc. and began his employment with Frontier in February 2013. Mr. Iannelli has worked in a variety of different capacities which supported a well-rounded base in operations for Frontier. Before joining Frontier, Mr. Iannelli was the President and CFO of D&T Trucking, a privately owned frac sand logistics company operating in the United States. In addition to his trucking experience at D&T, Mr. Iannelli was a Managing Director with Western Strategic Advisors, a regional investment banking and consulting group in Ft Worth. Frank led the consulting practice which provides operational and financial advisory services, turnaround and restructuring consulting and crisis and interim management. Mr. Iannelli is a CPA and has a BBA and MBA from the University of Texas at Austin.

    STEPHEN P. CARSON is Vice President and General Counsel and joined Frontier in February 2013. From January 2012 to FebruaryJuly 29, 2013 Stephen was self-employed as an attorney at law and from July 2011 to December 2011 was employed by KBR Capital Markets, LLC. He was employed by NGAS Production Co. from January 2004 to June of 2011 and was self-employed in his own law practice from June 1994 to December 2003. Mr. Carson holds a B.A. Degree from Vanderbilt University and a J.D. Degree from the University of Louisville School of Law. He also formerly held a Series 7,24,63,79 and 99 securities registrations from the Financial Industry Regulatory Authority (FINRA).

    DANIEL R. ROBINSON is an oil and gas executive. He is President and CEO of Placid Refining Company and Placid Holding Company, positions which he has held since 1994. He is also director of Field Point Petroleum Corporation, an AMEX traded public company, where he has served in that capacity since 2004. Mr. Robinson serves as director of the National Petrochemical and Refiners Association (NPRA), a non-profit industry advocacy organization serving the petroleum refining and petrochemical industry. He has been director of the NPRA since 2004.

    DONALD RAY LAWHORNE ispreviously President, CEO and Director of Pacesetter Management, Inc.; a Director of Orchard Holdings Group, LLC; Manager of Pacesetter Investment Partners, LLC, the general partner for Pacesetter Growth Fund, LP; and Manager of Pacesetter Associates LLC. Mr. Lawhorne has held the aforementioned positions since May 1997. Mr. Lawhorne was also President, CEO and Director of Alliance Enterprise, Inc. from March 1994 to February 2010. Mr. Lawhorne has an MBA from Pepperdine University and a BBA from Southern Methodist University.

    BERNARD R. O’DONNELL is the Executive Vice President for our Company. Mr. O’Donnell began with the Company in April 2005. From April 2005 to December 31, 2010 Mr. O’Donnell was also the President and managing principal for Euro American Capital Corporation, a FINRA licensed broker dealer. He has over 36 years of diversified experience in financial sales, investment banking and brokerage operations. He has held series 7, 24, 63, and 66 securities licenses. Mr. O’Donnell has an MBA and a BS degree in Business and Industrial Management from San Jose State University.

    John L. Stimpson is currently the President and owner in a number of enterprises including Gulf Trading, LLC an importer and exporter of forest products from 1998 to present and Point Logistics, LLC an asset based carrier and brokerage firm from 2005 to present. He is also currently a partner in Stimpson Properties, LLC a residential and commercial real estate management company, a position he began in 1998 and from 1996 to present he is owner/president of Pan American Mayal S.A. a real estate investment and development company located in Costa Rica. Mr. Stimpson has a Bachelor of Arts Degree from the University of Alabama.

    We have adopted a code of ethics and conduct entitled Frontier Oilfield Services, Inc. Code of Business Conduct and Ethics for Employees, Executive Officers and Directors. The code of ethics and conduct was revised and updated on April 30, 2014. The code of ethics and conduct applies to all of our employees including our principal executive officer, our principal financial officer and our principal accounting officer or any other employees performing a similar service to the Company.

    17

    Item 11. Executive Compensation.

    Compensation Discussion and Analysis

    Our executive compensation program is designed to create strong financial incentive for our officers to increase revenues, profits, operating efficiency and returns, which we expect to lead to an increase in shareholder value. Our Board of Directors conduct periodic reviews of the compensation and benefits programs to ensure that they are properly designed to meet corporate objectives, overseeing of the administration of the cash incentive and equity-based plans and developing the compensation program for the executive officers. Our executive compensation program includes four primary elements. Three of the elements are performance oriented and taken together; all constitute a flexible and balanced method of establishing total compensation for our executive officers.

    Our executive compensation program is intended to be simple and clear, and consists of the following elements (depending on individual performance):

     

    Base salary;

    ·Base salary;
    ·Annual incentive plan awards;
    ·Stock-based compensation; and
    ·Benefits.

     

    Annual incentive plan awards;

    Stock-based compensation; and

    Benefits.

    The following objectives guide the Board of Directors in its deliberations regarding executive compensation matters:

     

    Provide a competitive compensation program that enables us to retain key executives;

    ·Provide a competitive compensation program that enables us to retain key executives;
    ·Ensure a strong relationship between our performance results and those of our segments and the total compensation received by an individual;
    ·Balance annual and longer term performance objectives;
    ·Encourage executives to acquire and retain meaningful levels of common shares; and
    ·Work closely with the Chief Executive Officer to ensure that the compensation program supports our objectives and culture.

     

    Ensure a strong relationship between our performance results and those of our segments and the total compensation received by an individual;

    Balance annual and longer term performance objectives;

    Encourage executives to acquire and retain meaningful levels of common shares; and

    Work closely with the Chief Executive Officer to ensure that the compensation program supports our objectives and culture.

    We believe that the overall compensation of executives should be competitive with the market in which we compete for executive talent. This market consists of both the oil and gas exploration industry and oil and gas service-based industries in which we compete for executive talent. In determining the proper amount for each compensation element, we review publicly available compensation data, as well as the compensation targets for comparable positions at similar corporations within these industries. We also consider the need to maintain levels of compensation that are fair among our executive officers given differences in their respective responsibilities, levels of accountability and decision authority.

    Compensation Committee

    We have a compensation committee of our Board of Directors that is headedchaired by Daniel Robinson.John Stimpson. The Board of Directors is authorized to create certain committees, including a compensation committee.

    Compensation Committee Interlocks and Insider Participation

    The compensation committee of our Board of Directors consists of the threeall members of the Board of Directors, John Stimpson, Don Lawhorne and Bernard O’Donnell, Daniel Robinson, and Donald Ray Lawhorne, each participateparticipates in making compensation decisions. Bernard O’Donnell serves as an Executive Vice President in addition to serving as a director.

    Role of Management in Determining Compensation Decisions

    At the request of our Board of Directors, our management makes recommendations to our Board of Directors relating to executive compensation program design, specific compensation amounts, equity compensation levels and other executive compensation related matters for each of our executive officers, including our Chief Executive Officer. Our Board of Directors maintains decision-making authority with respect to these executive compensation matters.

    Our Board of Directors reviews the recommendations of our management with respect to total executive compensation and each element of compensation when making pay decisions.

    The objectives and details of why each element of compensation is paid are described below.

    Base Salary.Our objective for paying base salaries to executives is to reward them for performing the core responsibilities of their positions and to provide a level of security with respect to a portion of their compensation. We consider a number of factors when setting base salaries for executives, including:

     

    Existing salary levels;

    ·Existing salary levels;
    ·Competitive pay practices;
    ·Individual and corporate performance; and
    ·Internal equity among our executives, taking into consideration their relative contributions to our success.

     

    Competitive pay practices;

    Individual and corporate performance; and

    Internal equity among our executives, taking into consideration their relative contributions to our success.

    Stock-Based Compensation. The executive officers stock-based compensation is derived from their employment Agreements.

    Tim Burroughs,Donald Ray Lawhorne, Chief Executive Officer. Currently Mr. Lawhorne does not have an employment agreement with the Company. Mr. Lawhorne received stock based compensation only in connection with his position as a member of our Board.The Board elected to suspend all stock based compensation in 2014 as part of our cost cutting and restructuring measures.

    Bernard (“Dick”) O’Donnell, Executive Vice President. The Company executed a newan Employment Agreement with Mr. BurroughsO’Donnell on December 1, 2011. The stock-based compensation section of the Agreement is as follows:follows {I think the number of shares referred to below should be slit adjusted for the reverse 4:1 split}:

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. Upon execution of this Agreement, 100,000 shares of the Company’s common stock will be set aside for distribution to the Executive on a per annual basis (25,000 shares per quarter) beginning 90 days after Executive begins this employment agreement. (25,000 Frontier common shares to be issued each quarter).

    2. Stock Grant and Options. The Executive will receive, as part of his annual compensation for his services the following annual stock grant and options:

    a) Grant: Executive shall annually receive 5,000 common shares of the Company common stock times his number of years completed service to the Corporation to a maximum of 100,000 shares. As of December 31, 2012, Mr. Burroughs completed 17 years of service to the Company and received 85,000 shares of common stock.

    b) Option: Executive shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period.

    Previously the Company executed an amended Employment Agreement effective August 4, 2005 with Mr. Tim Burroughs for three years. The Employment Agreement was last amended on December 1, 2010 wherein options were continued for an additional five years at an option price no greater than 50% of the closing price on December 1, 2010 or $0.015 per share (one-half of the $0.03 closing bid price on December 1, 2010). Mr. Burroughs did not call any of his potential stock options as of November 30, 2011. In accordance with the terms of the Amended Employment Agreement, no compensation expense was recognized as of November 30, 2011 related to Mr. Burroughs’ potential common stock options. The agreement was terminated on November 30, 2011.

    Kenneth K. Conte, Chief Financial Officer. The Company executed an Employment Agreement with Mr. Conte on January 1, 2012. The stock-based compensation section of the Agreement is as follows:

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. 100,000 shares of the Company’s common stock will be set aside for distribution to the Executive on a per annual basis (25,000 shares per quarter) beginning 90 days after Executive begins this employment agreement. (25,000 Frontier common shares to be issued each quarter).

    2. Stock Grant. The Executive will receive a grant of 300,000 common shares as a sign on bonus for his services as Chief Financial Officer of the Company. However the granted shares will not be vested in Executive until such time as the Executive has been continuously employed by Frontier for a period of one year from the date of this Agreement. In the event Executive is terminated or resigns for any reason, at any time, prior to the end of said one year period the gifted shares must be immediately surrendered and returned to Frontier. Mr. Conte completed his one year of service January1, 2013 at which time the common shares were vested.

    Bernard (“Dick”) O’Donnell, Executive Vice President. The Company executed an Employment Agreement with Mr. O’Donnell on December 1, 2011. The stock-based compensation section of the Agreement is as follows:

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. Upon execution of this Agreement, 100,000 shares of the Company’s common stock will be set aside for distribution to the Executive on a per annual basis (25,000 shares per quarter) beginning 90 days after Executive begins this employment agreement. (25,000 Frontier common shares to be issued each quarter).

    2. Stock Grant and Options. The Executive will receive, as part of his annual compensation for his services the following annual stock grant and options:

    a) Grant: Executive shall annually receive 5,000 common shares of the Company’s common stock times his number of years completed service to the Corporation to a maximum of 100,000 shares. As of December 31, 2012, Mr. O’Donnell completed 7 years of service to the Company and received 35,000 shares of common stock.

    b) Option: Executive shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period.

    Previously, we executed an amended Employment Agreement effective April 1, 2006 with Mr. O’Donnell, having a term of one (1) year, which automatically renewed unless otherwise terminated as provided in said agreement. Under the terms of the Agreement, Mr. O’Donnell was entitled to receive 100,000 shares of Frontier common stock upon execution and Board approval of the Agreement. In addition, the Company agreed to issue Mr. O’Donnell options to acquire 25,000 shares of common stock per quarter beginning April 1, 2006 for a period of up to three years at an exercise price of $0.15 per share. The option exercise period was one year from its date. The option portion of Mr. O’Donnell’s contract expired on January 2, 2009. The Agreement was terminated on November 30, 2011.

    David York, Director of Field Operations. The Company executed an Employment Agreement with Mr. York on June 1, 2012. The stock-based compensation section of the Agreement is as follows:

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. Upon execution of this Agreement, 100,000 shares of the Company’s common stock will be set aside for distribution to Executive on a per annual basis (25,000 shares per quarter) beginning 90 days after the Executive begins this employment agreement. (25,000 Frontier common shares to be issued each quarter).

    2. Stock Grant and Options. The Executive will receive a grant of 50,000 common shares of Frontier as sign on bonus for his services as President of Trinity Disposal and Trucking, LLC. In addition, as part of his annual compensation for his services the following annual stock grant and options:

    a) Grant: Executive shall annually receive 5,000 common shares of the Company’s common stock times his number of years completed service to the Corporation to a maximum of 100,000 shares.

    b) Option: Executive shall receive the right to purchase up to 15,000 shares of the Company’s common stock per calendar quarter at an exercise price equal to the ending bid price of the last market day prior to the date of the option award. The option exercise period for each option will be up to two years from its date of issuance, at which time the option will expire. In the event of a change in ownership, all unexercised options will be accelerated to the current monthly period.

    Frank J. Iannelli, Chief Financial Officer. The Company executed an Employment Agreement with Mr. Iannelli effective January 1, 2013. The stock-based

    Our Board elected to suspend all stock based compensation section of the Agreement is as follows:in 2014 until our operating results improve.

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. Upon execution of this Agreement, 100,000 shares of the Company’s common stock will be set aside for distribution to Executive on a per annual basis (25,000 shares per quarter) beginning March 1, 2013.

    2. Stock Grant. The Executive will receive a grant of 200,000 restricted common shares of Frontier as sign on bonus for his services as Chief Operating Officer of the Company. However the granted shares shall vest at the end of each quarter at the rate of 50,000 shares per quarter for the Calendar year ending December 31, 2013. If the employee terminates his employment prior to the end of the year the non-vested shares will be returned to the Company.

    Stephen P. Carson Vice President and General Counsel. The Company executed an Employment Agreement with Mr. Carson effective February 1, 2013. The stock-based compensation section of the Agreement is as follows:

    1. Shares. The Executive will be entitled to the issuance of certain common stock of Frontier for services rendered. Upon execution of this Agreement, 100,000 shares of the Company’s common stock will be set aside for distribution to Executive on a per annual basis (25,000 shares per quarter pro rated) beginning March 1, 2013.

    2. Stock Grant. The Executive will receive a grant of 100,000 restricted common shares of Frontier as sign on bonus for his services as Vice President and General Counsel of the Company. However the granted shares shall vest at the end of each quarter at the rate of 25,000 shares per quarter for the Calendar year ending December 31, 2013. If the employee terminates his employment prior to the end of the year the non-vested shares will be returned to the Company.

    Previously certain officers agreed to forebear their salary until the Company’s cash flow improved. The Company granted stock awards in 2011 to the following officers in recognition of their forbearance.

    1. Sherri Cecotti: 100,000 common stock shares as compensation for services rendered as Ms. Cecotti has not received compensation from Frontier during the previous two fiscal years. Ms. Cecotti is an officer of Frontier and serves as Secretary.

    2. Bernard O’Donnell: 200,000 common stock shares as compensation for services rendered as Mr. O’Donnell has not received compensation for his services as an officer of the Company, Vice President, for two or more years.

    Benefits. The Company offers life, disability, medical and dental benefits to its employees. In addition, CTT sponsors a 401(k) defined contribution plan covering substantially all of its employees. CTT is required and generally matches contributions up to a maximum of 4% of the participant’s contributions.

    Summary Compensation Table

    The following table sets forth the annual and log-term compensation with respect to the year ended December 31, 20122014 paid or accrued by us on behalf of the executive officers named.

     

                       Long Term Compensation
    Awards
         
                       Restricted   Securities     
                   Stock   Stock   Underlying     
                   Awards (1)   Awards (1)   Restricted     

    Name and Principal Position

      Year   Salary ($)   Bonus ($)   ($)   ($)   Stock (#)   Total ($) 

    Tim Burroughs,

       2012    $150,000    $—      $279,438    $39,900     65,000    $469,338  

    President & CEO

       2011    $31,250    $—      $—      $—       —      $31,250  

    Kenneth K. Conte

       2012    $120,000    $57,800    $149,250    $255,000     300,000    $582,050  

    Chief Financial Officer

       2011    $—      $—      $—      $—       —      $—    

    David York

       2012    $42,716    $—      $164,750    $24,900     35,000    $232,366  

    Director of Field Operation

       2011    $—      $—      $—      $—       —      $—    

    Dick O’Donnell,

       2012    $150,000    $—      $205,226    $39,900     65,000    $395,126  

    Executive Vice President & Director

       2011    $36,250    $—      $14,000    $—       —      $50,250  

    Sherri Cecotti,

       2012    $81,662      $—      $—       —      $81,662  

    Secretary & Treasurer

       2011    $13,373    $—      $7,000    $—       —      $20,373  
                Long Term Compensation  
                Awards  
    Name and Principal Position Year Salary ($) Bonus ($) Options Awards (1) ($) Stock Awards (1) ($) Restricted Stock Awards (1) ($) Securities Underlying Restricted Stock  (#) Total  ($)
    Donald Ray Lawhorne,  2014  $32,580  $—        $—    $—     —    $32,580 
    Chief Executive Officer  2013  $44,167  $—        $215,250  $—     —    $259,417 
                                     
    Dick O’Donnell,  2014  $28,750  $—    $—    $—    $—     —    $28,750 
    Executive Vice President & Director  2013  $107,917  $—    $40,500  $322,150  $—     —    $470,567 

     

    (1)A description of the assumptions made in valuation of options and awards granted can be found in Note 10 to the Consolidated Financial Statements, which is deemed to be a part of this Item.

    Option Grants

    The following table sets forth theThere were no stock options granted to the named executive officers for the year ended December 31, 2012.2014.

     

    Name

      Number of
    Securities
    Underlying
    Options
    Granted (#)
       Percent
    of Total
    Options
    Granted
    Employees
    in Fiscal Yr.
      Weighted
    Average
    Market Price
    on Date of
    Issuance

    ($/Share)
       Expiration
    Date
     

    T. Burroughs

       60,000     39.39 $1.65     (1

    B. O’Donnell

       60,000     39.39 $1.65     (1

    D. York

       30,000     21.22 $1.99     (1

    (1)15,000 stock options per quarter which expire two years from the date of issuance. There were no option grants in the previous fiscal year.

    Aggregated Option Exercises in This Year and Year-End Option Values

    The following table sets forth the option exercises and year-end option values for the named executive officers.

     

               Number of Securities         
               Underlying   Value of Unexercised 
       Shares       Unexercised Options at   Options at 
       Acquired on   Value   Fiscal Year End   Fiscal Year End ($)(1) 

    Name

      Exercise (#)   Realized ($)   Exercisable   Unexercisable   Exercisable   Unexercisable 

    T. Burroughs

       —       —       60,000     —      $19,200     —    

    B. O’Donnell

       —       —       60,000     —      $19,200     —    

    D. York

       —       —       30,000     —      $—       —    

    Number of Securities
    UnderlyingValue of Unexercised
    SharesUnexercised Options atOptions at
    Acquired onValueFiscal Year EndFiscal Year End  ($) (1)
    Based on the closing price of our common stock on December 31, 2012 of $1.90 per share less the exercise price payable for those shares. There were no option grants in the previous fiscal year.NameExercise (#)Realized ($)ExercisableUnexercisableExercisableUnexercisable
    B. O’Donnell—  —  60,000—  $—  —  

    (1) Based on the closing price of our common stock on December 31, 2014 of $0.60 per share less the exercise price payable for those shares.

    Employment Agreements

    Tim Burroughs,Donald Ray Lawhorne, Chief Executive Officer. The Company executed a new one year Employment AgreementCurrently Mr. Lawhorne does not have an employment agreement with our President and Chief Executive Officer, Tim Burroughs, on December 1, 2011 with an automatic renew for successive one year terms unless otherwise terminated as provided for in the Agreement. Under the terms of the Agreement Mr. Burroughs is entitled to receive an initial annual base salary of $150,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. Burroughs is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.us.

    Previously, we executed an amended Employment Agreement effective August 4, 2005 with Mr. Burroughs for three years. Under the terms of the agreement, Mr. Burroughs was entitled to receive an annual compensation of $150,000, and other items enumerated in the agreement. The Agreement provided that Mr. Burroughs had the contractual right to require Frontier to issue, upon his request, up to 250,000 common share options subject to certain conditions. The conditions were that the options would not issue unless Mr. Burroughs made a demand for their issuance and the number of shares so demanded had vested (the agreement provided that 50,000 potential options vest at the beginning of each employment year for the five year term of the agreement and were cumulative.) The amendment also changed how the options were to be priced. The options were to be priced at a maximum exercise price of one-half the bid price for Frontier common stock as of August 4, 2005 or $0.70 per share (one-half $1.40 the closing bid price on August 4, 2005.) In the event the closing bid price of Frontier’s common stock was below $0.70 on the date of a call by Mr. Burroughs, the exercise price would be reduced to the lower actual bid price. In April 2007,

    in exchange for Frontier dropping the three year service requirement, Mr. Burroughs agreed to forgo his eligibility to call for stock options for fiscal years ending November 30, 2005 and 2006. The Employment Agreement was again amended on December 1, 2010, wherein options were continued for an additional five years at an option price no greater than 50% of the closing price on December 1, 2010 or $0.015 per share (one-half of the $0.03 closing bid price on December 1, 2010). Mr. Burroughs did not call any of his potential stock options in the previous fiscal year. The contract was terminated on November 30, 2011.

    Kenneth K. Conte, Chief Financial Officer. The Company executed a one year Employment Agreement with our Chief Financial Officer, Kenneth Conte, on January 1, 2012 with an automatic renew for successive one year terms unless otherwise terminated as provided for in the Agreement. Under the terms of the Agreement, Mr. Conte is entitled to receive an initial annual base salary of $120,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. Conte is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.

    Bernard (“Dick”) O’Donnell, Executive Vice President. The Company executed a new one yearWe amended Mr. O’Donnell’s Employment Agreement with our Executive Vice President, Bernard O’Donnell, on DecemberJanuary 1, 2011 with an automatic renew for successive one year terms unless otherwise terminated as provided for in the Agreement.2013. Under the terms of the Agreement Mr. O’Donnell is entitled to receive an initial annual base salary of $150,000$60,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. O’Donnell is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.sectionabove.

    Previously, we executed an amended Employment Agreement effective April 1, 2006 with Mr. O’Donnell, having a term of one (1) year, which automatically renewed unless otherwise terminated as provided in said agreement. Under the terms of the Agreement, Mr. O’Donnell was entitled to receive 100,000 shares of Frontier common stock upon execution and Board approval of the Agreement. In addition, the Company agreed to issue Mr. O’Donnell options to acquire 25,000 shares of common stock per quarter beginning April 1, 2006 for a period of up to three years at an exercise price of $0.15 per share. The option exercise period was one year from its date. The option portion of Mr. O’Donnell’s contract expired on January 2, 2009. The Agreement was terminated on November 30, 2011.

    David York, Director of Field Operations. The Company executed an Employment Agreement with Mr. York on June 1, 2012 with an automatic renewal for successive one year terms unless otherwise terminated as provided for in the Agreement. Under the terms of the Agreement Mr. York is entitled to receive an initial annual base salary of $150,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. York is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.

    Frank J. Iannelli, Chief Operating Officer. The Company executed an Employment Agreement with Mr. Iannelli effective January 1, 2013 with an automatic renewal for successive one year terms unless otherwise terminated as provided in the Agreement. Under the terms of the Agreement Mr. Iannelli is entitled to receive an initial annual base salary of $120,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. Iannelli is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.

    Stephan P. Carson, Vice President and General Counsel. The Company executed an Employment Agreement with Mr. Carson effective February 1, 2013 with an automatic renewal for successive one year terms unless otherwise terminated as provided in the Agreement. Under the terms of the Agreement Mr. Carson is entitled to receive an initial annual base salary of $120,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. Carson is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.

    Termination of Employment and Change of Control Arrangement

    If any individual named aboveMr. O’Donnell terminates employment with the Company by mutual agreement, death, disability or termination the Agreement providesMr. O’Donnell’s Employment Agreementprovides for the payment of the base salary through the date of termination plus the value of all accrued, earned and unused benefits under the Standard Benefit Plans, plus the accrued Net Profits Interest (except for termination with cause), if any, to date of termination, plus any vested pension and retirement benefits to the date of termination. In addition, if any individual named aboveMr. O’Donnell terminates employment as a result of disability, the Company will provide long term disability benefits to which the officerMr. O’Donnell may be eligible (if any) in accordance with the Company’s then existing Standard Benefit Plans.

    There is no compensatory plan or arrangement with respect to any individual named above which results or will result from a change in our control. There are no agreements or understandings, whether written or unwritten, concerning any type of compensation, whether present, deferred or contingent, that is based on or otherwise relates to an acquisition, merger, consolidation, sale or other disposition of all or substantially all assets of the Company.

    Compensation of Directors

    Each Director receives $250 for each meeting of the Board. In addition to the foregoing, each Director is awarded 25,000 shares of the Company’s common stock per calendar quarter (issued at the beginning of each quarter). The shareholders of the Company approved the election of the three directors on October 12, 2011. The sitting of the directors became effective 20 days after the mailing of the Information Statement to our shareholders, or on or about November 3, 2011. The two directors entitledboard elected to be awarded sharessuspend stock compensation as part of the Company’s common stock each received 100,000 shares in 2012.cost cutting and restructuring measures.

    Compensation Committee Report

    Our Board of Directors reviewed and discussed the Compensation Discussion and Analysis with management and, based on such discussion, included the Compensation Discussion and Analysis in this Annual Report on Form 10-K.

    ITEMItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

    As of December 31, 2012March 23, 2015 we had a total of 19,293,4445,457,486 shares of our common stock outstanding. The following table sets forth the stock ownership of the officers, directors and shareholders then holding more than 5% of theour common stock of Frontier Oilfield Services:stock:

       NAME AND ADDRESS  AMOUNT   PERCENT OF 

    TITLE OF CLASS

      

    OF OWNER

      OWNED   CLASS 

    Common stock

      Tim Burroughs (1)   2,513,339     13.03  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Tim Burroughs Family Tr (2)   500,000     2.59  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Marketing Research Group, Inc. (3)   8,012     0.04  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Petroleum Holdings, Inc. (3)   733     0.00  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      American Eagle Services, Inc. (3)   516     0.00  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Gulftex Oil & Gas, LLC (4), (5)   336,616     1.74  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      David York (5)   2,108,239     10.93  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      David & Kelli York Joint Account   10,000     0.05  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      D. York FBO AV   20     0.00  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Jimmy D. Coffman   1,177,087     6.10  
      503 W. Sherman    
      Chico, TX 76431    

    Common stock

      Bernard O’Donnell   500,000     2.59  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Bernard O’Donnell IRA   77,500     0.40  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Kenneth K. Conte   291,000     1.51  
      3030 LBJ Freeway, Suite1320    
      Dallas, TX 75234    

    Common stock

      Kyle Conte (6)   13,000     0.07  
      226 South Eastate Drive    
      Webster, NY 14580    

    Common stock

      Karen S. Conte (6)   13,000     0.07  
      226 South Eastate Drive    
      Webster, NY 14580    

    Common stock

      Joan K. Conte (6)   55,000     0.29  
      14 Park Road    
      Pittsford, NY 14534    

    Common stock

      Sherri Green (6)   15,000     0.08  
      1350 Ramsday Drive    
      Lucas, TX 75002    

    Common stock

      Danielle N. Paniagua (6)   13,000     0.07  
      447 Webster Avenue, Apt 3    
      New Rochelle, NY 10801    

    Common stock

      Daniel Robinson   100,000     0.52  
      3030 LBJ Freeway, Suite 1320    
      Dallas, TX 75234    

    Common stock

      Donald Ray Lawhorne   100,000     0.52  
      3030 LBJ Freeway, Suite 1320    
      Dallas, TX 75234    

    Common stock

      Sherri Cecotti   150,000     0.78  
      3030 LBJ Freeway, Suite 1320    
      Dallas, TX 75234    
        

     

     

       

     

     

     

    All Directors and Officers as a Group and Shareholders Owning More Than 5% of the Common Stock.

       7,982,062     41.38
        

     

     

       

     

     

     

     

    (1)The Company executed a new one year Employment Agreement with our President and Chief Executive Officer, Tim Burroughs, on December 1, 2011 with an automatic renew for successive one year terms unless otherwise terminated as provided for in the Agreement. Under the terms of the Agreement Mr. Burroughs is entitled to receive an initial annual base salary of $150,000 plus benefits enumerated therein unless otherwise altered by the Board with respect to all executives of the Company. Under the Agreement Mr. Burroughs is also entitled to certain stock-based compensation for services rendered as disclosed in the “Stock-Based Compensation”section above.20
     Previously, we executed an amended Employment Agreement effective August 4, 2005 with Mr. Burroughs for three years. Under the terms of the agreement, Mr. Burroughs was entitled to receive an annual compensation of $150,000, and other items enumerated in the agreement. The Agreement provided that Mr. Burroughs had the contractual right to require Frontier to issue, upon his request, up to 250,000 common share options subject to certain conditions. The conditions were that the options would not issue unless Mr. Burroughs made a demand for their issuance and the number of shares so demanded had vested (the agreement provided that 50,000 potential options vest at the beginning of each employment year for the five year term of the agreement and were cumulative.) The amendment also changed how the options were to be priced. The options were to be priced at a maximum exercise price of one-half the bid price for Frontier common stock as of August 4, 2005 or $0.70 per share (one-half $1.40 the closing bid price on August 4, 2005.) In the event the closing bid price of Frontier’s common stock was below $0.70 on the date of a call by Mr. Burroughs, the exercise price would be reduced to the lower actual bid price. In April 2007, in exchange for Frontier dropping the three year service requirement, Mr. Burroughs agreed to forgo his eligibility to call for stock options for fiscal years ending November 30, 2005 and 2006. The Employment Agreement was again amended on December 1, 2010 wherein options were continued for an additional five years at an option price no greater than 50% of the closing price on December 1, 2010 or $0.015 per share (one-half of the $0.03 closing bid price on December 1, 2010).Mr. Burroughs did not call any of his potential stock options in the previous fiscal year. The contract was terminated on November 30, 2011.
    (2)The beneficiary of the Burroughs Family Trust is Becca Burroughs, the daughter of Mr. Burroughs, our CEO.
    (3)Tim Burroughs claims a beneficial interest in the stated shares.
    (4)Tim Burroughs is a 50% owner of Gulftex Oil & Gas, LLC.
    (5)David York is a 50% owner of Gulftex Oil & Gas, LLC.
    (6)Kenneth Conte claims a beneficial interest in the stated shares.

    TITLE OF CLASS NAME AND ADDRESS OF OWNER  AMOUNT OWNED       PERCENT OF CLASS
    Common stock Newt Dorsett                       832,474                              15.25
      470 Railsback    
      Shreveport, LA 71106    
    Common stock Bryan Walker LLC                       716,048                              13.12
      220 Travis Street #501    
      Shreveport, LA 71101    
    Common stock Bernard O’Donnell                       218,750                                 4.01
      3505 Woodhaven Drive    
      Farmers Branch, TX 75234    
    Common stock Bernard O’Donnell IRA                         10,625                                 0.19
      3505 Woodhaven Drive    
      Farmers Branch, TX 75234    
    Common stock Bonnie O’Donnell IRA                            8,760                                 0.16
      3505 Woodhaven Drive    
      Farmers Branch, TX 75234    
    Common stock Donald Ray Lawhorne                       100,000                                 1.83
      3030 LBJ Freeway, Suite 1320    
      Dallas, TX 75234    
    All Directors and Officers as a Group and Shareholders
    Owning More Than 5% of the Common Stock.
                       1,886,657                              34.57

    Item 13. Certain Relationships and Related Transactions and Director Independence.

    John Stimpson is the only independent board member. Don Lawhorne is our Chief Executive Officer and one of the board members. Bernard O’Donnell is an Executive Vice President and one of our board members.

    On September 1, 2011 we entered into a service agreement with FIG. Under the agreementMay 23, 2014, the Company charged FIGissued 1,100,000 shares of cumulative convertible preferred stock and 2,200,000 warrants to purchase shares of the Company’s common stock, for a portion$440,000.

    During the year ended December 31, 2014, the Board of administrative services and rent.Directors agreed to issue Preferred Stock in exchange for the cancellation of $450,000 of the Company’s unsecured debt held by one of the Company’s significant stockholders. The agreementPreferred Stock was terminated on May 31, 2012.issued in January 2015.

    On December 1, 2010 we entered into a services agreement with Gulftex. Under the agreement the Company charged Gulftex for a portion of administrative services and rent. The Agreement was terminated on August 31, 2011.

    Item 14. Principal Accounting Fees and Services.

    Audit Fees

    The aggregate fees billed by our independent auditors, for professional services rendered for the audit of our annual consolidated financial statements on Form 10-K and the reviews of the financial reports included in our Quarterly Reports on Form 10-Q for the years ended December 31, 20122014 and November 30, 20112013 amounted to $52,100 and $16,000,$80,450and $137,800, respectively. There was no fee billed for the one month ended December 31, 2011.

    Tax Fees

    Fees billed by our auditors for professional services in connection with tax compliance, tax advice or tax planning for the year ended December 31, 20122014 and 2013 was $2,705.No fees were billed by our auditors for professional services in connection with tax compliance, tax advice or tax planning for the year ended November 30, 2011$28,760 and the one month ended December 31, 2011.$40,695.

    All Other Fees

    No fees were billed by our auditors for products and services other than those described above under “Audit Fees” and “Tax Fees” for the year ended December 31, 20122014 and November 30, 2011.2013.

    Board of Directors Pre-Approval Policies and Procedures

    In December 2003, the Board of Directors adopted policies and procedures for pre-approving all audit and non-audit services provided by our independent auditors prior to the engagement of the independent auditors with respect to such services. Under the policy, our independent auditors are prohibited from performing certain non-audit services and are pre-approved to perform certain other non-audit and tax related services provided that the aggregate fees for such pre-approved non-audit and tax related services do not exceed a pre-set minimum.


    PART IV

    Item 15. Exhibits, Financial Statement Schedules.

    21

    Financial Statement Schedules

    The following have been made part of this report and appear in Item 8 above.

    Report of Independent Registered Public Accounting Firm

    Consolidated Balance Sheets – December 31, 20122014 and 2011 and November 30, 20112013

    Consolidated Statements of Operations-

    For The Years Ended December 31, 20122014 and November 30, 2011 and One Month Ended December 31, 2011

    2013

    Consolidated Statements of Cash Flows-

    For The Years Ended December 31, 20122014 and November 30, 2011 and One Month Ended December 31, 20112013

    Consolidated Statements of Changes Inin Stockholders’ Equity-Equity (Deficit)

    For The Years Ended December 31, 20122014 and 2011 and One Month Ended December 31, 20112013

    Notes to Consolidated Financial Statements

    Exhibits

     

    Exhibit Number Description

    10.1

    Number
     Employment Agreement betweenDescription
    3.1Articles of Incorporation of TBX Resources, Inc. (as filed with the Texas Secretary of State on March 24, 1995)*
    3.3Articles of Amendment of the Articles of Incorporation of TBX Resources, Inc. (as filed with the Texas Secretary of State on July 23, 2001)*
    3.6Amended and Restated Bylaws of Frontier Oilfield Services, and Frank J. Iannelli effective January 1, 2013.Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Form 10-K filed February 28, 2012 (File No. 000-30746).*

    10.2

    4.2
     Employment Agreement between Frontier Oilfield Services and Stephen P. Carson effective February 1, 2013.Blank Check Preferred Stock Designation of 2013 Series A 7% Convertible Preferred Stock (as filed with the Texas Secretary of State on October 15, 2013)*

    31.1

    4.3
     Blank Check Preferred Stock Designation of 2014 Series A 7% Convertible Preferred Stock (as filed with the Texas Secretary of State on February 20, 2015)*
    31.1Certification of our President and Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2

    32.1
     Certification of our Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

    32.1

    Certification of our President and Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

    32.2

    Certification of our Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

    99.1

    Press Release; Employment of Frank Iannelli.

    99.2

    Press Release; Employment of Stephan Carson.

    101.INS**

    XBRL Instance

    101.SCH**

    XBRL Taxonomy Extension Schema

    101.CAL**

    XBRL Taxonomy Extension Calculation

    101.DEF**

    XBRL Taxonomy Extension Definition

    101.LAB**

    XBRL Taxonomy Extension Labels

    101.PRE**

    XBRL Taxonomy Extension Presentation

    * Filed herewith

    101

    101.INS XBRL Instance Document

    101.SCH XBRL Taxonomy Schema

    101.CAL XBRL Taxonomy Calculation Linkbase

    101.LAB XBRL Taxonomy Label Linkbase

    101.PRE XBRL Taxonomy Presentation Linkbase

    101.DEF XBRL Taxonomy Definition Linkbase

    22

    SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 1st day of April, 2013.March 31, 2015.

    FRONTIER OILFIELD SERVICES, INC.

     

    FRONTIER OILFIELD SERVICES, INC.
    SIGNATURE:/s/ Tim BurroughsDon Lawhorne  
    Tim Burroughs, President andDon Lawhorne, Chief Executive Officer

    In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated, on the 1st day of April, 2013.

    March 27, 2015

    Signatures Capacity

    /s/ Tim Burroughs

     President and
    /s/ Don LawhorneDirector, Chief Executive Officer

    /s/ Kenneth K. Conte

     Chief Financial Officer

    /s/ Bernard R. O’Donnell

    Executive Vice President, Director

    /s/ Daniel R. Robinson

     Director, Executive Vice President

    /s/ Donald Ray Lawhorne

    John L. Stimpson
     Director

     

    32

    23