Sable Natural Resources (SNREQ) 10-K 2012 FY Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the fiscal year ended December 31, 2012

Commission File Number: 53915

NYTEX ENERGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	84-1080045
(State or other jurisdiction of  incorporation or organization)	(I.R.S. Employer  Identification No.)

12222 Merit Drive, Suite 1850 Dallas, Texas	75251
(Address of principal executive offices)	(Zip Code)

972-770-4700

 (Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $0.001 par value per share

(Title of class)

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

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

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

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

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 o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 29, 2012 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $6.6 million assuming a market value of $0.50  per share.

As of February 28, 2013, the registrant had 26,653,158 shares of common stock outstanding.

Documents Incorporated by Reference

None

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	23
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	38
Item9A.	Controls and Procedures	38
Item 9B.	Other Information	39
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	40
Item 11.	Executive Compensation	42
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44
Item 13.	Certain Relationships and Related Transactions and Director Independence	44
Item 14.	Principal Accounting Fees and Services	45
PART IV
Item 15.	Exhibits and Financial Statement Schedules	46
Signatures		47

FORWARD-LOOKING STATEMENTS

The statements contained in all parts of this document relate to future events, including, but not limited to, any and all statements regarding future operations, financial results, business plans and cash needs and other statements that are not historical facts are forward looking statements.  When used in this document, the words “anticipate,” “budgeted,” “planned,” “targeted,” “potential,” “estimate,” “expect,” “may,” “project,” “believe” and similar expressions are intended to be among the statements that identify forward looking statements. Such statements involve known and unknown risks and uncertainties, including, but not limited to, those relating to the current economic environment and conditions, the volatility of natural gas and oil prices, our dependence on our key personnel, factors that affect our ability to manage our growth and achieve our business strategy, technological changes, our significant capital requirements, the potential impact of government regulations and the taxation of the oil and gas industry, adverse regulatory determinations, litigation, competition, availability of drilling, completion and production equipment and materials, business and equipment acquisition risks, weather, availability of financing and the terms of any such financing, financial condition of our industry partners, ability to obtain permits, drilling and completion of wells, infrastructure for salt water disposal, costs of exploiting and developing our properties and conducting other operations, competition in the oil and natural gas industry, developments in oil producing and natural gas producing countries, and other factors detailed herein. Some of the factors that could cause actual results to differ from those expressed or implied in forward-looking statements are described under “Risk Factors” and in other sections of this Form. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement.

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PART I

Item 1.  Business

NYTEX Energy Holdings, Inc. (“NYTEX Energy”) is an energy holding company with principal operations centralized in its wholly-owned subsidiary, NYTEX Petroleum, Inc. (“NYTEX Petroleum”).  NYTEX Petroleum is an early-stage exploration and production company engaged in the acquisition, development, and production of oil and natural gas reserves from low-risk, high rate-of-return wells in shallow carbonate reservoirs. To access top professionals for its high growth and to meet the booming oil and gas industry’s demand for highly qualified professionals, NYTEX Energy created Petro Staffing Group, LLC, doing business as KS Energy Search Group (“KS Search”), a full-service executive  recruiting and placement agency providing the energy marketplace with full-time professionals.  KS Search sources, evaluates, and delivers quality candidates to address the demand for personnel within the oil & gas industry.  Prior to November 5, 2012, NYTEX Energy owned 80% of KS Search resulting in a non-controlling interest.  On November 5, 2012, NYTEX Energy acquired the remaining 20% interest in KS Search and accordingly, KS Search became a wholly-owned subsidiary of NYTEX Energy.

Prior to May 4, 2012, NYTEX Energy, through its wholly-owned subsidiary, NYTEX FDF Acquisition, Inc. (“Acquisition Inc.”), owned a 100% membership interest in New Francis Oaks, LLC (“New Francis Oaks”) and its wholly-owned operating subsidiary, Francis Drilling Fluids, Ltd. (“Francis Drilling Fluids,” or “FDF” and, together with New Francis Oaks, the “Francis Group”), a full-service provider of drilling, completion, and specialized fluids, dry drilling and completion products, technical services, industrial cleaning services, and equipment rental for the oil and gas industry.    On May 4, 2012, certain subsidiaries of ours entered into an Agreement and Plan of Merger (the “Merger Agreement”) with an unaffiliated third party, FDF Resources Holdings LLC (the “Purchaser”).  Pursuant to the Merger Agreement, New Francis Oaks was merged into the Purchaser and, as a result, FDF is now owned by an unaffiliated third party.  See below for further discussion.

NYTEX Energy and its subsidiaries, headquartered in Dallas, Texas, are collectively referred to herein as the “Company,” “we,” “us,” and “our.”

General Information

Our headquarters is located at 12222 Merit Drive, Suite 1850, Dallas, Texas, 75251, and our telephone number is 972-770-4700.  Our internet address is www.nytexenergyholdings.com.

General information about us, including our corporate governance policies can be found on our website.  We make available on our website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) as soon as reasonably practicable after we electronically file or furnish them to the Securities and Exchange Commission (“SEC”).  The public may read and copy any materials we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549.  Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.  The SEC maintains an internet site that contains our reports, proxy and information statements, and our other filings.  The address of that site is www.sec.gov.

Our Strategy

The principal components of our strategy include:

·Grow reserves and production through exploration, appraisal and development

We plan to continue to produce and further develop the Marble Falls play in North Texas, while evaluating both existing and recently discovered oil and gas play opportunities throughout Texas and North America.  In the event of a declaration of commerciality and approval of a plan of development, we intend to develop these discoveries to grow proved reserves and production.  We also plan to drill in our prospect portfolio, with the intent to further grow proved reserves and production should discoveries be made.

·Apply technically-proven drilling and completion technologies to continue our successful exploration and development program

We believe our management and technical team are pivotal to the success of our business strategy. We have created an environment that enables them to focus their knowledge, skills and experience on finding and developing oil and gas fields. Culturally, we have an open, team-oriented work environment that fosters both creative and contrarian thinking. This approach allows us to fully consider and understand risk and reward and to deliberately and collectively pursue strategies that maximize value.  We used this philosophy and approach to develop the Marble Falls, a significant new petroleum system the industry previously did not consider either prospective or commercially viable.

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·Identify, access and explore emerging oil and liquids rich resources

We will continue to utilize our systematic and proven geologically-focused approach to emerging petroleum systems where geological data suggests hydrocarbon accumulations are likely to exist and early-stage commercial development has been made.  We believe this approach reduces the exploratory risk in poorly understood, under-explored or otherwise overlooked hydrocarbon areas that offer significant oil and gas potential.  This was the case with respect to the Marble Falls, the area in which we chose to build our exploration portfolio beginning in 2011.

This approach and focus provides a competitive advantage in identifying and accessing new strategic growth opportunities. We expect to continue to seek new opportunities where oil and gas has not been produced in meaningful quantities by leveraging the skills of our experienced technical team.  This includes our existing areas of interest as well as selectively expanding into other regions.

·Upholding the ethical and business standards of the Company and maintaining the highest standards of health, safety, and environmental performance

We believe our success is grounded in our purpose, core values, and conduct demonstrated each day through ethical business practices, commitment to our employees, and our culture.  Our Code of Business Conduct provides all employees with detailed guidance on the right way to conduct business.

Oil and Gas — NYTEX Petroleum

NYTEX Petroleum is engaged in the acquisition, development, and resale of oil and gas leasehold properties in Texas.  We also acquire overriding royalty and working interests in the leasehold properties’ production of oil and gas reserves.  In addition, we provide land services to third party oil and gas companies whereby, through the use of contract landmen, we acquire oil and gas leases in areas specified by the customers.  Our growth initiatives focus on the acquisition and sale of leasehold acreage within early-stage tight rock oil and gas resource plays.  We believe these plays exist and can be developed uniformly over expansive geographical areas with a high rate of success due to the recent advancements in horizontal drilling and multi-stage hydraulic fracturing technologies.  Since beginning these activities in early 2011, NYTEX has acquired overriding and working interests in nearly 87,000 leasehold acres in Archer, Clay, Young, Jack, Palo Pinto, Stephens, and Throckmorton Counties of Texas.  With approximately 20 landmen currently under contract and working in these areas, we have an increasing number of leasehold acres in various stages of acquisition and development.

In the second half of 2012, we drilled and completed our first six wells in North Texas and as of the date of this report, we have accumulated 5,740 gross leasehold acres for additional development with up to 139 well locations.  We have an average 12% working interest in the six wells, located on 667 gross leasehold acres, with 9 additional well locations.  We have an average 44% working interest in the gross 5,740 leasehold acres held for future development.  In 2013, we expect to drill 10 to 20 new wells.

On November 29, 2012, we entered into and completed the sale of a 15% interest in approximately 17,000 leasehold acres, which included two producing wells, and a carried interest in seven additional drilling prospects, for a cash purchase price of $3.2 million, for a net sale of interests to NYTEX amounting to $2,006,922.

Other Business Data

Our Competitive Edge

Our strategy is to enter early into emerging oil resource plays.  Now that the technology in the shales has extended to conventional tight rock limestone and carbonate reservoirs, the same horizontal drilling and multi-stage shale fracture stimulation technologies are being applied to increase daily production rates and ultimate recoveries of oil and gas. In the last year, we have been able to acquire significant acreage positions in oil resource plays in North Texas at low costs and utilize our extensive network of associates, landmen, partners, and customers within the oil and gas industry working in these plays.  We access funding for our leasehold acreage acquisitions through land bank partners, develop our geology, and either sell the high-graded leasehold properties to industry partners to drill and develop the properties while retaining a promoted interest, or, through our operator-partners, drill and develop the properties.  By originating acquisitions, we generate upfront transaction fees, retain carried working interests in the leases and wells, and retain overriding royalties.  As a result, we do not take exploration risk in our early-stage development of oil and gas properties.

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Our Wells

Information about our wells is summarized in the following table.

Well Name	County/State	Total Depth	NYTEX Working Interest
Non-Operated
Leach R-1	Jack, TX	5,575’	9.0	%
Leach R-2	Jack, TX	5,570’	10.2	%
Leach R-3	Jack, TX	5,400’	12.6	%
Virgil Maxwell	Jack, TX	5,443’	8.7	%
Gahagan Burns	Jack, TX	5,270’	12.5	%
Frank N-1	Jack, TX	5,436’	15.3	%
JO Hester #1D	Jack, TX	5,190’	25.0	%
Liberty Farms 2ST	Liberty, TX	13,500’	5.1	%
Oakwood Dome	Leon, TX	5,700’	6.3	%
Sand Hill C-3	Leon, TX	5,625’	6.3	%
West Chablis	Ship Shoal Parish, LA	13,032’	0.3	%

Our Prospects

Information about our prospects on leasehold acreage we hold for future development in Young, Jack, and Clay Counties in Texas is summarized in the following table.

Tract	County/State	Gross Acres	NYTEX Working Interest		Net Acres
Matlock	Clay, TX	90.5	33.3	%	30.2
Eatherly	Jack, TX	231.1	50.0	%	115.5
Nessmith	Jack, TX	80.0	33.3	%	26.7
Newman	Jack, TX	218.4	33.3	%	72.8
Coley	Jack, TX	160.0	33.3	%	53.3
Crum	Jack, TX	252.4	33.3	%	84.1
Letz	Jack, TX	320.0	50.0	%	160.0
Armstrong	Jack, TX	200.0	50.0	%	100.0
Peterson	Jack, TX	147.7	50.0	%	73.9
Briscoe	Jack, TX	107.3	50.0	%	53.6
Periman	Jack, TX	1,255.0	93.0	%	1,167.1
Senters	Young, TX	417.0	50.0	%	208.5
Barnett	Young, TX	2,261.0	12.0	%	271.3
		5,740.3			2,417.1

Governmental Regulation

Our oil and natural gas exploration and production activities are subject to extensive laws, rules and regulations promulgated by federal and state agencies.  In particular, oil and natural gas production and related operations are, or have been, subject to price controls, taxes and numerous other laws and regulations.  The jurisdictions in which we own or operate properties for oil and natural gas production have statutory provisions regulation the exploration for and production of oil and natural gas, including provisions related to permits for the drilling of wells, bonding requirements to drill or operate wells, the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, sourcing and disposal of water used in the drilling and completion process and the abandonment of wells.  Failure to comply with such laws, rules and regulations can result in substantial penalties, including the delay or stopping of our operations.  The legislative and regulatory burden on the oil and natural gas industry increases our cost of doing business and affects our profitability.

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Regulation of Production.  Our exploration and drilling activities, including the construction and operation of pipelines and facilities for gathering, processing or storing oil, natural gas and other products, are subject to stringent federal, state, and  local laws and regulations governing environmental quality, including those relating to oil spills, pipeline ruptures and pollution control, which are constantly changing.  Although such laws and regulations can increase the cost of planning, designing, installing and operating such facilities, it is anticipated that, absent the occurrence of an extraordinary event, compliance with existing federal, state, and local laws, rules and regulations governing the release of materials in the environment or otherwise relating to the protection of the environment, will not have a material effect upon our business operations, capital expenditures, operating results or competitive position. See “Item 1A. Risk Factors— We are subject to federal, state and local regulations regarding issues of health, safety and protection of the environment.  Under these regulations, we may become liable for penalties, damages or costs of remediation.  Any changes in these laws and government regulations could increase our costs of doing business.”

We commonly use hydraulic fracturing as part of our operations.  Hydraulic fracturing typically is regulated by state oil and natural gas commissions, but the U.S. Environmental Protection Agency, referred to as the EPA, has asserted federal regulatory authority pursuant to the Safe Drinking Water Act over certain hydraulic fracturing activities involving the use of diesel.  In addition, legislation has been introduced before Congress to provide for federal regulation of hydraulic fracturing under the Safe Drinking Water Act and to require disclosure of the chemicals used in the hydraulic fracturing process.  Several states, including Texas, are also considering implementing, or in some instances, have implemented, new regulations pertaining to hydraulic fracturing, including the disclosure of chemicals used in connection therewith.  In addition, local governments also may seek to adopt ordinances within their jurisdictions regulation the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular.  These regulatory requirements may result in additional costs and operational restrictions and delays, which could have an adverse impact on our business, financial condition, results of operations and cash flows. See “Item 1A. Risk Factors— Legislation and regulatory initiatives relating to hydraulic fracturing could increase our cost of doing business and adversely affect our operations.”

Regulation of Transportation.  Sales of crude oil and natural gas are not currently regulated and are made at negotiated prices.  Nevertheless, Congress could reenact price controls in the future.  Our sales of crude oil are affected by the availability, terms and cost of transportation.  The transportation of oil by common carrier pipelines is also subject to rate and access regulation.  The Federal Energy Regulatory Commission (“FERC”) regulates interstate oil pipeline transportation rates under the Interstate Commerce Act.  In general, interstate oil pipeline rates must be cost-based, although settlement rates agreed to by all shippers are permitted and market-based rates may be permitted in certain circumstances.  In 1995, the FERC implemented regulations establishing an indexing system (based on inflation) for transportation rates for oil pipelines that allows a pipeline to increase its rates annually up to a prescribed ceiling, without making a cost of service filing.  Every five years, the FERC reviews the appropriateness of the index level in relation to changes in industry costs.

Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.  Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors who are similarly situated.

In addition, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all similarly situated shippers requesting service on the same terms and under the same rates.  When oil pipelines operate at full capacity, access is generally governed by prorationing provisions set forth in the pipelines’ published tariffs.  Accordingly, we believe access to oil pipeline transportation services generally will be available to us to the same extent as to our similarly situated competitors.

Historically, the transportation and sale for resale of natural gas in interstate commerce has been regulated by the FERC under the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued under those statutes.  In the past, the federal government has regulated the prices at which natural gas could be sold.  While sales by producers of natural gas can currently be made at market prices, Congress could reenact price controls in the future.

The FERC regulates interstate natural gas transportation rates, and terms and conditions of service, which affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.  The FERC has stated open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. The  FERC issued a series of orders resulting in the elimination of the interstate pipelines’ traditional role of providing the sale and transportation of natural gas as a single service and replacing it with a structure under which pipelines provide transportation and storage service on an open access basis to others who buy and sell natural gas.  Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry.

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In 2000, the FERC issued Order No. 637 and subsequent orders, which imposed a number of additional reforms designed to enhance competition in natural gas markets.  Among other things, Order No. 637 revised the FERC’s pricing policy by waiving price ceilings for short-term released capacity for a two-year experimental period, and effected changes in FERC regulations relating to scheduling procedures, capacity segmentation, penalties, rights of first refusal and information reporting.  The natural gas industry historically has been very heavily regulated.  Therefore, we cannot provide any assurance the less stringent regulatory approach recently established by the FERC under Order No. 637 will continue.  However, we do not believe any action taken will affect us in a way that materially differs from the way it affects other natural gas producers.

The price at which we sell natural gas is not currently subject to federal rate regulation and, for the most part, is not subject to state regulation.

Intrastate natural gas transportation and facilities are also subject to regulation by state regulatory agencies, and certain transportation services provided by intrastate pipelines are also regulated by FERC.  The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state.  We believe the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors.  Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.

Climate Change.  Climate change has become the subject of an important public policy debate. Climate change remains a complex issue, with some scientific research suggesting that an increase in greenhouse gas emissions, or GHGs, may pose a risk to society and the environment.  The oil and natural gas exploration and production industry is a source of certain GHGs, namely carbon dioxide and methane.  The commercial risk associated with the production of fossil fuels lies in the uncertainty of government-imposed climate change legislation, including cap and trade schemes, and regulations that may affect us, our suppliers and our customers.  The cost of meeting these requirements may have an adverse impact on our business, financial condition, results of operations and cash flows, and could reduce the demand for our products. See “Item 1A. Risk Factors— Regulations related to global warming and climate change could have an adverse effect on our operations and the demand for oil and natural gas.”

Competition and Other External Factors

The level of our revenues, earnings and cash flows are substantially dependent upon, and affected by, the level of U.S. oil and gas exploration and development, as well as the equipment capacity in any particular region.

We derive revenue from the sale of oil and natural gas.  As a result, our revenues will be determined, to a large degree, by prevailing prices for crude oil and natural gas.  We expect our operating partners to sell our oil and natural gas on the open market at prevailing market prices.  The market price for oil and natural gas is dictated by supply and demand, and we cannot accurately predict or control the price we may receive for our oil and natural gas.  In addition, the oil and natural gas industry is a highly competitive industry.  We experience competition from other oil and natural gas companies in all areas, including the acquisition of leasing options on oil and natural gas properties and the exploration and development of these properties.  Our competition includes major oil and natural gas companies, a variety of independent oil and natural gas companies, individuals and drilling and income programs.  Many of our competitors are large, well established enterprises with substantially greater resources.  Our ability to acquire additional properties and discover additional reserves will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.

Price decreases would adversely affect our revenues, profits and the value of any proved reserves. Historically, the prices received for oil and natural gas have fluctuated widely. Among the factors that can cause these fluctuations are:

·The domestic and foreign supply of natural gas and oil

·Overall economic conditions

·The level of consumer product demand

·Weather conditions

·The price and availability of competitive fuels such as heating oil and coal

·Political conditions in the Middle East and other natural gas and oil producing regions

·The level of oil and natural gas imports

·Domestic and foreign governmental regulations

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The demand for our land services fluctuates in relation to the identification of newly discovered oil and gas plays and by the price (or anticipated price) of oil and gas which is impacted by the supply of, and demand for, oil and gas. Generally, as supply of those commodities decreases and demand increases, demand for our services increase as oil and gas producers attempt to expand their inventory of undeveloped oil and gas properties.  However, in a lower oil and gas price environment, demand for our services generally decreases as oil and natural gas producers decrease their activity.

Operating Hazards and Risks

Drilling activities are subject to many risks, including the risk that no commercially productive reservoirs will be encountered. There can be no assurance that the new wells we drill will be productive or that we will recover all or any portion of our investment. Drilling for oil and natural gas may involve unprofitable efforts, not only from dry wells, but also from wells that are productive, but do not produce sufficient net revenues to return a profit after drilling, completion, operating and other costs. The cost and timing of drilling, completing and operating wells is often uncertain. Our drilling operations may be curtailed, delayed or canceled as a result of numerous factors, many of which are beyond our control.  These factors include, but are not limited to, low oil and natural gas prices, title issues, weather conditions, delays by or disputes with project participants, compliance with governmental requirements, shortages or delays in the delivery of equipment and services and increases in the cost for such equipment and services.  Our future drilling activities may not be successful and, if unsuccessful, such failures may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our operations are subject to hazards and risks inherent in drilling for and producing and gathering and transporting oil and natural gas, such as fires, natural disasters, explosions, encountering formations with abnormal pressures, blowouts, craterings, pipeline ruptures and spills, any of which can result in the loss of hydrocarbons, environmental pollution, personal injury claims and damage to our properties and those of others. We maintain insurance against some but not all of the risks described above. In particular, the insurance we maintain does not cover claims relating to failure of title to oil and natural gas leases, loss of surface equipment at well locations, business interruption, loss of revenue due to low commodity prices or loss of revenue due to well failure.

Furthermore, in certain circumstances where such insurance is available, we may determine not to purchase it due to cost or other factors. The occurrence of an event that is not covered by, or not fully covered by insurance could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Hydraulic Fracturing

Hydraulic fracturing, a technique in use for over 60 years, is commonly applied to wells drilled in low permeability reservoir rock.  A hydraulic fracture is formed by pumping fracturing fluid into the wellbore at a rate sufficient to cause the formation to crack, allowing the fracturing fluid to enter and extend the crack farther into the formation.  To keep this fracture open after the injection stops, a solid proppant, primarily sand, is added to the fracture fluid.  The propped hydraulic fracture then becomes a high permeability conduit through which the oil and/or gas can flow to the well.

The fluid injected into the rock is mostly water.  Various types of proppant are added, such as silica sand, resin-coated sand, and fired bauxite clay (man-made ceramics), depending on the type of permeability or grain strength needed.  Chemical additives are sometimes applied by the driller/well operator to tailor the injected material to the specific geological situation, protect the well, and improve its operation, though chemical additives typically make up less than 1% of the total composition of the injected fluid, varying slightly based on the type of well.

Seasonality

Winter weather conditions and lease stipulations can limit or temporarily halt our drilling and producing activities and other oil and natural gas operations.  These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operating and capital costs.  Such seasonal anomalies can also pose challenges for meeting our well drilling objectives and may increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our operations.

Energy Staffing — KS Energy Search Group

KS Search is a full-service executive recruiting and placement agency providing the energy marketplace with full-time professionals.  KS Search sources, evaluates, and delivers quality candidates to address the demand for personnel within the oil & gas industry.  Our strategic oil and gas recruiting solutions provide a more creative and dynamic approach to recruiting and attracting top talent.  Our oil and gas recruiters bring extensive oil and gas recruiting backgrounds and bring years of recruiting experience to every search assignment. We have the experience and resources to handle assignments of

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any complexity.  KS Search maintains a state-of-the-art database/tracking system and utilizes its research tools to perform thorough targeted research on every search.

Customers

Our customers include independent oil and gas exploration and production companies.  Of our consolidated revenues during the year ended December 31, 2012, we had two customers that accounted for more than 10% of our total consolidated revenues at a rate of 31% and 20%, respectively.

Employees

As of February 28, 2013, we had eight employees between our Oil and Gas business, Energy Staffing business, and corporate holding company.  Our employees are not represented by a labor union and are not covered by collective bargaining agreements.

Disposition of FDF

On May 4, 2012, (the “Closing Date”), our subsidiary, Acquisition Inc., together with New Francis Oaks, entered into the Merger Agreement with the Purchaser.  Pursuant to the terms of the Merger Agreement, New Francis Oaks merged with and into the Purchaser, and the Purchaser continued as the surviving entity after the merger (the “Disposition” or the “Merger”).  As a result, New Francis Oaks owned 100% of the outstanding shares of FDF and FDF was no longer a subsidiary of ours.

The total consideration for the Merger paid by the Purchaser on the Closing Date was $62,500,000 (the “Merger Proceeds”).  After: (i) an adjustment to the amount of the Merger Proceeds based upon the level of estimated working capital of the Francis Group on the Closing Date; (ii) the payment or provision for payment of all indebtedness of the Francis Group on the Closing Date; (iii) the payment of all indebtedness of Acquisition Inc. on the Closing Date (including under its senior secured credit facility with PNC Bank); (iv) the payment of the Put Payment Amount (as defined below) due to WayPoint Nytex, LLC (“WayPoint”) under the WayPoint Purchase Agreement (as defined below); (v) the payment of all transaction expenses relating to the Merger; (vi) the payment to the Company of $812,500 of accrued management fees and $110,279 of expense reimbursement due and payable to the Company under the Management Services Agreement, dated November 23, 2010, between the Company and FDF (the “Management Agreement”); (vii) the payment of certain transaction bonuses payable to certain FDF employees; and (viii) the Purchaser’s delivery of $6,250,000 of the Merger Proceeds (the “Escrow Fund”) to The Bank of New York Mellon Trust Company, N.A., as escrow agent, to be held in escrow under the Escrow Agreement (as defined below), Acquisition Inc. received on the Closing Date remaining cash transaction proceeds in the amount of approximately $4,481,000.  The Merger Agreement provided that, to the extent the final amount of working capital of the Francis Group on the Closing Date was greater than the estimated amount of working capital, as determined under the Merger Agreement, the Purchaser would pay to Acquisition Inc. the amount of such working capital surplus, provided that, pursuant to the Omnibus Agreement (as defined below), WayPoint would be entitled to receive 87.5% of any such working capital surplus payment.  To the extent the final amount of working capital of the Francis Group on the Closing Date was less than the estimated amount of working capital, Acquisition Inc. would pay to the Purchaser the amount of such working capital deficit, which payment would be made out of the Escrow Fund, provided that, pursuant to the Omnibus Agreement, WayPoint would be obligated to pay to Acquisition Inc. 87.5% of the amount of any such working capital deficit.

In connection with the consummation of the Merger, we entered into an Omnibus Agreement (the “Omnibus Agreement”) with WayPoint and the Francis Group.  The Omnibus Agreement became effective upon the consummation of the Merger.

Pursuant to the Omnibus Agreement, upon the consummation of the Merger:

(i) the Management Agreement was terminated;

(ii) Waypoint paid $150,000 to the Company out of the Put Payment Amount due and payable to WayPoint;

(iii) the Company was paid $812,500 from the Merger Proceeds, which sum represented accrued management fees due and payable to the Company from FDF under the Management Agreement; and

(iv) the Company was paid $110,279 from the Merger Proceeds, which sum represented reimbursement by FDF of certain expenses previously incurred by the Company in respect of certain professional services provided, and which reimbursement was due and payable to the Company from FDF under the Management Agreement.

In the Omnibus Agreement, the Company, WayPoint, and the Francis Group also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.  In addition, the parties agreed that

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WayPoint would bear 87.5% of any post-closing working capital deficit under the Merger Agreement and WayPoint would receive 87.5% of any post-closing working capital surplus under the Merger Agreement.

Further, in connection with the consummation of the Merger, we entered into a Settlement Agreement (the “Settlement Agreement”) with WayPoint, the Francis Group, and Michael G. Francis and Bryan Francis (together,  the “Francises”).  The Settlement Agreement became effective upon the consummation of the Merger.

Pursuant to the Settlement Agreement, upon the consummation of the Merger:

(i) WayPoint paid out of the Put Payment Amount a $100,000 bonus to Michael G. Francis, the President of NYTEX Acquisition, and a $25,000 bonus to Jude N. Gregory, the Vice President and Chief Financial Officer of Acquisition Inc.;

(ii) (A) the Company caused the release of the $1,800,000 of  Escrowed Cash (as defined in the Escrow Agreement, dated as of November 23, 2010, by and among Acquisition Inc., Bryan Francis and The F&M Bank & Trust Company (the “Francis Escrow Agreement”)) then being held in escrow pursuant to the Francis Escrow Agreement, in accordance with the terms of the Francis Escrow Agreement, and (B) Michael G. Francis transferred and assigned back to the Company 625,000 shares of common stock of the Company then owned by Michael G. Francis and originally issued to him pursuant to the Membership Interest Purchase Agreement, dated as of November 23, 2010 (the “Francis Purchase Agreement”), and then being held in escrow pursuant to the Francis Escrow Agreement;

(iii) (A) Michael G. Francis transferred and assigned back to the Company all of the remaining 2,197,063 shares of common stock then owned by him and originally issued to him pursuant to the Francis Purchase Agreement, and (B) Bryan Francis transferred and assigned back to the Company all of the 381,607 shares of common stock originally issued to him pursuant to the Francis Purchase Agreement, as well as all of the 27,225 shares of NYTEX Common Stock issued to him in connection with his employment by FDF;

(iv) the employment agreements of Michael G. Francis and Bryan Francis terminated and they became at-will employees of the FDF Group;

(v) each of the three designees of WayPoint then serving as directors of Acquisition Inc., which included John Henry Moulton, Thomas Drechsler and Lee Buchwald, resigned as directors of Acquisition Inc., effective immediately upon the consummation of the Merger; and

(vi) in exchange for receipt by WayPoint of the Put Payment Amount (which consisted of $30,000,000, less an aggregate of $306,639 of dividends previously received by WayPoint on account of the WayPoint Senior Series A Redeemable Preferred Stock, less an aggregate of $275,000 payable by WayPoint to the Company, Michael G. Francis and Jude N. Gregory pursuant to the Settlement Agreement, less an additional $449,072 (representing 87.5% of the estimated working capital deficit of the Francis Companies on the Closing Date, but subject to the right of WayPoint to subsequently receive 87.5% of any final working capital surplus of the Francis Companies on the Closing Date and the obligation of WayPoint to subsequently pay 87.5% of any final working capital deficit of the Francis Companies on the Closing Date, pursuant to the Omnibus Agreement); the “Put Payment Amount”), WayPoint transferred and assigned (A) the Senior Series A Redeemable Preferred Stock back to Acquisition Inc., (B) the Purchaser Warrant and the Control Warrant back to the Company, and (C) the WayPoint Series B Share back to the Company, and all such securities were cancelled.

In the Settlement Agreement, the Company, WayPoint, the Francis Group, and the Francises also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties, including in connection with any employment agreements or arrangements of the Francises.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.

In August 2012, the Purchaser delivered a proposed final closing statement, which included, among other things, a calculation of the final closing date net working capital, to the Company.  Under the terms of the Omnibus Agreement, WayPoint agreed to bear 87.5% of any post-closing working capital deficit and conversely, we granted to WayPoint the authority to make all decisions, including the right to dispute any item contained in the final closing date net working capital, on our behalf with regards to the proposed final closing statement and final closing date net working capital.

In November 2012, WayPoint delivered to the Purchaser a notice of disagreement disputing certain items in the proposed closing statement and calculation of the final closing date net working capital.  In January 2013, NYTEX, WayPoint, and the Purchaser agreed in principal to the final closing statement amounts, along with the calculation of the final closing date net working capital.  Part of this agreement in principal included the planned release of funds from the Escrow Fund to the Purchaser in the amount of $1,936,762 (“Net Payment to Purchaser from Escrow”).

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A dispute between NYTEX and WayPoint arose with regards to the amounts due under the Omnibus Agreement to NYTEX with respect to WayPoint’s obligation to bear 87.5% of the Net Payment to Purchaser from Escrow.  Following substantial negotiations, on March 8, 2013, NYTEX and WayPoint agreed to settle this dispute such that WayPoint would pay to NYTEX $1,075,000 to satisfy its obligation under the Omnibus Agreement.  On March 14, 2013, NYTEX was paid $1,075,000 and on March 15, 2013, the Net Payment to Purchaser from Escrow was released to the Purchaser.

Additional Information

For additional information on our segments, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Results of Operations” and “Note 14, Segment Information,” set forth in Item 15, “Exhibits, Financial Statement Schedules.”

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Item 1A.  Risk Factors

An investment in our common stock involves a high degree of risk.  In evaluating our business, you should carefully consider all of the risks described in this Annual Report on Form 10-K, together with the other information contained in this Annual Report.  If any of the risks discussed in this Annual Report actually occur, our business, financial condition and results of operations could be materially and adversely affected.  If this were to happen the value of our common stock could decline significantly and you may lose all or a part of your investment.  These risk factors are provided for investors as permitted by the Private Securities Litigation Reform Act of 1995.  It is not possible to identify or predict all such factors and, therefore, you should not consider these risks to be a complete statement of all the uncertainties we face.

Our business model has substantially changed as a result of the sale of FDF.

Prior to its sale on May 4, 2012, FDF accounted for approximately 99 percent of our current revenues and approximately 97 percent of our assets and the provision of drilling fluids and oil and gas well fracturing proppants through FDF had been our primary business strategy since we acquired FDF.  As a result of the sale of FDF, we altered our business strategy to focus on the expansion and development of oil and gas reserves and the expansion of our energy staffing business.  In the future, we may explore additional and different opportunities, some of which may prove not to be viable or advisable and we will not develop every business we evaluate.  Further, exploring and executing new business models and opportunities can be time consuming, result in significant expenses that may never be recouped and may divert management’s attention from our existing businesses.  Even if we determine to further develop a business, the integration of any new business into our existing structure will likely be complex, time consuming and potentially expensive and could disrupt business operations if not completed in a timely and efficient manner.  Any failure to identify new business opportunities, successfully integrate any new businesses with our current structure or receive the anticipated benefits of any new business could have a material adverse effect on our business, financial condition and operating results.

Our historical financial results are not indicative of future results as a result of the sale of FDF.

Prior to its sale on May 4, 2012, FDF represented the most significant proportion of our assets and revenues.  Because FDF was sold to satisfy our obligations to WayPoint, our historical financial results provide only a limited basis for you to assess our business and our historical financial results are not indicative of future financial results.

We will need additional capital to pursue future strategic plans, and the sale of additional shares or other equity securities would result in additional dilution to our stockholders.

We cannot be certain that our existing sources of cash will be adequate to meet our liquidity requirements.  If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain an additional credit facility.  We cannot assure you that any additional equity sales or financing will be available in amounts or on terms acceptable to us, if at all.  The sale of additional equity securities would result in additional dilution to our stockholders and, depending on the amount of securities sold, could result in a significant reduction of your percentage interest in us. The incurrence of additional indebtedness would result in increased debt service obligations and could result in additional operating and financing covenants that would further restrict our operations.

We cannot control activities on properties we do not operate and are unable to control their proper operation and profitability.

We do not operate all of the properties in which we own an ownership interest.  As a result, we have limited ability to exercise influence over, and control the risks associated with, the operations of these properties.  The failure of an operator on these properties to adequately perform operations, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interests could negatively impact our operations.  The success and timing of drilling and development activities on properties operated by others therefore depend upon a number of factors outside of our control, including:

·the nature and timing of the operator’s drilling and other activities;

·the timing and amount of required capital expenditures;

·the operator’s geological and engineering expertise and financial resources;

·the approval of other participants in drilling wells; and

·the operator’s selection of suitable technology.

A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our financial commitments.

The price we receive for our oil and natural gas heavily influences our revenue, profitability, access to capital and future rate of growth.  The prices for oil and natural gas are subject to wide fluctuations in response to relatively minor

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changes in supply and demand.  Historically, the markets for oil and natural gas have been very volatile and will likely continue to be volatile in the future.  The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control. These factors include the following:

· worldwide and regional economic conditions impacting the global supply and demand for oil and natural gas;

· the actions of OPEC;

· the price and quantity of imports of foreign oil and natural gas;

· political conditions in or affecting other oil-producing and natural gas-producing countries, including the current conflicts in the Middle East and conditions in South America, China, India and Russia;

· the level of global oil and natural gas exploration and production;

· the level of global oil and natural gas inventories;

· localized supply and demand fundamentals and regional, domestic and international transportation availability;

· weather conditions and natural disasters;

· domestic and foreign governmental regulations;

· speculation as to the future price of oil and the speculative trading of oil and natural gas futures contracts;

· price and availability of competitors’ supplies of oil and natural gas;

· technological advances affecting energy consumption; and

· the price and availability of alternative fuels.

Lower oil and natural gas prices may also reduce the amount of oil and natural gas that we can produce economically and may affect our proved reserves.

If oil and gas prices remain volatile, or decline, the demand for our land services could be adversely affected.

The demand for our land services is primarily determined by current and anticipated oil and gas prices and the related general production spending and level of drilling activity in the areas in which we have operations.  Volatility or weakness in oil and gas prices (or the perception that oil and gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells or lower production spending on existing wells.  This, in turn, could result in lower demand for our services and may cause lower rates and lower utilization of our well service equipment.  Continued volatility in oil and gas prices or a reduction in drilling activities could materially and adversely affect the demand for our services and our results of operations.

If oil and gas prices decline we may be required to take write-downs of the carrying values of our oil and gas properties .

Accounting rules require us to periodically review the carrying value of our producing oil and gas properties for possible impairment.  Based on specific market factors and circumstances at the time of prospective impairment reviews, which may include depressed oil and natural gas prices, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and gas properties.

Our results of operations depend on our ability to acquire properties with adequate reserves which produce results.

Our future operations depend on our ability to find, develop, or acquire oil and natural gas reserves that are economically producible.  In general, properties produce oil and natural gas at a declining rate over time.  In order to maintain production rates, we must locate and develop or acquire new oil and natural gas reserves to replace those being depleted by production.  In addition, competition for oil and natural gas properties is intense and many of our competitors have financial, technical, human, and other resources needed to evaluate and integrate acquisitions that are substantially greater than ours.  Without successful drilling or acquisition activities, our reserves and production will decline over time.

In the event we do complete an acquisition, its successful impact on our business will depend on a number of factors, many of which are beyond our control.  These factors include the purchase price, future oil and natural gas prices, the ability to reasonably estimate or assess the recoverable volumes of reserves, rates of future production and future net revenues attainable from reserves, future operating and capital costs, results of future exploration, exploitation and development activities on the acquired properties, and future abandonment and possible future environmental or other liabilities.  There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves, actual future production rates, and associated costs and potential liabilities with respect to prospective acquisition targets.  Actual results

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may vary substantially from those assumed in the estimates.  A customary review of subject properties will not necessarily reveal all existing or potential problems.

Additionally, significant acquisitions can change the nature of our operations and business depending upon the character of the acquired properties if they have substantially different operating and geological characteristics or are in different geographic locations than our existing properties.  To the extent acquired properties are substantially different than our existing properties, our ability to efficiently realize the expected economic benefits of such transactions may be limited.

Our property acquisitions may not be worth what we paid due to uncertainties in evaluating recoverable reserves and other expected benefits, as well as potential liabilities.

Successful property acquisitions require an assessment of a number of factors sometimes beyond our control.  These factors include exploration potential, future crude oil and natural gas prices, operating costs, and potential environmental and other liabilities.  These assessments are not precise and their accuracy is inherently uncertain.

In connection with our acquisitions, we typically perform a customary review of the acquired properties that will not necessarily reveal all existing or potential problems and may not allow us to fully assess the potential deficiencies of a property.

In addition, significant acquisitions can change the nature of our operations and business if the acquired properties have substantially different operating and geological characteristics or are in different geographic locations than our existing properties. To the extent acquired properties are substantially different than our existing properties, our ability to efficiently realize the expected economic benefits of such acquisitions may be limited.

Integrating acquired properties and businesses involves a number of other special risks, including the risk that management may be distracted from normal business concerns by the need to integrate operations and systems as well as retain and assimilate additional employees. Therefore, we may not be able to realize all of the anticipated benefits of any acquisitions.

Exploration and development drilling may not result in commercially producible reserves.

Crude oil and natural gas drilling and production activities are subject to numerous risks, including the risk that no commercially producible oil or natural gas will be found.  The cost of drilling and completing wells is often uncertain, and oil and natural gas drilling and production activities may be shortened, delayed, or canceled as a result of a variety of factors, many of which are beyond our control. These factors include:

·unexpected drilling conditions;

·title problems;

·disputes with owners or holders of surface interests on or near areas where we operate;

·pressure or geologic irregularities in formations;

·engineering and construction delays;

·equipment failures or accidents;

·compliance with environmental and other governmental requirements; and

·shortages or delays in the availability of, or increases in the cost of, drilling rigs and crews, equipment, pipe, chemicals, water and other drilling supplies.

The prevailing prices for crude oil and natural gas affect the cost of and the demand for drilling rigs, completion and production equipment, and other related services.  However, changes in costs may not occur simultaneously with corresponding changes in commodity prices.  The availability of drilling rigs can vary significantly from region to region at any particular time. Although land drilling rigs can be moved from one region to another in response to changes in levels of demand, an undersupply of rigs in any region may result in drilling delays and higher drilling costs for the rigs that are available in that region.  In addition, the recent economic and financial downturn has adversely affected the financial condition of some drilling contractors, which may constrain the availability of drilling services in some areas.

When we elect to conduct drilling operations, such operations may not be productive.

When we determine to drill wells, the wells we drill may not be productive and we may not recover all or any portion of our investment in such wells. The seismic data and other technologies we use do not allow us to know conclusively prior to drilling a well if oil or natural gas is present, or whether they can be produced economically.  The cost of drilling, completing, and operating a well is often uncertain, and cost factors can adversely affect the economics of a project.  Drilling

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activities can result in dry holes or wells that are productive but do not produce sufficient net revenues after operating and other costs to cover initial drilling and completion costs.

Any future drilling activities may not be successful.  Our overall drilling success rate or our drilling success rate within a particular area may decline.  In addition, we may not be able to obtain any options or lease rights in potential drilling locations that we identify.  Although we have identified numerous potential drilling locations, we may not be able to economically produce oil or natural gas from all of them.

Another significant risk inherent in any drilling plan is the need to obtain drilling permits from state, local, and other governmental authorities.  Delays in obtaining regulatory approvals and drilling permits, including delays that jeopardize our ability to realize the potential benefits from leased properties within the applicable lease periods, the failure to obtain a drilling permit for a well, or the receipt of a permit with unreasonable conditions or costs could have a materially adverse effect on our ability to explore on or develop our properties.

Our success depends on key members of our management, the loss of any of whom could disrupt our business operations.

We depend to a large extent on the services of some of our executive officers.  The loss of the services of Michael K. Galvis, our President and Chief Executive Officer or other key personnel could disrupt our operations.  Although we have entered into employment agreements with Mr. Galvis and certain other executive officers that contain, among other provisions, non-compete agreements, we may not be able to retain the executives past the terms of their employment agreements or enforce the non-compete provisions in the employment agreements.

Our operations are subject to inherent risks, some of which are beyond our control. These risks may be self-insured, or may not be fully covered under our insurance policies.

Our operations are subject to hazards inherent in the oil and gas industry, such as, 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 (including the collateral securing our indebtedness) and the environment;

·suspension of our operations; and

·lost profits.

The occurrence of a significant event or adverse claim in excess of the insurance coverage we maintain or which is not covered by insurance could have a material adverse effect on our financial condition and results of operations.  In addition, claims for loss of oil and gas production and damage to formations can occur in the well services industry.  Litigation arising from a catastrophic occurrence at a location where our equipment and services are being used may result in our being named as a defendant in lawsuits asserting large claims.

We maintain insurance coverage we believe to be customary in the industry against these hazards.  However, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium costs.  As a result, not all of our property is insured.

The occurrence of an event not fully insured against, or the failure of an insurer to meet its insurance obligations, could result in substantial losses.  In addition, we may not be able to maintain adequate insurance in the future at rates we consider reasonable.  Insurance may not be available to cover any or all of the risks we are exposed to, or, even if available, it may be inadequate, or prohibitively expensive.  It is likely that, in the future, our insurance renewals, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive than it has been in the recent past.  In addition, our insurance is subject to coverage limits, and some policies exclude coverage for damages resulting from environmental contamination.  Our insurance program is administered by an officer of the Company, is reviewed not less than annually with our insurance brokers and underwriters, and is reviewed by our Board of Directors on an annual basis.

We are subject to federal, state and local regulations regarding issues of health, safety and protection of the environment.  Under these regulations, we may become liable for penalties, damages or costs of remediation. Any changes in these laws and government regulations could increase our costs of doing business.

Our operations are subject to federal, state and local laws and regulations relating to protection of natural resources and the environment, health and safety, waste management, and transportation of waste and other materials.  Liability under these laws and regulations could result in cancellation of well operations, fines and penalties, expenditures for remediation,

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and liability for property damage and personal injuries.  Sanctions for noncompliance with applicable environmental laws and regulations also may include assessment of administrative, civil and criminal penalties, revocation of permits and issuance of corrective action orders.

Regulations related to global warming and climate change could have an adverse effect on our operations and the demand for oil and natural gas.

Recent scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases,” may be contributing to the warming of the Earth’s atmosphere.  Methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of refined oil products and natural gas, are examples of greenhouse gases. From time to time the U.S. Congress has considered climate-related legislation to reduce emissions of greenhouse gases. In addition, many states have developed measures to regulate emissions of greenhouse gases, primarily through the planned development of greenhouse gas emissions inventories and/or regional greenhouse gas Cap and Trade programs.  These regulations would likely increase our costs and adversely affect our operating results.  The EPA has also adopted regulations imposing permitting and best available control technology requirements on the largest greenhouse gas stationary sources, regulations requiring reporting of greenhouse gas emissions from certain facilities and is considering additional regulation of greenhouse gases as “air pollutants” under the existing federal Clean Air Act.  Passage of climate change legislation or other regulatory initiatives by Congress or various states, or the adoption of regulations by the EPA or analogous state agencies, that regulate or restrict emissions of greenhouse gases (including methane or carbon dioxide) in areas in which we conduct business could have an adverse effect on our operations and the demand for oil and natural gas.

Legislation and regulatory initiatives relating to hydraulic fracturing could increase our cost of doing business and adversely affect our operations.

Our operations utilize the practice of hydraulic fracturing for new oil and natural gas wells. Hydraulic fracturing is also occasionally used to recomplete or restimulate an existing well that has declined in production performance.  Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into rock formation to stimulate oil and natural gas production. The use of hydraulic fracturing is necessary to produce commercial quantities of oil and natural gas from many reservoirs, especially shale formations.  The process is typically regulated by state oil and natural gas commissions and agencies, and continues to receive significant regulatory and legislative attention at the federal, state, and local level. On May 11, 2012, the Bureau of Land Management (the “BLM”) proposed regulations that would require public disclosure of the chemicals used in hydraulic fracturing and impose certain permitting, testing and other requirements on such operations on federal lands, although the BLM announced on January 18, 2013 that it would revise and reissue these regulations at a later time.  Various other federal agencies (including the EPA and the Department of Energy) continue to study hydraulic fracturing and may propose additional regulations.  From time to time, legislation has been introduced in Congress to amend the federal SDWA to eliminate exemptions for most hydraulic fracturing activities. On August 16, 2012, the EPA published final rules that establish new air emission controls for natural gas and natural gas liquids production, processing and transportation activities, including New Source Performance Standards to address emissions of sulfur dioxide and volatile organic compounds, and a separate set of emission standards to address hazardous air pollutants frequently associated with production and processing activities.  Similar efforts to review the practice of hydraulic fracturing and impose new regulatory conditions are taking place at the state and local level in Texas where we operate and states where we may operate in the future.  California, Texas and Wyoming as well as other states, have adopted or are considering new regulations and statutes pertaining to hydraulic fracturing. These new requirements will (and future regulatory and legislative changes, if enacted, could) create new permitting and financial assurance requirements, require us to adhere to certain construction specifications, fulfill monitoring, reporting and recordkeeping obligations, and meet plugging and abandonment requirements.  The imposition of stringent new regulatory and permitting requirements related to the practice of hydraulic fracturing could significantly increase our cost of doing business, create adverse effects on our operations including creating delays related to the issuance of permits, and depending on the specifics of any particular proposal that is enacted, could be material.

Furthermore, multiple lawsuits have been filed against regulatory agencies throughout the country by non-profit environmental organizations seeking to challenge various rules and regulations related to the practice of hydraulic fracturing and permitting of new wells completed with hydraulic fracturing.  The resolution of these lawsuits could create new permitting or regulatory requirements, which could have an effect on our business.

The high cost or unavailability of drilling rigs, equipment, supplies and other oil field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget, which could have an adverse effect on our business, financial condition or results of operations.

Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment or supplies. During these periods, the costs of rigs, equipment and supplies are substantially greater and their availability may be limited. Additionally, these services may not be available on commercially reasonable terms.  The high cost or unavailability of

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drilling rigs, equipment, supplies, personnel and other oil field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget, which could have an adverse effect on our business, financial condition or results of operations.

Risk factors relating to an investment in our securities

The issuance of shares of common stock upon conversion of the Series A Preferred Stock, as well as upon exercise of outstanding warrants may cause immediate and substantial dilution to our existing stockholders.

If the market price per share of our common stock at the time of conversion of our Series A Preferred Stock and exercise of any warrants, options, or any other convertible securities is in excess of the various conversion or exercise prices of these derivative securities, conversion or exercise of these derivative securities would have a dilutive effect on our common stock.

As of December 31, 2012, we had outstanding (i) 5,763,869 shares of Series A Preferred Stock which are convertible into an aggregate of 5,763,869 shares of our common stock at $1.00 per share, and (ii) warrants to purchase 4,748,690 shares of our Common Stock at a weighted average exercise price of $1.18 per share.

Further, any additional financing we may secure could require the granting of rights, preferences or privileges senior to those of our common stock, which may result in additional dilution of the existing ownership interests of our common stockholders.

We are subject to the reporting requirements of federal securities laws, compliance with which is expensive.

We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act of 2002.  The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we were a privately held company.

Our compliance with the Sarbanes Oxley Act and SEC rules concerning internal controls are time consuming, difficult, and costly.

As a reporting company, it is time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act.  In order to comply with our obligations, we hired additional financial reporting, internal control, and other finance staff in order to develop and implement appropriate internal controls and reporting procedures.  If we are unable to comply with the Sarbanes-Oxley Act’s requirements regarding internal controls, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires publicly traded companies to obtain.

If we fail to maintain the adequacy of our internal controls, our ability to provide accurate financial statements and comply with the requirements of the Sarbanes-Oxley Act could be impaired, which could cause the market price of our common stock to decrease substantially.

We have committed limited personnel and resources to the development of the external reporting and compliance obligations that are required of a public company.  We have taken measures to address and improve our financial reporting and compliance capabilities and we are in the process of instituting changesto satisfy our obligations in connection with being a public company, when and as such requirements become applicable to us. If our financial and managerial controls, reporting systems, or procedures fail, we may not be able to provide accurate financial statements on a timely basis or comply with the Sarbanes-Oxley Act as it applies to us. Any failure of our internal controls or our ability to provide accurate financial statements could cause the trading price of our common stock to decline substantially.

Our stock price may be volatile, which may result in losses to our stockholders.

Domestic and international stock markets often experience significant price and volume fluctuations especially in times of economic uncertainty.  In particular, the market prices of companies quoted on the OTC QB market tier operated by OTC Markets Group, Inc., where our shares of common stock are quoted, generally have been very volatile and have experienced sharp share-price and trading-volume changes. The public trading price of our common stock is likely to be volatile and could fluctuate widely in response to the following factors, some of which are beyond our control:

·variations in our operating results;

·changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;

·changes in operating and stock price performance of other companies in our industry;

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·additions or departures of key personnel;

·future sales of our common stock; and

·general economic and political conditions.

The market price for our common stock may be particularly volatile given our status as a smaller reporting company with a relatively small and thinly-traded “float.”  You may be unable to sell your common stock at or above your purchase price, if at all, which may result in substantial losses to you.

The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect our share price will be more volatile than a seasoned issuer for the indefinite future.  The potential volatility in our share price is attributable to a number of factors.  As noted above, our common stock may be sporadically and/or thinly traded.  As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction.  The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price.

Our common stock is thinly-traded.  You may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate such shares.

We cannot predict the extent to which an active public trading market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a smaller reporting company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume.  Even if we come to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our common stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained or that current trading levels will be sustained.

Our common stock may be subject to penny stock rules, which may make it more difficult for our stockholders to sell their common stock.

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC.  Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.  In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.

We do not anticipate paying any dividends.

We presently do not anticipate we will pay any dividends on our common stock in the foreseeable future.  The payment of dividends on our common stock, if any, would be contingent upon our revenues, earnings, capital requirements, and our general financial condition.  We will pay dividends on our common stock only if and when declared by our board of directors.  The ability of our board of directors to declare a dividend is subject to restrictions imposed by Delaware law.  In determining whether to declare dividends, our board of directors will consider these restrictions as well as our financial condition, results of operations, working capital requirements, future prospects and other factors it considers relevant.

We have a substantial number of authorized common shares available for future issuance that could cause dilution of our stockholders’ interest and adversely impact the rights of holders of our common stock.

We have a total of 200,000,000 shares of common stock authorized for issuance. As of December 31, 2012, we had 172,347,251 shares of common stock available for issuance.  We have reserved 5,763,869 shares for conversion of our Series A Preferred Stock, 4,748,690 shares for issuance upon the exercise of outstanding warrants held by various security holders, and 5,000,000 shares for issuance under the 2013 Equity Incentive Plan.  Subsequent to the Merger Agreement, we

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have also reserved approximately 266,666 shares of common stock in connection with stock grants to our employees under respective employment agreements.  We may seek financing that could result in the issuance of additional shares of our capital stock and/or rights to acquire additional shares of our capital stock.  We may also make acquisitions that result in issuances of additional shares of our capital stock. Furthermore, the book value per share of our common stock may be reduced.

The introduction of a substantial number of shares of our common stock into the market or by the registration of any of our other securities under the Securities Act may significantly and negatively affect the prevailing market price for our common stock.  The future sales of shares of our common stock issuable upon the exercise of outstanding warrants and options may have a depressive effect on the market price of our common stock, as such warrants and options are likely to be exercised only at a time when the price of our common stock is greater than the exercise price.

Other risk factors

Reserve data of our oil and gas operations are estimates based on assumptions that may be inaccurate.

There are uncertainties inherent in estimating natural gas and oil reserves and their estimated value, including many factors beyond our control as producer. Reservoir engineering is a subjective and inexact process of estimating underground accumulations of natural gas and oil that cannot be measured in an exact manner and is based on assumptions that may vary considerably from actual results.

Accordingly, reserve estimates and actual production, revenue and expenditures likely will vary, possibly materially, from estimates. Additionally, there recently has been increased debate and disagreement over the classification of reserves, with particular focus on proved undeveloped reserves. Changes in interpretations as to classification standards or disagreements with our interpretations could cause us to write down these reserves.

The extent to which we can benefit from successful acquisition and development activities or acquire profitable oil and natural gas producing properties with development potential is highly dependent on the level of success in finding or acquiring reserves.

Item 1B.  Unresolved Staff Comments

We do not have any unresolved comments from the SEC staff regarding our periodic or current reports under the Securities Exchange Act of 1934, as amended.

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Item 2.  Properties

Our corporate headquarters comprises approximately 3,700 square feet of leased office space, and is located at 12222 Merit Drive, Suite 1850, Dallas, Texas.

The following is a summary of our interest in oil and gas wells:

Well Name	County/State	Total Depth	NYTEX Working Interest
Non-Operated
Leach R-1	Jack, TX	5,575’	9.0	%
Leach R-2	Jack, TX	5,570’	10.2	%
Leach R-3	Jack, TX	5,400’	12.6	%
Virgil Maxwell	Jack, TX	5,443’	8.7	%
Gahagan Burns	Jack, TX	5,270’	12.5	%
Frank N-1	Jack, TX	5,436’	15.3	%
JO Hester #1D	Jack, TX	5,190’	25.0	%
Liberty Farms 2ST	Liberty, TX	13,500’	5.1	%
Oakwood Dome	Leon, TX	5,700’	6.3	%
Sand Hill C-3	Leon, TX	5,625’	6.3	%
West Chablis	Ship Shoal Parish, LA	13,032’	0.3	%

The following is a summary of our interest in undeveloped properties:

Tract	County/State	Gross Acres	NYTEX Working Interest		Net Acres
Matlock	Clay, TX	90.5	33.3	%	30.2
Eatherly	Jack, TX	231.1	50.0	%	115.5
Nessmith	Jack, TX	80.0	33.3	%	26.7
Newman	Jack, TX	218.4	33.3	%	72.8
Coley	Jack, TX	160.0	33.3	%	53.3
Crum	Jack, TX	252.4	33.3	%	84.1
Letz	Jack, TX	320.0	50.0	%	160.0
Armstrong	Jack, TX	200.0	50.0	%	100.0
Peterson	Jack, TX	147.7	50.0	%	73.9
Briscoe	Jack, TX	107.3	50.0	%	53.6
Periman	Jack, TX	1,255.0	93.0	%	1,167.1
Senters	Young, TX	417.0	50.0	%	208.5
Barnett	Young, TX	2,261.0	12.0	%	271.3
		5,740.3			2,417.1

Reserve Rule Changes

The SEC issued its final rule on the modernization of oil and gas reporting (the “Reserve Ruling”) which went into effect in January 2010 and the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2011-03 (“ASU 2011-03”) “Extractive Industries — Oil and Gas,” which aligns the estimation and disclosure requirements of FASB Accounting Standards Codification Topic 932 with the Reserve Ruling.  The Reserve Ruling and ASU 2011-03 are effective for Annual Reports on Form 10-K for fiscal years ending on or after December 31, 2009.  The key provisions of the Reserve Ruling and ASU 2011-03 are as follows:

·Expanding the definition of oil- and gas-producing activities to include the extraction of saleable hydrocarbons, in the solid, liquid or gaseous state, from oil sands, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, and activities undertaken with a view to such extraction;

·Amending the definition of proved oil and gas reserves to require the use of an average of the first-day-of-the-

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month commodity prices during the 12-month period ending on the balance sheet date rather than the period-end commodity prices;

·Adding to and amending other definitions used in estimating proved oil and gas reserves, such as “reliable technology” and “reasonable certainty”;

·Broadening the types of technology that a reporter may use to establish reserves estimates and categories; and

·Changing disclosure requirements and providing formats for tabular reserve disclosures.

Oil and Natural Gas Reserves

During 2012, we re-focused our strategy on oil and gas production as well as early stage development of minor oil and gas resource plays.  We did not have significant oil- and gas-producing activities during the year ended December 31, 2011.  The following table summarizes our oil and gas productions, revenues, our productive wells and acreage, undeveloped acreage and drilling activities for the year ended December 31, 2012:

	2012
Production
Oil Revenue	$	137,119
Gas Revenue	$	45,354
Gross oil production (bbl)	63,442
Net oil production (bbl)	1,502
Gross gas production (mcf)	242,768
Net gas production (mcf)	10,565
Average oil sales price per bbl	$	94.38
Average gas sales price per mcf	$	3.79
Average gross daily production (BOED)	320
Average net daily production (BOED)	11
Average gross daily production (mcfs)	1,399
Average net daily production (mcfs)	80
Productive wells - oil
Gross	10
Net	1
Productive wells - gas
Gross	8
Net	1
Developed acreage
Gross	667
Net	106
Undeveloped acreage
Gross	5,740
Net	2,417
Drilling activity
Net productive exploratory wells drilled	—
Net dry exploratory wells drilled	—

As we re-focused our strategy during 2012 on the acquisition, development, and production of oil and gas, nearly all of the wells in which we have interests were not completed nor in production until late in the fourth quarter of 2012. Accordingly, there was not a sufficient seasoning of the well production nor is there a sufficient number of existing wells to appropriately establish the amount of oil and gas reserves at December 31, 2012.  Therefore, we do not present reserve data for the year ended December 31, 2012.

Item 3.  Legal Proceedings

Other than ordinary routine litigation incidental to our business, we are not party to any material pending legal proceedings.

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Item 4.  Mine Safety Disclosures

Not applicable.

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PART II

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

Market Information

A public trading market for our common stock began trading on April 1, 2011, and our common stock is now traded in very limited quantities under the symbol “NYTE” on the OTCQB market tier, an interdealer quotation system operated by OTC Markets Group, Inc.  The range of closing prices for our common stock, as reported during each quarter since April 2011 was as follows.

Quarter Ended	High		Low
March 31, 2012	$	1.00	$	0.50
June 30, 2012	$	0.80	$	0.27
September 30, 2012	$	0.51	$	0.20
December 31, 2012	$	0.40	$	0.20

These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.  As of February 28, 2013, the closing price of our common stock was $0.50 per share.

Holders

As of February 28, 2013, we had approximately 26,653,158 shares of common stock outstanding held by a total of 389 stockholders of record.

Dividends

We have not historically and do not currently anticipate that we will declare or pay cash dividends on our common stock in the foreseeable future.  We will pay dividends on our common stock only if and when declared by our Board of Directors.  The ability of our Board of Directors to declare a dividend is subject to restrictions imposed by Delaware law and by restrictions under certain of our financing arrangements.  In determining whether to declare dividends, our Board of Directors will consider these restrictions as well as our financial condition, results of operations, working capital requirements, future prospects and other factors it considers relevant.

Securities Authorized For Issuance Under Equity Compensation Plans

In November 2012, we established our 2013 Equity Incentive Plan for the purpose of attracting and retaining the services of key employees, consultants, and non-employee members of our board of directors and to provide such persons with a proprietary interest in the Company through the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and/or other awards.  It is our intent that these awards will:

·increase the interest of such persons in our welfare,

·furnish an incentive to such persons to continue their services for the Company, and

·provide a means through which we may attract able persons as employees, contractors, and non-employee members of our board of directors.

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In addition, we have granted performance-based stock awards to certain employees of the Company and its subsidiaries pursuant to terms negotiated under individual employment agreements for such employees with no exercise price.  The following table sets forth the number of shares of restricted common stock outstanding under such plans and the number of shares that remain available for issuance under such plans, as of February 28, 2013.

	Total Securities to be Issued Upon Exercise of Outstanding Options or Vesting of Restricted Stock
Plan Category	Number (a)	Weighted-average exercise price (b)	Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	—	—	—
Equity compensation plans not approved by security holders	266,666	—	5,000,000
Total	266,666	—	5,000,000

Recent Sales of Unregistered Securities

In October 2012, in connection with the restructuring of our outstanding Series A Convertible Preferred Stock, we issued to the holders of our Series A Convertible Preferred Stock 768,090 shares of our common stock in exchange for all accrued and unpaid dividends as of June 15, 2012 and also 2,463,214 shares of our common stock in consideration for eliminating the liquidation preference associated with the Series A Convertible Preferred Stock.  See also Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Restructuring of Series A Convertible Preferred Stock.

Item 6.  Selected Financial Data

The information is not required under Regulation S-K for “smaller reporting companies.”

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Overview

Our strategy is to enhance value for our shareholders by:

·Growing reserves and production through exploration, appraisal and development;

·Applying technically-proven drilling and completion technologies  to continue our successful exploration and development program;

·Identifying, accessing and exploring emerging oil and liquids rich resources; and

·Upholding the ethical and business standards of the Company and maintaining the highest standards of health, safety, and environmental performance.

We are an energy holding company consisting of two operating segments:

Oil and Gas -

consisting of our wholly-owned subsidiary, NYTEX Petroleum, Inc. (“NYTEX Petroleum”), an exploration and production company engaged in the acquisition, development and production of oil & gas reserves from low-risk, high rate-of-return wells in shallow carbonate reservoirs.; and

Energy Staffing -

consisting of our wholly-owned subsidiary, Petro Staffing Group, LLC doing business as KS Energy Search Group (“KS Search”), a professional oil and gas recruiting firm, focused on providing oil and gas companies with properly educated and experienced full-time professionals. KS Search sources, evaluates, and delivers quality candidates to address the demand for personnel within the oil & gas industry.

NYTEX Energy and subsidiaries are collectively referred to herein as “we,” “us,” “our,” “its,” and the “Company”.

Operating and Financial Highlights

·During 2012, we acquired an average 1% overriding royalty interest (ORRI) in approximately 74,000 leasehold acres in Jack, Throckmorton, Young, Palo Pinto, Clay, and Archer Counties, Texas in the Marble Falls, Mississippi Lime, and Caddo Lime resource plays.

·As of December 31, 2012, we acquired and own an average 36% non-operating working interest in approximately 6,407 leasehold acres in North Texas.  In addition, during 2012, we acquired a 5% carried working interest in 5,614 leasehold acres in North Texas.

·During the third and fourth quarters of 2012, we drilled and successfully completed six Marble Falls wells in which the Company owns an approximately 12% average working interest.

·As of the date of this report, we hold leasehold ownership in approximately 6,407 gross acres with approximately 148 drilling locations.

·On May 4, 2012, we entered into an agreement by which Francis Drilling Fluids (“FDF”) was sold to an unaffiliated third party for total consideration of $62.5 million.  We recognized a $1,470,007 loss, before taxes, on the disposition for the year ended December 31, 2012, which is reported as part of discontinued operations on our consolidated financial statements for the year ended December 31, 2012.

·Subsequent to the disposition of FDF, during the second quarter of 2012, we redeemed our 9% and 12% convertible debentures in full, thereby reducing our interest costs by approximately $30,000 per month as well as eliminating the potential dilutive impact of approximately 1.9 million common shares.

·In the third quarter of 2012, we substantially completed the restructuring of our Series A Convertible Preferred Stock, eliminating accrued cash dividends of $767,570 as well as the future cash obligation of a 9% cumulative preferred dividend of approximately $520,000 annually.

·For the year ended December 31, 2012, income from continuing operations was $3.7 million, or $0.14 income per diluted share, as compared to a loss for the year ended December 31, 2011 of $3.7 million, or $0.05 loss per diluted share.

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General Industry Overview

The U.S. economy experienced a modest recovery during 2012 with much of that recovery driven by the U.S. energy industry.  However, uncertainty persists as federal deficit issues continue to leave ambiguities with U.S. businesses and consumers including what policies and practices may be implemented to resolve these matters.  It remains challenging to predict the economic consequences on the U.S. energy industry, specifically the supply and demand for oil and gas, as governments struggle to resolve these issues.

Oil and Gas

NYTEX Petroleum, Inc. is an exploration and production company engaged in the acquisition, development and production of oil & gas reserves from low-risk, high rate-of-return wells in shallow carbonate reservoirs. By focusing on early, low and no-cost entry into “tight oil” resource plays in North Texas, using multiple entry methods, NYTEX Petroleum has swiftly amassed interest in more than 87,000 leasehold acres and during the third and fourth quarters of 2012, drilled its first six wells.  We believe these plays can be developed uniformly over expansive geographical areas with a high rate of success due to the recent advancements in horizontal drilling and multi-stage hydraulic fracturing technologies.

Discontinued Operations — Oilfield Services

Disposition of FDF

As more fully reported on our Form 8-K filed on May 10, 2012, on May 4, 2012, (the “Closing Date”), Acquisition Inc., together with New Francis Oaks, LLC, a Delaware limited liability company (“New Francis Oaks”, formerly Francis Oaks, LLC ) and a wholly-owned subsidiary of Acquisition Inc., entered into an Agreement and Plan of Merger (the “Merger Agreement”) with an unaffiliated third party, FDF Resources Holdings LLC, a Delaware limited liability company (the “Purchaser”).  Pursuant to the terms of the Merger Agreement, New Francis Oaks merged with and into the Purchaser, and the Purchaser continued as the surviving entity after the merger (the “Disposition” or the “Merger”).  New Francis Oaks owns 100% of the outstanding shares of FDF, and, as a result of the Disposition, we no longer own FDF.

The total consideration for the Merger paid by the Purchaser on the Closing Date was $62,500,000 (the “Merger Proceeds”).  After: (i) an adjustment to the amount of the Merger Proceeds based upon the level of estimated working capital of the Francis Group on the Closing Date; (ii) the payment or provision for payment of all indebtedness of the Francis Group on the Closing Date; (iii) the payment of all indebtedness of Acquisition Inc. on the Closing Date (including under its senior secured credit facility with PNC Bank; (iv) the payment of the Put Payment Amount (as defined below) due to WayPoint Nytex, LLC (“WayPoint”) under the WayPoint Purchase Agreement (as defined below); (v) the payment of all transaction expenses relating to the Merger; (vi) the payment to the Company of $812,500 of accrued management fees and $110,279 of expense reimbursement due and payable to the Company under the Management Services Agreement, dated November 23, 2010, between the Company and FDF (the “Management Agreement”); (vii) the payment of certain transaction bonuses payable to certain FDF employees; and (viii) the Purchaser’s delivery of $6,250,000 of the Merger Proceeds (the “Escrow Fund”) to The Bank of New York Mellon Trust Company, N.A., as escrow agent, to be held in escrow under the Escrow Agreement (as defined below), Acquisition Inc. received on the Closing Date remaining cash transaction proceeds in the amount of approximately $4,481,000.  The Merger Agreement provides that, to the extent that the final amount of working capital of the Francis Group on the Closing Date is greater than the estimated amount of working capital, as determined under the Merger Agreement, the Purchaser will pay to Acquisition Inc. the amount of such working capital surplus, provided that, pursuant to the Omnibus Agreement (as defined below), WayPoint is entitled to receive 87.5% of any such working capital surplus payment.  To the extent that the final amount of working capital of the Francis Group on the Closing Date is less than the estimated amount of working capital, Acquisition Inc. will pay to the Purchaser the amount of such working capital deficit, which payment will be made out of the Escrow Fund, provided that, pursuant to the Omnibus Agreement, WayPoint is obligated to pay to Acquisition Inc. 87.5% of the amount of any such working capital deficit.

In connection with the consummation of the Merger, we entered into an Omnibus Agreement (the “Omnibus Agreement”) with WayPoint and Francis Group.  The Omnibus Agreement became effective upon the consummation of the Merger.

Pursuant to the Omnibus Agreement, upon the consummation of the Merger:

(i) the Management Agreement was terminated;

(ii) Waypoint paid $150,000 to the Company out of the Put Payment Amount due and payable to WayPoint;

(iii) the Company was paid $812,500 from the Merger Proceeds, which sum represented accrued management fees due and payable to the Company from FDF under the Management Agreement; and

(iv) the Company was paid $110,279 from the Merger Proceeds, which sum represented reimbursement by FDF

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of certain expenses previously incurred by the Company in respect of certain professional services provided, and which reimbursement was due and payable to the Company from FDF under the Management Agreement.

In the Omnibus Agreement, the Company, WayPoint, and the Francis Group also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.  In addition, the parties agreed that WayPoint would bear 87.5% of any post-closing working capital deficit under the Merger Agreement and WayPoint would receive 87.5% of any post-closing working capital surplus under the Merger Agreement.

Further, in connection with the consummation of the Merger, we entered into a Settlement Agreement (the “Settlement Agreement”) with WayPoint, the Francis Group, and Michael G. Francis and Bryan Francis (together,  the “Francises”).  The Settlement Agreement became effective upon the consummation of the Merger.

Pursuant to the Settlement Agreement, upon the consummation of the Merger:

(i) WayPoint paid out of the Put Payment Amount a $100,000 bonus to Michael G. Francis, the President of NYTEX Acquisition, and a $25,000 bonus to Jude N. Gregory, the Vice President and Chief Financial Officer of Acquisition Inc.;

(ii) (A) the Company caused the release of the $1,800,000 of  Escrowed Cash (as defined in the Escrow Agreement, dated as of November 23, 2010, by and among Acquisition Inc., Bryan Francis and The F&M Bank & Trust Company (the “Francis Escrow Agreement”)) then being held in escrow pursuant to the Francis Escrow Agreement, in accordance with the terms of the Francis Escrow Agreement, and (B) Michael G. Francis transferred and assigned back to the Company 625,000 shares of common stock of the Company (“NYTEX Common Stock”) then owned by Michael G. Francis and originally issued to him pursuant to the Membership Interest Purchase Agreement, dated as of November 23, 2010 (the “Francis Purchase Agreement”), and then being held in escrow pursuant to the Francis Escrow Agreement;

(iii) (A) Michael G. Francis transferred and assigned back to the Company all of the remaining 2,197,063 shares of NYTEX Common Stock then owned by him and originally issued to him pursuant to the Francis Purchase Agreement, and such shares were cancelled, and (B) Bryan Francis transferred and assigned back to the Company all of the 381,607 shares of NYTEX Common Stock originally issued to him pursuant to the Francis Purchase Agreement, as well as all of the 27,225 shares of NYTEX Common Stock issued to him in connection with his employment by FDF;

(iv) the employment agreements of Michael G. Francis and Bryan Francis terminated and they became at-will employees of the FDF Group;

(v) each of the three designees of WayPoint then serving as directors of Acquisition Inc., which included John Henry Moulton, Thomas Drechsler and Lee Buchwald, resigned as directors of Acquisition Inc., effective immediately upon the consummation of the Merger; and

(vi) in exchange for receipt by WayPoint of the Put Payment Amount (which consisted of $30,000,000, less an aggregate of $306,639 of dividends previously received by WayPoint on account of the WayPoint Senior Series A Redeemable Preferred Stock, less an aggregate of $275,000 payable by WayPoint to the Company, Michael G. Francis and Jude N. Gregory pursuant to the Settlement Agreement, less an additional $449,072 (representing 87.5% of the estimated working capital deficit of the Francis Companies on the Closing Date, but subject to the right of WayPoint to subsequently receive 87.5% of any final working capital surplus of the Francis Companies on the Closing Date and the obligation of WayPoint to subsequently pay 87.5% of any final working capital deficit of the Francis Companies on the Closing Date, pursuant to the Omnibus Agreement); the “Put Payment Amount”), WayPoint transferred and assigned (A) the Senior Series A Redeemable Preferred Stock back to Acquisition Inc., (B) the Purchaser Warrant and the Control Warrant back to the Company, and (C) the WayPoint Series B Share back to the Company, and all such securities were cancelled.

In the Settlement Agreement, the Company, WayPoint, the Francis Group, and the Francises also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties, including in connection with any employment agreements or arrangements of the Francises.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.

In August 2012, the Purchaser delivered a proposed final closing statement, which included, among other things, a calculation of the final closing date net working capital, to the Company.  Under the terms of the Omnibus Agreement,

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WayPoint agreed to bear 87.5% of any post-closing working capital deficit and conversely, we granted to WayPoint the authority to make all decisions, including the right to dispute any item contained in the final closing date net working capital, on our behalf with regards to the proposed final closing statement and final closing date net working capital.

In November 2012, WayPoint delivered to the Purchaser a notice of disagreement disputing certain items in the proposed closing statement and calculation of the final closing date net working capital.  In January 2013, NYTEX, WayPoint, and the Purchaser agreed in principal to the final closing statement amounts, along with the calculation of the final closing date net working capital.  Part of this agreement in principal included the planned release of funds from the Escrow Fund to the Purchaser in the amount of $1,936,762 (“Net Payment to Purchaser from Escrow”).

A dispute between NYTEX and WayPoint arose with regards to the amounts due under the Omnibus Agreement to NYTEX with respect to WayPoint’s obligation to bear 87.5% of the Net Payment to Purchaser from Escrow.   Following substantial negotiations, on March 8, 2013, NYTEX and WayPoint agreed to settle this dispute such that WayPoint would pay to NYTEX $1,075,000 to satisfy its obligation under the Omnibus Agreement.  On March 14, 2013, NYTEX was paid $1,075,000 and on March 15, 2013, the Net Payment to Purchaser from Escrow was released to the Purchaser.  As the events that gave rise to both NYTEX’s settlement with WayPoint and the release from escrow of the Net Payment to Purchaser from Escrow existed as of December 31, 2012, the amount paid by WayPoint of $1,075,000 has been recognized as a receivable on the accompanying consolidated balance sheet at December 31, 2012.  In addition, the amount of funds to be released from the Escrow Fund of $1,936,762 has been recognized as a reserve against the restricted cash balance on the accompanying consolidated balance sheet at December 31, 2012.  The difference between the $1,936,762 and $1,075,000 has been recognized as an additional loss on discontinued operations on the accompanying consolidated statement of operations as of December 31, 2012.

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Results of Operations

Selected Data

	December 31,
	2012			2011
Financial Results
Revenues - Land services	$	3,816,810		$	357,863
Revenues - Oil and Gas sales	182,473			349,707
Sale of oil and gas interests	2,006,922			—
Revenues - Energy staffing	117,433			—
Total revenues	6,123,638			707,570
Operating expenses	(2,871,020		)	(5,465,176		)
Gain on settlement of accounts payables	314,448			—
(Gain) loss on sale of assets, net	419,834			(6,954		)
Other (expense) income	(308,672		)	1,034,190
Income (loss) from continuing operations before income taxes	3,678,228			(3,730,370		)
Income tax provision	(20,401		)	—
Income (loss) from continuing operations	$	3,657,827		$	(3,730,370	)
Basic earnings per share:
Earnings (loss) from continuing operations	$	0.14		$	(0.14	)
Earnings (loss) from discontinued operations	(0.34		)	0.77
Net loss	$	(0.20	)	$	0.63
Net loss attributable to common stockholders	$	(0.22	)	$	0.61
Diluted earnings per share:
Earnings (loss) from continuing operations	$	0.14		$	(0.05	)
Earnings (loss) from discontinued operations	(0.34		)	0.28
Net loss	$	(0.20	)	$	0.23
Net income (loss) attributable to common stockholders	$	(0.20	)	$	0.23
Weighted average shares outstanding:
Basic	25,863,313			26,711,840
Diluted	26,277,045			73,556,473
Operating Results
Adjusted EBITDA - Oil and Gas	$	5,678,236				(2)
Adjusted EBITDA - Staffing Services	(339,461		)			(2)
Adjusted EBITDA - Corporate and Intersegment Eliminations	(2,034,182		)			(2)
Consolidated Adjusted EBITDA(1)	$	3,304,593		$	(5,772,742	)

(1)See Results of Operations—Adjusted EBITDA for a description of Adjusted EBITDA, which is not a U.S. Generally Accepted Accounting Principles (“GAAP”) measure, and a reconciliation of Adjusted EBITDA to net income (loss), which is presented in accordance with GAAP.

(2)Due to the disposition of FDF, the Company operated as a single segment for the year ended December 31, 2011.

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Year ended December 31, 2012 compared to the year ended December 31, 2011

Revenues.

·Land Services.  Revenues from land services increased 967%, to $3,816,810, during the year ended 2012 compared to the prior year of only $357,863 as we continue to expand our capabilities of providing focused project management for oil and gas companies desiring to acquire and build significant positions in lease plays throughout Texas.  During 2012, we provided land services with respect to more than 100,000 leasehold acres in North Texas.   For our customers, our land services generate land and mineral title reports, leasehold title analysis, and land title run sheets as well as source, negotiate, and acquire leases, prepare documents, and provide title curative functions.

·Oil and Gas Sales. Oil and gas sales decreased $167,234, or 48%, for the year ended December 31, 2012 compared to the prior year primarily due to the disposition of the Panhandle Field Producing Property in May 2011 and the fact we did not actively participate in drilling /production projects until the late third quarter and the fourth quarter of 2012.  In the future, we plan to continue to produce and further develop our interests in North Texas, while evaluating both existing and recently discovered oil and gas play opportunities throughout Texas and North America.  In the event of a declaration of commerciality and approval of a plan of development, we intend to develop these discoveries to grow proved reserves and production.  We also plan to drill in our prospect portfolio, with the intent to grow proved reserves and production should discoveries be made.

·Sale of oil and gas interests.  In December 2012, we entered into and completed the sale of a 15% interest in approximately 17,000 leasehold acres including two producing wells and carried interest in seven additional drilling prospects that resulted in a net sale of approximately $2 million.

·Staffing.  In the fourth quarter of 2012, we successfully placed two candidates for permanent hire for total fees of approximately $92,000.  We expect revenues from our staffing services to increase as our backlog of unfilled permanent placement opportunities continues to build and we place qualified candidates.

Oil & gas lease operating expenses.  Lease operating expenses increased $34,546, or 49%, in the current year ended December 31, 2012 compared to the prior year ended December 31, 2011 due principally to the drilling activities we undertook on the six wells during the third and fourth quarters of 2012.  We expect lease operating expenses to increase in the future as we drill additional wells.

Depreciation, depletion, and amortization.  Depreciation, depletion, and amortization decreased over the prior year period due primarily to a reduction in overall depreciable assets as well as a reduction in the timing of depletion occurring during the current year as old wells were fully depleted and new wells were being drilled.

General and administrative expenses.  General and administrative (“G&A”) expenses from continuing operations decreased for the year ended December 31, 2012 compared to the prior year due primarily to a reduction in legal, accounting, and other professional fees during 2012, offset by an increase in salary and wages related to our Energy Staffing business.  G&A consists primarily of salary and wages, contract labor, professional fees, lease rental costs, fuel, and insurance costs.

Gain on settlement of accounts payable.  In 2012, we settled an outstanding payable balance with a vendor.  The reduction in the amount payable to the vendor resulted in a gain of approximately $314,000.

Gain (loss) on sale of assets, net.  In 2012, gain on sale of assets, net consists primarily of the current period recognition of previously deferred gains on the sale of certain properties.   In 2011, loss on sale of assets, net consists of the aggregate loss recognized on the sale of equipment.

Interest expense.  Interest expense from continuing operations decreased for the year ended December 31, 2012 compared to the prior year period due primarily to the retirement of the 9% and 12% debentures as well as the write-off of certain deferred financing costs and associated amortization related to the disposition of FDF and  is accounted for as interest expense.

Change in fair value of derivative liabilities.  The expense in the current year as compared to the decrease in the prior year of $1,691,240 is due to the elimination of the warrants associated with the WayPoint Transaction, subsequent to the disposition of FDF in May 2012.  At December 31, 2012, we had one derivative on our consolidated balance sheet which was related to the warrants issued to the holders of the Company’s Series A Convertible Preferred Stock.  The agreement setting forth the terms of the warrants issued to the holders of the Company’s Series A Convertible Preferred Stock include an anti-dilution provision that requires a reduction in the instrument’s exercise price should subsequent at-market issuances of the Company’s common stock be issued below the instrument’s original exercise price of $2.00 per share.  Accordingly, we consider the warrants to be a derivative; and, as a result, the fair value of the derivative is included as a derivative liability

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on the accompanying consolidated balance sheets.  At December 31, 2012 and December 31, 2011, the fair value of the warrants issued to the holders of the Series A Convertible Preferred Stock was $2,510 and $0, respectively.

Adjusted EBITDA

To assess the operating results of our segments, our chief operating decision maker analyzes net income (loss) before income taxes, interest expense, DD&A, impairments, gains or losses resulting from the sale of assets other than dispositions of oil and gas interests, or resolution of commercial disputes, and changes in fair value attributable to derivative liabilities (“Adjusted EBITDA”).  Our definition of Adjusted EBITDA, which is not a GAAP measure, excludes interest expense to allow for assessment of segment operating results without regard to our financing methods or capital structure.  Similarly, DD&A and impairments are excluded from Adjusted EBITDA as a measure of segment operating performance because capital expenditures are evaluated at the time capital costs are incurred.  In addition, changes in fair value attributable to derivative liabilities are excluded from Adjusted EBITDA since these unrealized (gains) losses are not considered to be a measure of asset-operating performance.  Management believes that the presentation of Adjusted EBITDA provides information useful in assessing the Company’s financial condition and results of operations and that Adjusted EBITDA is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures and make distributions to stockholders.

Adjusted EBITDA, as we define it, may not be comparable to similarly titled measures used by other companies. Therefore, our consolidated Adjusted EBITDA should be considered in conjunction with net income (loss) and other performance measures prepared in accordance with GAAP, such as operating income or cash flow from operating activities. Adjusted EBITDA has important limitations as an analytical tool because it excludes certain items that affect net income (loss) and net cash provided by operating activities.  Adjusted EBITDA should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP.  Below is a reconciliation of consolidated Adjusted EBITDA to consolidated net loss as reported on our consolidated statements of operations.

	December 31,
	2012			2011
Reconciliation of Adjusted EBITDA to GAAP Net Income (Loss):
Net income (loss)	$	(5,156,891	)	$	16,752,492
Discontinued operations	8,814,718			(20,482,862		)
Income tax provision (benefit)	20,401			—
Interest expense	324,932			658,279
DD&A	33,205			52,700
Change in fair value of derivative liabilities	2,510			(1,691,240		)
Loss on litigation	—			(1,069,065		)
Gain on settlement of accounts payables	(314,448		)	—
(Gain) loss on sale of asset	(419,834		)	6,954
Consolidated Adjusted EBITDA	$	3,304,593		$	(5,772,742	)

Liquidity and Capital Resources

Our working capital needs have historically been satisfied through operations, equity and debt investments from private investors, loans with financial institutions, and through the sale of assets.  Historically, our primary use of cash has been to pay for acquisitions and investments, service our debt, and for general working capital requirements.  As of December 31, 2012, we have cash and marketable securities, less the cash portion of deposits held in trust, totaling $1,998,263 that we have available, along with cash flow from operations, to provide capital to support the growth of our business, service our debt, and for general working capital requirements.

On July 11, 2012, we entered into a revolving line of credit agreement with a commercial bank providing for loans up to $325,000.  The revolving credit line bears an annual interest rate based on the 30 day LIBOR plus 1.95% and matures on July 11, 2014.  The line of credit is secured by our marketable securities.  We pay no fee for the unused portion of the revolving line of credit.  At December 31, 2012 and as of the date of this report, amounts available under the revolving line of credit were $216,645.

Restructuring of Series A Convertible Preferred Stock

On August 31, 2012, NYTEX’s Amended and Restated Certificate of Designation in respect of the Series A Convertible Preferred Stock was approved by written consent of the holders of a majority of the total outstanding voting power of NYTEX’s voting securities (the “Restructuring”).  On September 12, 2012, we commenced mailing to all holders of

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the Company’s common stock and Series A Convertible Preferred Stock, a definitive information statement related to NYTEX’s Amended and Restated Certificate of Designation.  On October 2, 2012 (“Effective Date”), we filed the Amended and Restated Certificate of Designation with the Secretary of State of the State of Delaware.  Upon the filing of the Amended and Restated Certificate of Designation, the original Certificate of Designation was amended, among other things, as follows:

(i)	The 9% dividend payable with respect to the shares of Series A Convertible Preferred Stock ceased to accrue effective as of June 15, 2012 (the “Termination Date”) and, thereafter, no dividends will be payable with respect to such shares unless declared by the Company’s board of directors;
(ii)	In exchange for all accrued and unpaid dividends as of the Termination Date, each holder of Series A Convertible Preferred Stock (a “Series A Holder”), as of the record date of July 24, 2012 (the “Record Date”), was issued shares of NYTEX common stock at a rate of one (1) share of NYTEX common stock for each $1.00 of accrued and unpaid dividends due such holder (collectively, the “Dividend Common Shares”). As a result, in October 2012 the Company issued an aggregate of approximately 768,090 Dividend Common Shares to the Series A Holders;
(iii)	The original terms of the Series A Convertible Preferred Stock also provided for a liquidation preference of $1.50 per share which would have been payable on a deemed liquidation event involving the Company. As part of the Restructuring and in consideration for eliminating the liquidation preference, in October 2012 the Company issued to the Series A Holders, as of the Record Date, shares of NYTEX common stock at a rate of 0.42735 shares for each share of Series A Preferred held by them, or an aggregate of approximately 2,463,214 NYTEX common shares (the “Liquidation Adjustment Common Shares”);
(iv)	As part of the Restructuring, in October 2012 we paid to the Series A Holders as of the Record Date, a restructuring fee in the amount of 0.0075% of the original $1.00 per share purchase price of the Series A Convertible Preferred Stock, with such fee totaling approximately $43,230; and
(v)	At any time following the Effective Date of the Restructuring, the Company has the right to redeem any or all of the outstanding shares of Series A Convertible Preferred Stock at its original purchase price of $1.00 per share. Further, the Company is required to redeem outstanding shares of Series A Convertible Preferred Stock, from time-to-time, upon any release to the Company any portion of the $6,250,361 in cash currently being held in the post-closing escrow fund (reported as restricted cash on the accompanying balance sheet at December 31, 2012) in connection with the sale of FDF on May 4, 2012, which mandatory redemption would be made by the Company out of funds legally available therefor to the extent of 100% of the amount of funds released at that time. Each redemption would be applied pro rata among all Series A Holders.

In October 2012, we issued the Dividend Common Shares and Liquidation Adjustment Common Shares to the Series A Holders which was, along with the payment of the restructuring fee, recognized as a charge to retained earnings as a dividend and a reduction to earnings available to common shareholders for the year ended December 31, 2012.  Accordingly, subsequent to the Effective Date, the Series A Convertible Preferred Stock is presented outside of permanent equity as mezzanine equity on our consolidated balance sheets.

Redemption of 12% Convertible Debenture and 9% Convertible Debenture

On June 13, 2012, pursuant to the terms of the debentures, we redeemed, in full, the outstanding 9% and 12% Convertible Debentures totaling $3.2 million. Accordingly, we are no longer obligated under these notes including the payment of any interest.

Other Financings

In March 2006, NYTEX Petroleum LLC entered into a $400,000 revolving credit facility (“Facility”) with one of its founding members to be used for operational and working capital needs. In August 2008, the revolving nature of the Facility was terminated, with the then unpaid principal balance of $295,000 on the Facility effectively becoming a note payable to the non-executive founding member. The Facility was amended to provide for interest, payable monthly, at 6% per annum, a security interest in the assets of NYTEX Petroleum LLC (now NYTEX Petroleum) and the personal guarantee of NYTEX Petroleum LLC’s two founding members.  In May 2009, the Facility was further amended pursuant to a letter agreement such that principal and any unpaid interest on the note payable to the non-executive founding member was to be paid in full upon completion of the $5,850,000 private placement of common stock, which had not occurred as of February 18, 2010.  The letter agreement was further amended as of February 18, 2010, to require monthly principal payments of $3,000 plus interest for eighteen months beginning March 1, 2010 and ending September 1, 2011.  At the end of this eighteen-month period, the remaining principal balance and any unpaid interest were due in a lump sum.  There was no penalty for early payment of principal.  In August 2011, the facility was further amended, extending the maturity date to September 1, 2012.  In September

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2012, the facility was paid in full.

In August 2011, we entered into a $200,000 promissory note with a third party.  The promissory note was due in full along with accrued, unpaid interest at the fixed rate of 18% at maturity, on November 24, 2011.  As an inducement to enter into the promissory note, we agreed to pay the holder of the promissory note a one-time fee of $11,000 and 20,000 shares of our common stock, which would was paid on maturity.  Both of these items were accounted for as a premium to the promissory note.  During the first quarter of 2012, the promissory note was paid in full.

In July 2012, we entered into a revolving line of credit agreement with a commercial bank providing for loans up to $325,000.  The revolving credit line bears an annual interest rate based on the 30 day LIBOR plus 1.95% and matures on July 11, 2014.  Payments of interest only are payable monthly with any outstanding principal and interest due in full, at maturity.  The revolving line of credit is secured by our marketable securities.  We pay no fee for the unused portion of the revolving line of credit nor are there any prepayment penalties.  In September 2012, we drew $108,355 from the revolving line of credit, primarily to pay in full, the 6% Related Party Loan.  At December 31, 2012, amounts available under the revolving line of credit were $216,645.

Cash Flows

The following table summarizes our cash flows and has been derived from our audited financial statements for the years ended December 31, 2012 and 2011.

	December 31,
	2012			2011
Cash flows provided by operating activities	$	3,936,339		$	2,134,034
Cash flow provided by (used in) investing activities	3,984,119			(4,252,401		)
Cash flow provided by (used in) financing activities	(6,446,889		)	1,919,686
Net increase (decrease) in cash and cash equivalents	1,473,569			(198,681		)
Beginning cash and cash equivalents	10,817			209,498
Ending cash and cash equivalents	$	1,484,386		$	10,817

Cash flows from operating activities increased from a cash inflow of $2,134,034 for the year ended December 31, 2011 to a cash inflow of $3,936,339 for the year ended December 31, 2012 mainly due to a net increase of $3,611,469 in working capital in the current year compared to a net decrease of $1,274,039 in the prior year.  This represents a net cash inflow of $4,885,508, which was offset by a net loss in the current year of $5,156,891 compared to net income of $16,752,492 in the prior year.  The increase in cash inflows was further offset by changes in non-cash adjustments affecting earnings including a $5,671,671 decrease in depreciation, depletion, and amortization, a $33,172,576 increase in change of fair value of derivatives, $2,006,922 from the net sale of oil and gas interests, a $314,448 from a gain on the settlement of accounts payable, and a gain on the sale of assets of $491,400.

Cash flows provided in investing activities increased by $8,236,520 for the year ended December 31, 2012 compared to the year ended December 31, 2011 primarily as a result of cash received as part of the disposition of FDF in May 2012.  During 2012, we had $317,039 and $618,747 of additions to property and equipment and investments in oil and gas properties, respectively, compared to $5,761,498 and $0, respectively, for the prior year.

Cash flows used by financing activities decreased by $8,366,575 for the year ended December 31, 2012 to cash used of $6,446,889 compared to cash flows provided by financing activity of $1,919,686 for the year ended December 31, 2011.  This change was primarily a result of the redemption of the convertible debentures during 2012 of $3,208,014 as well as an overall reduction in borrowings under notes payables of $3,738,878 when compared to the prior year.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

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Critical Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. The consolidated financial statements include the accounts of NYTEX Energy and entities in which it holds a controlling interest. All intercompany transactions have been eliminated.

Investments in non-controlled entities over which we have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. In applying the equity method of accounting, the investments are initially recognized at cost, and subsequently adjusted for our proportionate share of earnings and losses and distributions.  Certain prior-period amounts have been reclassified to conform to the current-year presentation.

All references to the Company’s outstanding common shares and per share information have been adjusted to give effect to the one-for-two reverse stock split effective November 1, 2010.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  On an ongoing basis, we review these estimates based on information that is currently available.  Changes in facts and circumstances may cause us to revise our estimates.  The most significant estimates relate to revenue recognition, depreciation, depletion and amortization, the assessment of impairment of long-lived assets and oil and gas properties, income taxes, and fair value.  Actual results could differ from estimates under different assumptions and conditions, and such results may affect operations, financial position, or cash flows.

Cash and Cash Equivalents

We consider all demand deposits, money market accounts, and highly liquid investments with original maturities of three months or less to be cash equivalents.  The carrying amount of cash and cash equivalents reported on the consolidated balance sheet approximates fair value.  We maintain funds in bank accounts which, from time to time, exceed federally insured limits.

Accounts Receivable

We provide credit in the normal course of business to our customers and perform ongoing credit evaluations of those customers.  We maintain an allowance for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.  A portion of our receivables are from the operators of producing wells in which we maintain ownership interests.  These operators market our share of crude oil and natural gas production.  The ability to collect is dependent upon the general economic conditions of the purchasers/participants and the oil and gas industry.

Marketable Securities

We determine the appropriate classification of our investments in marketable securities at the time of acquisition and reevaluate such determinations at each balance sheet date.  Marketable securities are classified as held to maturity when we have the positive intent and ability to hold securities to maturity.  Marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with the unrealized gains and losses recognized in earnings.  Marketable securities not classified as held to maturity or as trading, are classified as available for sale, and are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income (loss) and reported in shareholders’ equity.  We have classified all of our marketable securities as available for sale.  The fair value of substantially all securities is determined by quoted market prices. The estimated fair value of securities for which there are no quoted market prices is based on similar types of securities that are traded in the market.

We review our marketable securities on a regular basis to determine if any security has experienced an other-than-temporary decline in fair value.  We consider several factors including the length of the time and the extent to which the fair value has been below cost, the financial condition and near-term prospects of the affiliated entity, and other factors, in our review.  If we determine that an other-than-temporary decline exists in a marketable security, we write down the investment to its market value and record the related write-down as an investment loss in our Consolidated Statement of Operations.

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Property and equipment

Property and equipment are recorded at cost less accumulated depreciation, depletion, and amortization (“DD&A”).  Costs of improvements that appreciably improve the efficiency or productive capacity of existing properties or extend their lives are capitalized.  Maintenance and repairs are expensed as incurred. Upon retirement or sale, the cost of properties and equipment, net of the related accumulated DD&A, is removed and, if appropriate, gain or loss is recognized in the respective period’s consolidated statement of operations.

For our oil and gas properties, we follow the successful efforts method of accounting for oil and gas exploration and development costs.  Under this method of accounting, all property acquisition costs and costs of exploratory wells are capitalized when incurred, pending determination of whether additional proved reserves are found.  If an exploratory well does not find additional reserves, the costs of drilling the well are charged to expense.  The costs of development wells, whether productive or nonproductive, are capitalized.  Geological and geophysical costs on exploratory prospects and the costs of carrying and retaining unproved properties are expensed as incurred.

Long-lived Assets

Long-lived assets are reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset.  If it is determined that the carrying amount may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.  Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties.  We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as the price of oil and gas, production volumes and costs, drilling activity, and economic conditions could significantly affect these estimates.

We evaluate impairment of our oil and gas properties on a property-by-property basis and estimate the fair value based on discounted cash flows expected to be generated from the production of proved reserves.  We did not have any impairment charges for the years ended December 31, 2012 and 2011.

Deposits Held in Trust

We record a liability for funds held on behalf of outside investors in oil and gas exploration projects, which are to be paid to the project operator as capital expenditures are billed.  The liability is reduced as we make payments on behalf of those outside investors to the operator of the project.

Asset Retirement Obligations

We recognize liabilities for retirement obligations associated with tangible long-lived assets, such as producing well sites when there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The initial measurement of an asset retirement obligation is recorded as a liability at its fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet.  If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement cost.  The asset retirement cost is depreciated using a systematic and rational method similar to that used for the associated property and equipment.  As of December 31, 2012 and 2011, we did not have any obligation related to asset retirements.

Fair Value Measurements

Certain of our assets and liabilities are measured at fair value at each reporting date.  Fair value represents the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants.  This price is commonly referred to as the “exit price”.

Fair value measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation techniques.  This hierarchy consists of three broad levels. Level 1 inputs on the hierarchy consist of unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority.  Level 2 measurements are based on inputs other than quoted prices that are generally observable for the asset or liability.  Common examples of Level 2 inputs include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in markets not considered to be active.  Level 3 measurements have the lowest priority and are based upon inputs that are not observable from objective sources.  The most common Level 3 fair value measurement is an internally developed cash flow model.  We use appropriate valuation techniques based on the available inputs to measure the fair values of our assets and liabilities.  When available, we measure the fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value.

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The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable, and accrued expenses reported on the accompanying consolidated balance sheets approximates fair value due to their short-term nature.  The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date.  Debt fair values are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments.

Revenue Recognition

Revenues from the sales of natural gas and crude oil are recorded when product delivery occurs and title and risk of loss pass to the customer, the price is fixed or determinable, and collection is reasonably assured.  Revenues from land services are recorded when title work is completed and the customer has been invoiced for services provided.  Revenues from the sale of interests in oil and gas properties are recorded once a formal agreement has been reached and the agreement has been consummated through the exchange of any consideration.  Revenues from energy staffing are recorded once a formal offer has been provided to the candidate by the hiring company and the candidate has accepted the offer.

The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company’s individual interest in the property.  Periodically, imbalances between production and nomination volumes can occur for various reasons.  In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined.  If an imbalance exists at the time the wells’ reserves are depleted, settlements are made among the joint interest owners under a variety of arrangements.

Discontinued Operation

The consolidated financial statements present the operations of our former oilfield services segment (FDF) as discontinued operations in accordance with ASC 205-20-55 for all periods presented.

Recent Accounting Pronouncements

In May 2011, the FASB issued an accounting pronouncement related to fair value measurement (FASB ASC Topic 820), which amends current guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The amendments generally represent clarification of FASB ASC Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We adopted this pronouncement for our fiscal year beginning January 1, 2012 and the adoption of this pronouncement did not have a material effect on our consolidated financial statements.

In 2011, the FASB issued accounting ASU No. 2011-05 as amended by ASU No. 2011-12 that provides new guidance on the presentation of comprehensive income (FASB ASC Topic 220) in financial statements. Entities are required to present total comprehensive income either in a single, continuous statement of comprehensive income or in two separate, but consecutive, statements. Under the single-statement approach, entities must include the components of net income, a total for net income, the components of other comprehensive income and a total for comprehensive income. Under the two-statement approach, entities must report an income statement and, immediately following, a statement of other comprehensive income. The ASUs do not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. The provisions for this pronouncement were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The adoption of ASUs 2011-05 and 2011-12 did not have a material impact on our results of operations, financial position, or cash flows.

In February 2012, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. We are required to apply this guidance prospectively beginning with our first quarterly filing in 2013. The adoption of this new guidance is not expected to impact our financial position or statement of operations, other than changes in presentation.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The information is not required under Regulation S-K for “smaller reporting companies.”

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Item 8.  Financial Statements and Supplementary Data

The information required by this Item 8 is included in our Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of December 31, 2012.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2012.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.  Our management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2012.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework.  Based on this evaluation, our management, with the participation of the chief executive officer and chief financial officer, concluded that, as of December 31, 2012, our internal control over financial reporting was effective.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

Remediation of Material Weaknesses in Internal Control Over Financial Reporting

During the year ended December 31, 2012, our management completed corrective actions to remediate certain of the material weaknesses identified in our 2011 Annual Report on Form 10-K.  Specifically, the following actions were taken with respect to the following identified material weakness:

·The Company did not maintain effective controls over accounting for income taxes, including the determination and reporting of deferred income taxes and the related income tax provision.  During 2012, we engaged and have continued to engage a third-party accounting firm to assist us in tax accounting and reporting.  In addition, this third-party accounting firm assisted us in the execution of this remediation.

38

Changes in Internal Control Over Financial Reporting

Other than as described above, there have not been any other changes in our internal control over financial reporting during the year ended December 31, 2012, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.  Other Information

None.

39

PART III

Item 10.   Directors, Executive Officers and Corporate Governance

Executive Officers

Our named executive officers include:

Name	Age	Position
Michael K. Galvis	56	President, Chief Executive Officer and Director of NYTEX
Bryan A. Sinclair	48	Vice President and Chief Financial Officer of NYTEX

Michael K. Galvis has been the President and Chief Executive Officer and a director of the Company since October 31, 2008. He has also been the President and Chief Executive Officer and a director of NYTEX Petroleum, Inc., a wholly-owned subsidiary of the Company, since October 31, 2008, and the Chairman of Francis Drilling Fluid Services, Ltd. (“FDF”), a wholly-owned subsidiary of the Company, since November 23, 2010.  From March 2006 through October 2008, he was President, Treasurer and Secretary of NYTEX Petroleum, LLC, the predecessor to NYTEX Petroleum, Inc. From 1994 through February 2006 he was a Consultant for PetroQuest Exploration, Inc., a privately held Texas corporation engaged in the acquisition and development of oil and natural gas reserves in the U.S. He has been in the oil and gas industry since 1983 with extensive experience in the drilling, operating and participating in onshore and offshore oil and gas wells in Texas, Louisiana, Arkansas, Oklahoma, Colorado, Mississippi, Illinois, North Dakota, and New Mexico. During that period his experience included generating and funding drilling prospects and evaluating and acquiring drill-ready prospects, producing oil and gas properties, oil and gas service companies and facilities, including managing and providing consulting services regarding such assets.

Bryan A. Sinclair was appointed Vice President and Chief Financial Officer effective November 14, 2011.  Mr. Sinclair joined the Company in March 2011 as Vice President of Finance.  Prior to joining NYTEX, Mr. Sinclair worked at Behringer Harvard as Chief Accounting Officer for Behringer Harvard Opportunity REIT I, Inc. and Behringer Harvard Opportunity REIT II, Inc. from 2007 to 2010.  Prior to joining Behringer Harvard, Mr. Sinclair worked at Celanese Corporation (CE:NYSE) as Director-Global SOX Risk and Control from 2005 to 2007. From 2002 to 2005, Mr. Sinclair served as Corporate Controller for Lone Star Technologies, Inc., a Dallas-based provider of oilfield tubulars and services. From 1993 to 2002, Mr. Sinclair worked in the Dallas office of PricewaterhouseCoopers, the last three years serving as a manager in their audit/attestation practice.  Mr. Sinclair received a Bachelor of Sciences — Finance degree from Arizona State University and a Bachelor of Arts — Accounting degree from the University of Arizona. Mr. Sinclair is a certified public accountant in the State of Texas. Mr. Sinclair is 48 years old.

Members of Our Board of Directors

During 2012, our directors included:

Name	Age	Position
Michael K. Galvis	56	President, Chief Executive Officer and Director of NYTEX
William G. Brehmer	54	Director
Jonathan Rich	44	Director

Michael K. Galvis.  See “Executive Officers” for biographical information about Mr. Galvis.

William G. Brehmer has been director of the Company since October 31, 2008.  Mr. Brehmer acted as Chief Operating Officer and Vice President of the Company from October 31, 2008 to March 24, 2010, and also has served in such capacities for NYTEX Petroleum, Inc. since October 31, 2008.  Mr. Brehmer has over 25 years of experience in the oil and gas industry in the areas of contract administration, natural gas marketing, natural gas processing, natural gas liquids marketing, business planning, funding and implementation of oil and gas drilling projects, technology marketing and sales

40

and commercial fuel marketing and operations. From April 1, 2006, through October 31, 2008, he was a Consulting Analyst and Contract Administrator for NYTEX Petroleum, LLC. From November 1, 2005, through March 31, 2006, he was an Analyst and Contract Administrator for Petro-Quest Exploration, Inc., a privately held Texas corporation engaged in the acquisition and development of oil and natural gas reserves in the U.S.  From December 12, 2003, through October 31, 2005, he was President of Petro-Frac Corporation, a privately held Texas corporation focused on identifying, acquiring and developing shallow (above 4,000 feet), Austin Chalk oil reserves in east Texas.  Mr. Brehmer graduated from the University of South Dakota with a B.S. in Business Administration.

Jonathan Richhas served as director since November 2010.  Mr. Rich was appointed as director per the terms of the Series A Preferred Stock of the Company.   Mr. Rich has been the Executive Vice President and Head of Investment Banking of National Securities Corporation, a full-service investment banking firm, since July 2008.  Mr. Rich had been the Executive Vice President and Director of Investment Banking of vFinance Investments, Inc. since July 2005, and assumed his current position with National Securities when vFinance was acquired by National Securities in July 2008.  Mr. Rich had previously served as Senior Vice President and Managing Director of Corporate Finance at First Colonial Financial Group since January 2001.  First Colonial Financial was, in turn, acquired by vFinance in July 2005.  Mr. Rich graduated from Tulane University with an interdisciplinary major in economics, political science, history and philosophy and received a joint J.D. / M.B.A. degree from Fordham University with a concentration in corporate finance.

2012 Director Compensation

During the year ended December 31, 2012, directors neither received nor accrued compensation for their services as directors other than reimbursement of expenses relating to attending meetings of the board of directors.

Code of Ethics

The Company’s Code of Business Conduct and Ethics can be found on the Company’s website located at http://www.nytexenergyholdings.com/PoliciesAndProcedures.asp.  Any stockholder may request a printed copy of the Code of Ethics by submitting a written request to the Company’s Corporate Secretary. If the Company amends the Code of Ethics or grants a waiver, including an implicit waiver, from the Code of Ethics, the Company will disclose the information on its website. The waiver information will remain on the website for at least 12 months after the initial disclosure of such waiver.

Corporate Governance

Board Meetings and Committees; Annual Meeting Attendance

During 2012, the Company’s Board held 15 regular and special meetings.  None of the members of our Board of Directors attended less than 75 percent of the total number of meetings of the Board of Directors held during 2012.

Audit Committee

At present, we do not have a separately standing audit committee and our entire board of directors acts as our audit committee.  None of the members of our board of directors meet the definition of “audit committee financial expert” as defined in Item 407(d) of Regulation S-K promulgated under the Act.  As a new reporting company, the Company could not in the past retain an audit committee financial expert without undue cost and expense.  We are currently in the process of establishing an Audit Committee and retaining qualified independent directors to serve on the board and such committee.

Personnel and Compensation Committee

The Company is in the process of establishing a Personnel and Compensation Committee and retaining independent directors to serve on such Committee.

Nominating and Corporate Governance Committee

The Company does not have a standing Nominating and Corporate Governance Committee.  Given the small size of the Company’s Board of Directors, it is the Company’s view that it is appropriate for the entire Board to serve the functions which would otherwise be served by a Nominating and Corporate Governance Committee.  The Board does not currently have in place specific procedures by which security holders may recommend nominees to the Board of Directors.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers to file reports of ownership and changes in ownership of our equity securities with the SEC.  To our knowledge, based solely on information furnished to us by such persons, all of our directors and executive officers complied with their filing requirements in 2012.

41

Item 11.   Executive Compensation

Summary Compensation Table

The following table summarizes the compensation of the named executive officers of the Company and its subsidiaries for the years ended December 31, 2012 and 2011:

Name and Principal Position	Year	Salary ($)		Bonus ($)(1)		Stock Awards ($)(2)		All Other Compensation ($)(5)		Total ($)
Michael K. Galvis, President and CEO(3)	12/31/12	$	250,000	$	203,950	$	0	$	9,900	$	463,850
	12/31/11	$	333,809	$	7,000	$	0	$	29,546	$	370,355
Bryan A. Sinclair, VP & CFO(4)	12/31/12	$	160,000	$	84,000	$	17,000	$	0	$	261,000
	12/31/11	$	130,909	$	24,000	$	18,667	$	0	$	173,576

(1)All bonuses are discretionary based on each individual executive’s performance as determined by the Company.

(2)Stock awards granted to Mr. Sinclair in 2012 and 2011 are valued at a weighted average of $0.41 per share and $1.12 per share of common stock, respectively.

(3)Mr. Galvis’ base salary is comprised of $250,000 under an employment agreement with the Company for his role as President and CEO of the Company.  Prior to May 10, 2011, Mr. Galvis salary included an additional $275,000 under an employment agreement with FDF for his role as Chairman of FDF.

(4)Mr. Sinclair joined the Company as Vice President — Finance in March 2011.  Mr. Sinclair was appointed Vice President and Chief Financial Officer on November 14, 2011.

(5)Mr. Galvis’ NYTEX employment agreement contemplates a car allowance which equals in the aggregate approximately $825 per month.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

A summary of the Employment Agreements of our Named Executive Officers follows:

Agreements with Michael K. Galvis.  On April 28, 2009, the Company entered into an employment agreement with Mr. Galvis (the “NYTEX Employment Agreement”).  On November 22, 2010, the NYTEX Employment Agreement was amended to modify Mr. Galvis’s compensation.  The NYTEX Employment Agreement provides for an annual base salary of $250,000 per year, an auto allowance of $825 per month, health insurance allowance of approximately $1,500 per month and incentive compensation to be determined from time to time by the Company’s board of directors.  Any award of restricted stock made to Mr. Galvis is subject to non-transferability and forfeitability, and vests over a three year period in equal amounts per year.

Agreement with Bryan A. Sinclair.  On March 5, 2011, the Company entered into an employment agreement with Mr. Sinclair.  The employment agreement provides for an annual base salary of $160,000 per year and incentive compensation to be determined from time to time by the Company’s board of directors.  In addition, Mr. Sinclair received a signing bonus of $24,000 on execution of the agreement.  In addition to the base and bonus compensation set forth above, the employment agreement provides for stock awards of 50,000 shares of Common Stock of the Company upon execution of the employment agreement, and 75,000 shares of Common Stock of the Company for each calendar year 2012 and 2013, provided Mr. Sinclair meets certain performance criteria set forth by management of the Company.  Any award of restricted stock made to Mr. Sinclair is subject to non-transferability and forfeitability, and vests over a three year period in equal amounts per year.

42

Outstanding Equity Awards at Fiscal Year-End Table

Stock Awards

Name	Number of Shares or Units That Have Not Vested	Market Value of Shares or Units of Stock That Have Not Vested		Number of Unearned Shares, Units or Other Rights That Have Not Vested	Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Bryan A. Sinclair, Vice President and CFO(1)	66,666	$	33,333	—	$	—

(1)Mr. Sinclair was awarded 50,000 shares and 75,000 shares of common stock during 2012 and 2011, respectively, which vest over three years in equal installments. Mr. Sinclair is eligible to receive a grant of 75,000 shares of common stock in calendar year 2013.  For more information, see Narrative to Summary Compensation Table.

43

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The following table lists stock ownership of the Company’s common stock as of February 28, 2013.  The information includes beneficial ownership by (i) holders of more than 5% of common stock, (ii) each of the directors who beneficially own shares of common stock and executive officers and (iii) all directors and executive officers as a group. Each person or entity named in the table has sole voting and investment power with respect to all shares of common stock beneficially owned.

		Amount and nature
Title	Name and address of	of beneficial		Percent
of class	beneficial owner	ownership		of class
Beneficial Owners of More than 5% of Company’s Equity
Common Stock	Diana Istre Francis 416 North Avenue K Crowley, LA 70526	2,058,125		7.7	%
Common Stock	Buccel, LLC 9 Hidden Hollow Terrace Holmdel, NJ 07733	1,976,179		7.4	%
Executive Officers and Directors of the Company
Common Stock	Michael K. Galvis President and CEO of NYTEX 12222 Merit Drive Suite 1850 Dallas, TX 75251	8,007,258		30.0	%
Common Stock	Bryan A. Sinclair VP and CFO of NYTEX 12222 Merit Drive Suite 1850 Dallas, TX 75251	112,378	(1)	0.4	%
Common Stock	William Brehmer Director of NYTEX 12222 Merit Drive Suite 1850 Dallas, TX 75251	1,013,425		3.8	%
Common Stock	Jonathan Rich Director of NYTEX 330 Madison Ave., 18th Floor New York, NY 10017	10,140		<0.1	%
	All officers and directors as a group (4 persons)	9,143,201		34.3	%

(1)Includes 66,666 shares of restricted stock subject to vesting

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

Director Independence

The standards relied upon by the Company in determining whether a director is “independent” are those of the NASDAQ.  NASDAQ Rules define an “Independent Director” as a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Examples of persons who would not be considered independent include:  (a) a director who is an employee, or whose immediate family member (defined as a

44

spouse, parent, child, sibling, father- and mother-in-law, son- and daughter-in-law and anyone, other than a domestic employee, sharing the director’s home) is an executive officer of the Company, would not be independent for a period of three years after termination of such relationship; (b) a director who receives, or whose immediate family member receives, compensation of more than $120,000 during any period of twelve consecutive months from the Company, except for certain permitted payments, would not be independent for a period of three years after ceasing to receive such amount; (c) a director who is or who has an immediate family member who is, a current partner of the Company’s outside auditor or who was, or who has an immediate family member who was, a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years would not be independent until a period of three years after the termination of such relationship; (d) a director who is, or whose immediate family member is, employed as an executive officer of another company where any of the Company’s present executive officers serve on the other company’s compensation committee would not be independent for a period of three years after the end of such relationship; and (e) a director who is, or who has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of any organization that makes payments to, or receives payments from, the Company for property or services in an amount that, in any single fiscal year, exceeds the greater of $200,000, or 5% of such other company’s consolidated gross revenues, would not be independent until a period of three years after falling below such threshold.

In applying the above-referenced standards, our Board has determined that only Mr. Jonathan Rich is independent.

Item 14.   Principal Accounting Fees and Services

Independent Registered Public Accounting Firm

Whitley Penn LLP has served as our independent registered public accounting firm since October 2009.  Our management believes that it is knowledgeable about our operations and accounting practices and well qualified to act as our independent registered public accounting firm.

Audit and Other Fees

The following table presents fees for professional services rendered by our independent registered public accounting firm, Whitley Penn LLP, for the audit of our annual financial statements for the years ended December 31, 2012 and 2011:

	2012		2011
Audit fees(1)	$	108,000	$	185,000
Audit-related fees	—		—
Tax fees(2)	35,000		32,503
All other fees(3)	—		39,600
Total Fees	$	143,000	$	257,103

(1)Audit fees consisted of professional services performed in connection with the audit of our annual financial statements and  review of financial statements included in our quarterly reports on Form 10-Q and other related regulatory filings.

(2) Tax fees consist principally of assistance with matters related to tax compliance, tax planning, and tax advice.

(3) For 2011, other fees consisted of services related to the filing of the Company’s Form S-1.

45

PART IV

Item 15.   Exhibits, Financial Statement Schedules

(a)  List of Documents Filed.

1.Financial Statements

The list of the financial statements filed as part of this Annual Report on Form 10-K is set forth on page F-1 herein.

2.Financial Statement Schedules

Financial statement schedules have been omitted because they are either not required, not applicable or the information required to be presented is included in our financial statements and related notes.

(b)  Exhibits.

The exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index attached hereto.

(c)  Financial Statement Schedules.

Financial statement schedules have been omitted because they are not required, not applicable, or the information is included in the Company’s consolidated financial statements.

46

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NYTEX Energy Holdings, Inc.
By:	/s/ Michael K. Galvis
	Michael K. Galvis
	President and Chief Executive Officer

March 20, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Michael K. Galvis	President, Chief Executive Officer, and Director	March 20, 2013
Michael K. Galvis
/s/ Bryan A. Sinclair	Vice President and Chief Financial Officer	March 20, 2013
Bryan A. Sinclair
/s/ William G. Brehmer	Director	March 20, 2013
William G. Brehmer
/s/ Jonathan Rich	Director	March 20, 2013
Jonathan Rich

47

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2012 and 2011	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011	F-4
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2012 and 2011	F-5
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2012 and 2011	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011	F-7
Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

NYTEX Energy Holdings, Inc.

We have audited the accompanying consolidated balance sheets of NYTEX Energy Holdings, Inc. and subsidiaries (the “Company”), as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these 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 audit 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.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NYTEX Energy Holdings, Inc. and subsidiaries, as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Whitley Penn LLP

Dallas, Texas

March 20, 2013

F-2

NYTEX ENERGY HOLDINGS, INC.

Consolidated Balance Sheets

	At December 31,
	2012			2011
Assets
Current assets:
Cash and cash equivalents	$	1,484,386		$	72
Accounts receivable, net	2,539,976			77,159
Marketable securities	514,244			—
Prepaid expenses and other	114,589			31,632
Deferred tax asset, net	3,452			—
Assets from discontinued operations	—			80,733,006
Total current assets	4,656,647			80,841,869
Restricted cash, net of reserve of $1,936,762 (Note 3)	4,313,599			—
Property and equipment, net	681,555			66,112
Deferred financing costs	12,500			1,023,269
Deposits and other	9,296			9,296
Total assets	$	9,673,597		$	81,940,546
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	743,495		$	1,330,121
Deposits held in trust	369			502,106
Revenues payable	230,947			7,700
Debt - current portion	299,767			2,577,484
Liabilities from discontinued operations	—			60,679,065
Total current liabilities	1,274,578			65,096,476
Other liabilities:
Debt	416,016			1,445,935
Derivative liabilities	2,510			—
Deferred tax liabilities	3,452			165,467
Total liabilities	1,696,556			66,707,878
Commitments and contingencies (Note 8)
Mezzanine equity:
Preferred stock, Series A convertible, $0.001 par value; and redemption value of 5,763,869 at December 31, 2012	5,763,869			—
Stockholders’ equity:
Preferred stock, Series A convertible, $0.001 par value; 10,000,000 shares authorized; 5,761,028 issued and outstanding at December 31, 2011	—			5,761
Common stock, $0.001 par value; 200,000,000 shares authorized; 27,652,749 issued and 26,653,158 outstanding at December 31, 2012 and 27,467,723 shares issued and outstanding at December 31, 2011	27,653			27,468
Additional paid-in capital	20,546,744			25,974,600
Treasury stock, at cost: 999,591 and no shares at December 31, 2012 and December 31, 2011, respectively	(1,859,890		)	—
Accumulated deficit	(16,506,529		)	(10,775,161		)
Accumulated other comprehensive income	5,194			—
Total stockholders’ equity	2,213,172			15,232,668
Total liabilities and stockholders’ equity	$	9,673,597		$	81,940,546

See accompanying Notes to Consolidated Financial Statements

F-3

NYTEX ENERGY HOLDINGS, INC.

Consolidated Statements of Operations

	Years Ended December 31,
	2012			2011
Revenues:
Land services	$	3,816,810		$	357,863
Oil and gas sales	182,473			349,707
Sale of oil and gas interests	2,006,922			—
Staffing services	117,433			—
Total revenues	6,123,638			707,570
Operating expenses:
Oil & gas lease operating expenses	104,642			70,096
Depreciation, depletion, and amortization	33,205			52,700
General and administrative expenses	2,733,173			4,273,315
Loss on litigation settlement	—			1,069,065
Gain on settlement of accounts payables	(314,448		)	—
(Gain) loss on sale of assets, net	(419,834		)	6,954
Total operating expenses	2,136,738			5,472,130
Income (loss) from operations	3,986,900			(4,764,560		)
Other income (expense):
Interest and dividend income	13,885			1,229
Interest expense	(324,932		)	(658,279		)
Change in fair value of derivative liabilities	(2,510		)	1,691,240
Other	4,885			—
Total other income (expense)	(308,672		)	1,034,190
Income (loss) from continuing operations before taxes	3,678,228			(3,730,370		)
Income tax provision	(20,401		)	—
Income (loss) from continuing operations	3,657,827			(3,730,370		)
Discontinued Operations:
Income (loss) from discontinued operations, before taxes	(8,728,028		)	21,042,129
Loss on sale of discontinued operation	(1,470,007		)	—
Income tax benefit (provision)	1,383,317			(559,267		)
Income (loss) from discontinued operations	(8,814,718		)	20,482,862
Net income (loss)	(5,156,891		)	16,752,492
Non-controlling interest	65,015			—
Net income (loss) attributable to NYTEX Energy Holdings, Inc.	(5,091,876		)	16,752,492
Preferred stock dividends	(643,829		)	(530,354		)
Net income (loss) to common stockholders	$	(5,735,705	)	$	16,222,138
Basic earnings per share:
Income (loss) from continuing operations	$	0.14		$	(0.14	)
Income (loss) from discontinued operations	(0.34		)	0.77
Net income (loss)	$	(0.20	)	$	0.63
Net income (loss) attributable to common stockholders	$	(0.22	)	$	0.61
Diluted earnings per share:
Income (loss) from continuing operations	$	0.14		$	(0.05	)
Income (loss) from discontinued operations	(0.34		)	0.28
Net income (loss)	$	(0.20	)	$	0.23
Net income (loss) attributable to common stockholders	$	(0.20	)	$	0.23
Weighted average shares outstanding
Basic	25,863,313			26,711,840
Diluted	26,277,045			73,556,473

See accompanying Notes to Consolidated Financial Statements

F-4

NYTEX ENERGY HOLDINGS, INC.

Consolidated Statements of Comprehensive Income (Loss)

	Years Ended December 31,
	2012			2011
Net income (loss) to common stockholders	$	(5,735,705	)	$	16,222,138
Other comprehensive income
Unrealized holding gains on securities available for sale	5,194			—
Other comprehensive income	5,194			—
Comprehensive income (loss) to common stockholders	$	(5,730,511	)	$	16,222,138

See accompanying Notes to Consolidated Financial Statements

F-5

NYTEX ENERGY HOLDINGS, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

	Series A Convertible Preferred Stock					Common Stock			Additional Paid-In			Treasury Stock					Accumulated			Accumulated Other Comprehensive
	Shares		Amounts			Shares	Amounts		Capital			Shares		Amounts			Deficit			Income		Total
Balance at December 31, 2010	5,580,000		$	5,580		26,219,665	$	26,219	$	24,750,200							$	(26,997,299	)			$	(2,215,300	)
Issuance of Series A Convertible Preferred Stock	420,000		420						250,610													251,030
Shares issued for warrants exercised						519,073	519		12,741													13,260
Shares issued for share based compensation and services						277,417	278		846,263													846,541
Shares issued for debt converted						76,667	77		114,922													114,999
Shares of Series A Convertible Preferred Stock issued for warrants converted	135,929		136						(136		)											—
Shares issued for Series A Convertible Preferred Stock converted	(374,901	)	(375		)	374,901	375		—													—
Dividends declared																	(530,354		)			(530,354		)
Net income																	16,752,492					16,752,492
Balance at December 31, 2011	5,761,028		5,761			27,467,723	$	27,468	$	25,974,600		—		$	—		$	(10,775,161	)	$	—	15,232,668
Shares issued for debt						20,000	20		32,980													33,000
Shares issued for share based compensation and services						165,026	165		106,780													106,945
Treasury Shares acquired												4,230,895		(2,732,342		)						(2,732,342		)
Stock dividend declared on Series A convertible preferred stock									258,504			(3,231,304	)	872,452								1,130,956
Shares of Series A Convertible Preferred Stock issued for warrants converted	2,841		3																			3
Acquisition of noncontrolling interest									(68,015		)						65,015					(3,000		)
Return of equity investment in sub																	4,337					4,337
Reclass of Series A Convertible Preferred Stock to mezzanine equity	(5,763,869	)	(5,764		)				(5,758,105		)											(5,763,869		)
Comprehensive income (loss):
Unrealized gain on marketable securities																				5,194		5,194
Dividends declared																	(643,829		)			(643,829		)
Net loss																	(5,156,891		)			(5,156,891		)
Comprehensive loss to common stockholders																						(5,795,526		)
Balance at December 31, 2012	—		$	—		27,652,749	$	27,653	$	20,546,744		999,591		$	(1,859,890	)	$	(16,506,529	)	$	5,194	$	2,213,172

See accompanying Notes to Consolidated Financial Statements

F-6

NYTEX ENERGY HOLDINGS, INC.

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2012			2011
Cash flows from operating activities:
Net income (loss)	$	(5,156,891	)	$	16,752,492
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion, and amortization	3,158,989			8,830,660
Bad debt expense	(42,895		)	212,715
Share-based compensation	106,948			742,541
Deferred income taxes	(2,236,043		)	331,718
Accretion of discount on asset retirement obligations	—			(50,078		)
Amortzation of debt discount	59,611			186,248
Amortization of deferred financing fees	137,343			391,485
Accretion of Senior Series A redeemable preferred stock liability	1,299,495			3,772,727
Change in fair value of derivative liabilities	4,269,510			(28,903,066		)
Loss on litigation	—			1,069,065
Gain on settlement of accounts payables	(314,448		)	—
Sale of oil and gas interest	(2,006,922		)	—
(Gain) loss on sale of assets, net	(419,834		)	71,566
Loss on disposal of discontinued operations	1,470,007			—
Change in working capital:
Accounts receivable	729,599			(3,777,570		)
Inventories	(219,055		)	(259,917		)
Prepaid expenses and other	1,405,491			(1,082,700		)
Accounts payable and accrued expenses	1,652,020			3,822,767
Deposits held in trust	(30,496		)	—
Other liabilities	73,910			23,381
Net cash provided by operating activities	3,936,339			2,134,034
Cash flows from investing activities:
Additions to property and equipment	(317,039		)	(5,761,498		)
Proceeds from sale of property and equipment	28,530			1,509,097
Investments in oil and gas properties	(618,747		)	—
Disposition of FDF	11,653,786
Restricted cash	(6,250,361		)	—
Purchase of marketable securities	(509,050		)	—
Acquisition of noncontrolling interest	(3,000		)	—
Net cash provided by (used in) investing activities	3,984,119			(4,252,401		)
Cash flows from financing activities:
Proceeds from the issuance of common stock and warrants	—			12,500
Proceeds from the issuance of Series A convertible preferred stock	—			420,000
Proceeds from the issuance of 9% convertible debentures	—			936,000
Redemption of convertible debentures	(3,208,014		)	—
Borrowings under senior facility	29,345,714			85,917,747
Payments under senior facility	(31,112,386		)	(86,436,464		)
Borrowings under notes payable	348,341			4,087,219
Payments on notes payable	(1,820,544		)	(2,966,786		)
Issuance costs	—			(50,530		)
Net cash provided by (used in) financing activities	(6,446,889		)	1,919,686
Net increase (decrease) in cash and cash equivalents	1,473,569			(198,681		)
Cash and cash equivalents at beginning of year	10,817			209,498
Cash and cash equivalents at end of year	$	1,484,386		$	10,817

See accompanying Notes to Consolidated Financial Statements

F-7

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 1.  NATURE OF BUSINESS

NYTEX Energy Holdings, Inc. (“NYTEX Energy”) is an energy holding company with principal operations centralized in its wholly-owned subsidiary, NYTEX Petroleum, Inc. (“NYTEX Petroleum”).  NYTEX Petroleum is an early-stage exploration and production company engaged in the acquisition, development, and production of oil and natural gas reserves from low-risk, high rate-of-return wells in shallow carbonate reservoirs. To access top professionals for its high growth and to meet the booming oil and gas industry’s demand for highly qualified professionals, NYTEX Energy created Petro Staffing Group, LLC, doing business as KS Energy Search Group (“KS Search”), a full-service executive  recruiting and placement agency providing the energy marketplace with full-time professionals.  KS Search sources, evaluates, and delivers quality candidates to address the demand for personnel within the oil & gas industry.  Prior to November 5, 2012, NYTEX Energy owned 80% of KS Search resulting in a non-controlling interest.  On November 5, 2012, NYTEX Energy acquired the remaining 20% interest in KS Search and accordingly, KS Search became a wholly-owned subsidiary of NYTEX Energy.

Prior to May 4, 2012, NYTEX Energy, through its wholly-owned subsidiary, NYTEX FDF Acquisition, Inc. (“Acquisition Inc.”), owned a 100% membership interest in New Francis Oaks, LLC (“New Francis Oaks”) and its wholly-owned operating subsidiary, Francis Drilling Fluids, Ltd. (“Francis Drilling Fluids,” or “FDF” and, together with New Francis Oaks, the “Francis Group”), a full-service provider of drilling, completion, and specialized fluids, dry drilling and completion products, technical services, industrial cleaning services, and equipment rental for the oil and gas industry.    On May 4, 2012, certain subsidiaries of ours entered into an Agreement and Plan of Merger (the “Merger Agreement”) with an unaffiliated third party, FDF Resources Holdings LLC (the “Purchaser”).  Pursuant to the Merger Agreement, New Francis Oaks was merged into the Purchaser and, as a result, FDF is now owned by an unaffiliated third party.  See below for further discussion.

NYTEX Energy and subsidiaries are collectively referred to herein as the “Company,” “we,” “us,” and “our.”

NYTEX Energy and its subsidiaries are headquartered in Dallas, Texas.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. The consolidated financial statements include the accounts of NYTEX Energy and entities in which it holds a controlling interest. All intercompany transactions have been eliminated.  Certain prior-period amounts have been reclassified to conform to the current-year presentation.

All references to the Company’s outstanding common shares and per share information have been adjusted to give effect to the one-for-two reverse stock split effective November 1, 2010.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  On an ongoing basis, we review these estimates based on information that is currently available.  Changes in facts and circumstances may cause us to revise our estimates.  The most significant estimates relate to revenue recognition, depreciation, depletion and amortization, the assessment of impairment of long-lived assets and oil and gas properties, income taxes, and fair value.  Actual results could differ from estimates under different assumptions and conditions, and such results may affect operations, financial position, or cash flows.

Cash and Cash Equivalents

We consider all demand deposits, money market accounts, and highly liquid investments with original maturities of three months or less to be cash equivalents.  The carrying amount of cash and cash equivalents reported on the consolidated balance sheet approximates fair value.  We maintain funds in bank accounts which, from time to time, exceed federally insured limits.

F-8

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Accounts Receivable

We provide credit in the normal course of business to our customers and perform ongoing credit evaluations of those customers.  We maintain an allowance for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.   A portion of our receivables are from the operators of producing wells in which we maintain ownership interests.  These operators market our share of crude oil and natural gas production.  The ability to collect is dependent upon the general economic conditions of the purchasers/participants and the oil and gas industry.

Marketable Securities

We determine the appropriate classification of our investments in marketable securities at the time of acquisition and reevaluate such determinations at each balance sheet date.  Marketable securities are classified as held to maturity when we have the positive intent and ability to hold securities to maturity. Marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with the unrealized gains and losses recognized in earnings.  Marketable securities not classified as held to maturity or as trading, are classified as available for sale, and are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income (loss) and reported in shareholders’ equity.  We have classified all of our marketable securities as available for sale.  The fair value of substantially all securities is determined by quoted market prices. The estimated fair value of securities for which there are no quoted market prices is based on similar types of securities that are traded in the market.

We review our marketable securities on a regular basis to determine if any security has experienced an other-than-temporary decline in fair value.  We consider several factors including the length of the time and the extent to which the fair value has been below cost, the financial condition and near-term prospects of the affiliated entity, and other factors, in our review.  If we determine that an other-than-temporary decline exists in a marketable security, we write down the investment to its market value and record the related write-down as an investment loss in our Consolidated Statement of Operations.

Property and equipment

Property and equipment are recorded at cost less accumulated depreciation, depletion, and amortization (“DD&A”).  Costs of improvements that appreciably improve the efficiency or productive capacity of existing properties or extend their lives are capitalized.  Maintenance and repairs are expensed as incurred. Upon retirement or sale, the cost of properties and equipment, net of the related accumulated DD&A, is removed and, if appropriate, gain or loss is recognized in the respective period’s consolidated statement of operations.

For our oil and gas properties, we follow the successful efforts method of accounting for oil and gas exploration and development costs.  Under this method of accounting, all property acquisition costs and costs of exploratory wells are capitalized when incurred, pending determination of whether additional proved reserves are found.  If an exploratory well does not find additional reserves, the costs of drilling the well are charged to expense.  The costs of development wells, whether productive or nonproductive, are capitalized.  Geological and geophysical costs on exploratory prospects and the costs of carrying and retaining unproved properties are expensed as incurred.

Long-lived Assets

Long-lived assets are reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset.  If it is determined that the carrying amount may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.  Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties.  We consider projected future undiscounted cash flows, trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as the price of oil and gas, production volumes and costs, drilling activity, and economic conditions could significantly affect these estimates.

We evaluate impairment of our oil and gas properties on a property-by-property basis and estimate the fair value based on discounted cash flows expected to be generated from the production of proved reserves.  We did not have any impairment charges for the years ended December 31, 2012 and 2011.

Deposits Held in Trust

We record a liability for funds held on behalf of outside investors in oil and gas exploration projects, which are to be

F-9

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

paid to the project operator as capital expenditures are billed.  The liability is reduced as we make payments on behalf of those outside investors to the operator of the project.

Asset Retirement Obligations

We recognize liabilities for retirement obligations associated with tangible long-lived assets, such as producing well sites when there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The initial measurement of an asset retirement obligation is recorded as a liability at its fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet.  If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement cost.  The asset retirement cost is depreciated using a systematic and rational method similar to that used for the associated property and equipment.  As of December 31, 2012 and 2011, we did not have any obligation related to asset retirements.

Fair Value Measurements

Certain of our assets and liabilities are measured at fair value at each reporting date.  Fair value represents the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants.  This price is commonly referred to as the “exit price”.

Fair value measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation techniques.  This hierarchy consists of three broad levels. Level 1 inputs on the hierarchy consist of unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority.  Level 2 measurements are based on inputs other than quoted prices that are generally observable for the asset or liability.   Common examples of Level 2 inputs include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in markets not considered to be active.  Level 3 measurements have the lowest priority and are based upon inputs that are not observable from objective sources.  The most common Level 3 fair value measurement is an internally developed cash flow model.  We use appropriate valuation techniques based on the available inputs to measure the fair values of our assets and liabilities.  When available, we measure the fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value.

The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable, and accrued expenses reported on the accompanying consolidated balance sheets approximates fair value due to their short-term nature.  The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date.  Debt fair values are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments.  As of December 31, 2012 and 2011, we estimate the fair value of our debt to be $715,783 and $4,023,419, respectively.

Non-financial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a business combination, intangible assets and goodwill, and asset retirement obligations.

See Note 10 for fair value measurements included in our accompanying consolidated balance sheets.

Revenue Recognition

Revenues from the sales of natural gas and crude oil are recorded when product delivery occurs and title and risk of loss pass to the customer, the price is fixed or determinable, and collection is reasonably assured.  Revenues from land services are recorded when title work is completed and the customer has been invoiced for services provided.  Revenues from the sale of interests in oil and gas properties are recorded once a formal agreement has been reached and the agreement has been consummated through the exchange of any consideration.  Revenues from energy staffing are recorded once a formal offer has been provided to the candidate by the hiring company and the candidate has accepted the offer.

The Company uses the sales method of accounting for oil and gas revenues.  Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company’s individual interest in the property.  Periodically, imbalances between production and nomination volumes can occur for various reasons.  In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined.  If an imbalance exists at the time the wells’ reserves are depleted, settlements are made among the joint interest owners under a variety of arrangements.

F-10

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Discontinued Operation

The consolidated financial statements present the operations of our former oilfield services segment (FDF) as discontinued operations in accordance with ASC 205-20-55 for all periods presented.

General and Administrative Expenses

General and administrative expenses are summarized below for the years ended December 31, 2012 and 2011:

	December 31,
	2012		2011
Salary, wages, and benefits	$	1,804,332	$	1,259,735
Legal, accounting, and professional fees	516,787		2,138,352
Acquistion-related expenses	—		46,595
Contract labor	66,640		43,465
Rent and operating lease expenses	87,973		72,527
Insurance	173,493		79,378
Other	83,948		633,263
	$	2,733,173	$	4,273,315

Share Based Compensation

We grant share-based awards to acquire goods and/or services, to members of our Board of Directors, and to selected employees.  All such awards are measured at fair value on the date of grant and are recognized as a component of general and administrative expenses in the accompanying consolidated statements of operations over the applicable requisite service periods.

Income Taxes

We are subject to current income taxes assessed by the federal government and various state jurisdictions in the United States.  In addition, we account for deferred income taxes related to these jurisdictions using the asset and liability method.  Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets are also recognized for the future tax benefits attributable to the expected utilization of existing tax net operating loss carryforwards and other types of carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

We recognize the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority.  Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority.  We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the years ended December 31, 2012 and 2011.  There were no interest and penalties related to unrecognized tax positions for the years ended December 31, 2012 and 2011.  The tax years subject to examination by tax jurisdictions in the United States are 2008 to 2011.

Earnings Per Common Share

Basic earnings (loss) per share amounts have been computed based on the average number of shares of common stock outstanding for the period.   Diluted loss per share is calculated using the treasury stock method to reflect the potential dilution that could occur if dilutive share-based instruments were exercised.

On November 1, 2010, we effected a one-for-two reverse stock split to common shareholders.  All share and per share information referenced and presented within this filing has been retroactively adjusted to reflect the reverse stock split.

Recently Issued Accounting Standards

In May 2011, the FASB issued an accounting pronouncement related to fair value measurement (FASB ASC Topic 820), which amends current guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP

F-11

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

and International Financial Reporting Standards. The amendments generally represent clarification of FASB ASC Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We adopted this pronouncement for our fiscal year beginning January 1, 2012 and the adoption of this pronouncement did not have a material effect on our consolidated financial statements.

In 2011, the FASB issued accounting ASU No. 2011-05 as amended by ASU No. 2011-12 that provides new guidance on the presentation of comprehensive income (FASB ASC Topic 220) in financial statements. Entities are required to present total comprehensive income either in a single, continuous statement of comprehensive income or in two separate, but consecutive, statements. Under the single-statement approach, entities must include the components of net income, a total for net income, the components of other comprehensive income and a total for comprehensive income. Under the two-statement approach, entities must report an income statement and, immediately following, a statement of other comprehensive income. The ASUs do not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. The provisions for this pronouncement were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The adoption of ASUs 2011-05 and 2011-12 did not have a material impact on our results of operations, financial position, or cash flows.

In February 2012, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. We are required to apply this guidance prospectively beginning with our first quarterly filing in 2013. The adoption of this new guidance is not expected to impact our financial position or statement of operations, other than changes in presentation.

NOTE 3.  DISPOSITION OF FDF

As more fully reported on our Form 8-K filed on May 10, 2012, on May 4, 2012, (the “Closing Date”), Acquisition Inc., together with New Francis Oaks, entered into the Merger Agreement with the Purchaser.  Pursuant to the terms of the Merger Agreement, New Francis Oaks merged with and into the Purchaser, and the Purchaser continued as the surviving entity after the merger (the “Disposition” or the “Merger”).  New Francis Oaks owns 100% of the outstanding shares of FDF, and, as a result of the Disposition, we no longer own FDF.

The total consideration for the Merger paid by the Purchaser on the Closing Date was $62,500,000 (the “Merger Proceeds”).  After: (i) an adjustment to the amount of the Merger Proceeds based upon the level of estimated working capital of the Francis Group on the Closing Date; (ii) the payment or provision for payment of all indebtedness of the Francis Group on the Closing Date; (iii) the payment of all indebtedness of Acquisition Inc. on the Closing Date (including under its senior secured credit facility with PNC Bank; (iv) the payment of the Put Payment Amount (as defined below) due to WayPoint Nytex, LLC (“WayPoint”) under the WayPoint Purchase Agreement (as defined below); (v) the payment of all transaction expenses relating to the Merger; (vi) the payment to the Company of $812,500 of accrued management fees and $110,279 of expense reimbursement due and payable to the Company under the Management Services Agreement, dated November 23, 2010, between the Company and FDF (the “Management Agreement”); (vii) the payment of certain transaction bonuses payable to certain FDF employees; and (viii) the Purchaser’s delivery of $6,250,000 of the Merger Proceeds (the “Escrow Fund”) to The Bank of New York Mellon Trust Company, N.A., as escrow agent, to be held in escrow under the Escrow Agreement (as defined below) and reported as restricted cash on the accompanying consolidated balance sheet at December  31, 2012, Acquisition Inc. received on the Closing Date remaining cash transaction proceeds in the amount of approximately $4,481,000.  The Merger Agreement provides that, to the extent that the final amount of working capital of the Francis Group on the Closing Date is greater than the estimated amount of working capital, as determined under the Merger Agreement, the Purchaser will pay to Acquisition Inc. the amount of such working capital surplus, provided that, pursuant to the Omnibus Agreement (as defined below), WayPoint is entitled to receive 87.5% of any such working capital surplus payment.  To the extent that the final amount of working capital of the Francis Group on the Closing Date is less than the estimated amount of working capital, Acquisition Inc. will pay to the Purchaser the amount of such working capital deficit, which payment will be made out of the Escrow Fund, provided that, pursuant to the Omnibus Agreement, WayPoint is obligated to pay to Acquisition Inc. 87.5% of the amount of any such working capital deficit.

As previously disclosed, on April 13, 2011, we received a letter from PNC, notifying the Company of the occurrence and continued existence of certain events of default (the “PNC Default”) under the Revolving Credit, Term Loan and Security Agreement (the “Senior Facility”).  On November 3, 2011, the Company entered into a First Amendment to Revolving Credit, Term Loan and Security Agreement and Limited Waiver (the “First Amendment”) with PNC, which was

F-12

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

effective as of November 1, 2011.  Under the First Amendment, PNC waived each of the events of default under the Senior Facility.  However, as a result of the PNC Default, on April 14, 2011, the Company received a letter from WayPoint, as the holder of all of the outstanding shares of the Senior Series A Redeemable Preferred Stock of NYTEX Acquisition, stating that the Company was in default under the Preferred Stock and Warrant Purchase Agreement, by and among the Company, Acquisition Inc., and WayPoint (the “WayPoint Purchase Agreement”), for defaults similar to the PNC Default plus for our failure to pay dividends to WayPoint when due under the terms of the WayPoint Purchase Agreement.  On May 4, 2011, WayPoint demanded, pursuant to a “Put Election Notice” delivered under the WayPoint Purchase Agreement (the “Put Election Notice”), that, as a result of those defaults, the Company and Acquisition Inc. repurchase from WayPoint, for an aggregate purchase price of $30,000,000, all of the securities of Acquisition Inc. and the Company originally acquired by WayPoint pursuant to the WayPoint Purchase Agreement, which securities consisted of: (i) 20,750 shares of Senior Series A Redeemable Preferred Stock of NYTEX Acquisition (the “WayPoint Series A Shares”); (ii) one (1) share of Series B Redeemable Preferred Stock of the Company (the “WayPoint Series B Share”); (iii) the Purchaser Warrant (as defined in the WayPoint Purchase Agreement); and (iv) the Control Warrant (as defined in the WayPoint Purchase Agreement) (collectively, the “WayPoint Securities”).  Our failure to repurchase the WayPoint Securities in accordance with the Put Election Notice resulted in an additional event of default under the WayPoint Purchase Agreement.  Thereafter, pursuant to the terms of the Forbearance Agreement, dated as of September 30, 2011 (the “Forbearance Agreement”), by and among the Company, Acquisition Inc., and WayPoint, WayPoint agreed to forbear, for a period of 60 days, from exercising its rights and remedies under the WayPoint Purchase Agreement.  On November 14, 2011, WayPoint provided a formal written notice to the Company that the Company was in default under the Forbearance Agreement.  Due to cross-default provisions, the default under the Forbearance Agreement also constituted a default under the First Amendment. As a result of the defaults under the WayPoint Purchase Agreement and the Forbearance Agreement, WayPoint initiated certain remedies afforded to it under the WayPoint Purchase Agreement and the Forbearance Agreement, including the sale of FDF to a third party.  WayPoint directed the FDF sale process and, although we participated in the process, we did not control the ultimate disposition of FDF, including, but not limited to, the timing of the Merger and the Merger consideration.  As a result of the transactions associated with the Merger, we are no longer in default under the First Amendment with PNC.

In connection with the consummation of the Merger, we entered into an Omnibus Agreement (the “Omnibus Agreement”) with WayPoint and the Francis Group.  The Omnibus Agreement became effective upon the consummation of the Merger.

Pursuant to the Omnibus Agreement, upon the consummation of the Merger:

(i) the Management Agreement was terminated;

(ii) Waypoint paid $150,000 to the Company out of the Put Payment Amount due and payable to WayPoint;

(iii) the Company was paid $812,500 from the Merger Proceeds, which sum represented accrued management fees due and payable to the Company from FDF under the Management Agreement; and

(iv) the Company was paid $110,279 from the Merger Proceeds, which sum represented reimbursement by FDF of certain expenses previously incurred by the Company in respect of certain professional services provided, and which reimbursement was due and payable to the Company from FDF under the Management Agreement.

In the Omnibus Agreement, the Company, WayPoint, and the Francis Group also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.  In addition, the parties agreed that WayPoint would bear 87.5% of any post-closing working capital deficit under the Merger Agreement and WayPoint would receive 87.5% of any post-closing working capital surplus under the Merger Agreement.

Further, in connection with the consummation of the Merger, we entered into a Settlement Agreement (the “Settlement Agreement”) with WayPoint, the Francis Group, and Michael G. Francis and Bryan Francis (together,  the “Francises”).  The Settlement Agreement became effective upon the consummation of the Merger.

Pursuant to the Settlement Agreement, upon the consummation of the Merger:

(i) WayPoint paid out of the Put Payment Amount a $100,000 bonus to Michael G. Francis, the President of NYTEX Acquisition, and a $25,000 bonus to Jude N. Gregory, the Vice President and Chief Financial Officer of Acquisition Inc.;

(ii) (A) the Company caused the release of the $1,800,000 of  Escrowed Cash (as defined in the Escrow Agreement, dated as of November 23, 2010, by and among Acquisition Inc., Bryan Francis and The F&M Bank &

F-13

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Trust Company (the “Francis Escrow Agreement”)) then being held in escrow pursuant to the Francis Escrow Agreement, in accordance with the terms of the Francis Escrow Agreement, and (B) Michael G. Francis transferred and assigned back to the Company 625,000 shares of common stock of the Company then owned by Michael G. Francis and originally issued to him pursuant to the Membership Interest Purchase Agreement, dated as of November 23, 2010 (the “Francis Purchase Agreement”), and then being held in escrow pursuant to the Francis Escrow Agreement;

(iii) (A) Michael G. Francis transferred and assigned back to the Company all of the remaining 2,197,063 shares of common stock then owned by him and originally issued to him pursuant to the Francis Purchase Agreement, and (B) Bryan Francis transferred and assigned back to the Company all of the 381,607 shares of common stock originally issued to him pursuant to the Francis Purchase Agreement, as well as all of the 27,225 shares of NYTEX Common Stock issued to him in connection with his employment by FDF;

(iv) the employment agreements of Michael G. Francis and Bryan Francis terminated and they became at-will employees of the FDF Group;

(v) each of the three designees of WayPoint then serving as directors of Acquisition Inc., which included John Henry Moulton, Thomas Drechsler and Lee Buchwald, resigned as directors of Acquisition Inc., effective immediately upon the consummation of the Merger; and

(vi) in exchange for receipt by WayPoint of the Put Payment Amount (which consisted of $30,000,000, less an aggregate of $306,639 of dividends previously received by WayPoint on account of the WayPoint Senior Series A Redeemable Preferred Stock, less an aggregate of $275,000 payable by WayPoint to the Company, Michael G. Francis and Jude N. Gregory pursuant to the Settlement Agreement, less an additional $449,072 (representing 87.5% of the estimated working capital deficit of the Francis Companies on the Closing Date, but subject to the right of WayPoint to subsequently receive 87.5% of any final working capital surplus of the Francis Companies on the Closing Date and the obligation of WayPoint to subsequently pay 87.5% of any final working capital deficit of the Francis Companies on the Closing Date, pursuant to the Omnibus Agreement); the “Put Payment Amount”), WayPoint transferred and assigned (A) the Senior Series A Redeemable Preferred Stock back to Acquisition Inc., (B) the Purchaser Warrant and the Control Warrant back to the Company, and (C) the WayPoint Series B Share back to the Company, and all such securities were cancelled.

In the Settlement Agreement, the Company, WayPoint, the Francis Group, and the Francises also agreed to mutual releases from and to each other, and their related parties, relating to facts existing on or before the Closing Date that relate to the Merger, the WayPoint Purchase Agreement, the related documents, and the relations among the parties, including in connection with any employment agreements or arrangements of the Francises.  The releases also covered claims that any of the parties could assert against any employees of the FDF Group.

In August 2012, the Purchaser delivered a proposed final closing statement, which included, among other things, a calculation of the final closing date net working capital, to the Company.  Under the terms of the Omnibus Agreement, WayPoint agreed to bear 87.5% of any post-closing working capital deficit and conversely, we granted to WayPoint the authority to make all decisions, including the right to dispute any item contained in the final closing date net working capital, on our behalf with regards to the proposed final closing statement and final closing date net working capital.

In November 2012, WayPoint delivered to the Purchaser a notice of disagreement disputing certain items in the proposed closing statement and calculation of the final closing date net working capital.  In January 2013, NYTEX, WayPoint, and the Purchaser agreed in principal to the final closing statement amounts, along with the calculation of the final closing date net working capital.  Part of this agreement in principal included the planned release of funds from the Escrow Fund to the Purchaser in the amount of $1,936,762 (“Net Payment to Purchaser from Escrow”).

A dispute between NYTEX and WayPoint arose with regards to the amounts due under the Omnibus Agreement to NYTEX with respect to WayPoint’s obligation to bear 87.5% of the Net Payment to Purchaser from Escrow.  Following substantial negotiations, on March 8, 2013, NYTEX and WayPoint agreed to settle this dispute such that WayPoint would pay to NYTEX $1,075,000 to satisfy its obligation under the Omnibus Agreement.  On March 14, 2013, NYTEX was paid $1,075,000 and on March 15, 2013, the Net Payment to Purchaser from Escrow was released to the Purchaser.  As the events that gave rise to both NYTEX’s settlement with WayPoint and the release from escrow of the Net Payment to Purchaser from Escrow existed as of December 31, 2012, the amount paid by WayPoint of $1,075,000 has been recognized as a receivable on the accompanying consolidated balance sheet at December 31, 2012.  In addition, the amount of funds to be released from the Escrow Fund of $1,936,762 has been recognized as a reserve against the restricted cash balance on the accompanying consolidated balance sheet at December 31, 2012.  The difference between the $1,936,762 and $1,075,000 has been

F-14

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

recognized as an additional loss on discontinued operations on the accompanying consolidated statement of operations as of December 31, 2012.

NOTE 4.  ACCOUNTS RECEIVABLE

Accounts receivable at December 31, 2012 and 2011 consist of the following:

	December 31,
	2012			2011
Trade receivables	$	1,432,295		$	36,203
Waypoint receivable	1,075,000			—
Other	40,641			40,956
Total accounts receivable	2,547,936			77,159
Allowance for doubtful accounts	(7,960		)	—
Accounts receivable, net	$	2,539,976		$	77,159

NOTE 5.  PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2012 and 2011 consist of the following:

	December 31,
	2012			2011
Equipment	$	101,770		$	98,453
Oil and gas properties	757,920			128,626
Total property & equipment	859,690			227,079
Accumulated depreciation & depletion	(178,135		)	(160,967		)
Property & equipment, net	$	681,555		$	66,112

Depreciation and depletion from continuing operations related to our property and equipment was $33,205 and $49,180 for the years ended December 31, 2012 and 2011, respectively.

NOTE 6.  DERIVATIVE LIABILITIES

The following summarizes our derivative liabilities at December 31, 2012 and 2011:

	December 31,
	2012		2011
Warrrants - Series A Convertible Preferred Stock	$	2,510	$	—
Total derivative liabilities	$	2,510	$	—

At December 31, 2012, we had one derivative on our consolidated balance sheet which was related to the warrants issued to the holders of the Company’s Series A Convertible Preferred Stock.  The agreement setting forth the terms of the warrants issued to the holders of the Company’s Series A Convertible Preferred Stock include an anti-dilution provision that requires a reduction in the instrument’s exercise price should subsequent at-market issuances of the Company’s common stock be issued below the instrument’s original exercise price of $2.00 per share.  Accordingly, we consider the warrants to be a derivative; and, as a result, the fair value of the derivative is included as a derivative liability on the accompanying consolidated balance sheets.  At December 31, 2012 and December 31, 2011, the fair value of the warrants issued to the holders of the Series A Convertible Preferred Stock was $2,510 and $0, respectively.

Changes in fair value of the derivative liabilities are included as a separate line item within other income (expense) in the accompanying consolidated statement of operations for the years ended December 31, 2012 and 2011, and are not taxable or deductible for income tax purposes.

F-15

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 7.  DEBT

A summary of our outstanding debt obligations at December 31, 2012 and 2011 is presented as follows:

	December 31,
	2012			2011
18% Demand Note due November 2011	$	—		$	244,000
6% Related Party Loan due September 2012	—			138,000
12% Convertible Debentures due October 2012	—			2,032,501
9% Convertible Debentures due February 2014	—			1,173,013
7.5% Secured Equipment Loan due February 2016	—			27,781
5.5% Insurance Financing due August 2013	55,484			—
Revolving Line of Credit due July 2014	108,355			—
Francis Promissory Note (non-interest bearing) due October 2015	292,938			385,824
Promissory Note (non-interest bearing) due December 2015	241,453			—
7.5% Secured Equipment Loan due March 2016	17,553			22,300
Total debt	715,783			4,023,419
Less: current maturities	(299,767		)	(2,577,484		)
Total long-term debt	$	416,016		$	1,445,935

Carrying values in the table above include net unamortized debt discount of $183,109 and $216,676 at December 31, 2012 and 2011, respectively, which is amortized to interest expense over the terms of the related debt.

Debt maturities as of December 31, 2012, excluding discounts, are as follows:

2013	$	299,767
2014	353,035
2015	245,108
2016	982
2017	—
2018 and thereafter	—
Unamortized Discount	(183,109		)
	$	715,783

$2.15 Million 12% Convertible Debentures

In August 2010, we initiated a $2,150,000 offering of convertible debt (“12% Convertible Debenture”) to fund our ongoing working capital needs.  Terms of the 12% Convertible Debenture were as follows:  (i) $100,000 per unit with interest at a rate of 12% per annum payable monthly with a maturity of 180 days from the date of issuance; (ii) convertible at any time prior to maturity at $1.50 per share of the Company’s common stock; and, (iii) each unit includes a three-year warrant to purchase up to 20,000 shares of the Company’s common stock at an exercise price of $2.00 per share for a period of three years from the effective date of the warrant.  As of December 31, 2011, we had raised the full $2,150,000 under the 12% Convertible Debenture offering including warrants to purchase up to 430,000 shares of the Company’s common stock.  In addition, we also issued 45,000 shares of the Company’s common stock to certain 12% Convertible Debenture holders.  During 2011, the 12% Convertible Debentures were amended twice, ultimately extending the maturity date to October 2012.

On June 13, 2012, pursuant to their terms we redeemed the 12% Convertible Debentures in full.

$1.17 Million 9% Convertible Debentures

In February 2011, we issued 9% Convertible Debentures (“9% Convertible Debenture”) due January 2014 in exchange for $237,000 in demand notes and additional working capital.  Interest only was payable monthly at the annual rate

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NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

of 9% with any accrued and unpaid interest along with the unpaid principal due at maturity.  The 9% Convertible Debenture was convertible to the Company’s common stock at any time at the fixed conversion price of $2.50 per share, subject to certain adjustments including stock dividends and stock splits.  We had the option, at any time, to redeem the outstanding 9% Convertible Debentures in cash equal to 100% of the original principal amount plus accrued and unpaid interest.

On June 13, 2012, pursuant to their terms, we redeemed the 9% Convertible Debentures in full.

Francis Promissory Note

In connection with the FDF acquisition, on November 23, 2010, we entered into a promissory note payable to a former interest holder of FDF (“Francis Promissory Note”) in the face amount of $750,000.  The Francis Promissory Note is an unsecured, non-interest bearing loan that requires quarterly payments of $37,500 and matures October 1, 2015.  For the years ended December 31, 2012 and 2011, we have recorded the Francis Promissory Note as a discounted debt of $292,938 and $385,824, respectively, using an imputed interest rate of 9%.

Related Party Loan

In March 2006, NYTEX Petroleum LLC entered into a $400,000 revolving credit facility (“Related Party Loan”) with one of its founding members to be used for operational and working capital needs.  Effective with the execution of an amended letter agreement on August 25, 2008, the revolving nature of the Facility was terminated, with the then unpaid principal balance of $295,000 on the Related Party Loan effectively becoming a note payable to the founding member.  The Related Party Loan was amended to provide for interest, payable monthly, at 6% per annum, a security interest in the assets of NYTEX Petroleum LLC (now NYTEX Petroleum), and a personal guarantee by NYTEX Petroleum LLC’s two founding members.  The terms of the Related Party Loan were further amended, requiring monthly principal payments of $3,000 plus interest for eighteen months beginning March 1, 2010 and ending September 1, 2011.  At the end of the eighteen month period, the remaining principal balance and any unpaid interest were due in a lump sum. In August 2011, the facility was further amended, extending the maturity date to September 1, 2012.  There is no penalty for early payment of principal.

In September 2012, we paid the outstanding balance due on the Related Party loan in full.  For the years ended December 31, 2012 and 2011, interest expense related to the 6% Related Party Loan totaled $5,233 and $6,102, respectively.

Revolving Line of Credit

In July 2012, we entered into a revolving line of credit agreement with a commercial bank providing for loans up to $325,000.  The revolving credit line bears an annual interest rate based on the 30 day LIBOR plus 1.95% and matures on July 11, 2014.  Payments of interest only are payable monthly with any outstanding principal and interest due in full, at maturity.  The revolving line of credit is secured by our marketable securities.  We pay no fee for the unused portion of the revolving line of credit nor are there any prepayment penalties.  In September 2012, we drew $108,355 from the revolving line of credit, primarily to pay in full, the 6% Related Party Loan.  At December 31, 2012, amounts available under the revolving line of credit were $216,645.

Other Loans

In August 2011, we entered into a $200,000 promissory note with a third party.  The promissory note payable was due in full along with accrued, unpaid interest at the fixed rate of 18% at maturity, on November 24, 2011.  As an inducement to enter into the promissory note, we agreed to pay the holder of the promissory note payable a one-time fee of $11,000 and 20,000 shares of our common stock, which would be paid on maturity.  Both of these items are accounted for as a premium to the promissory note.  As of December 31, 2011, the balance on the promissory note was $244,000.  During the first quarter of 2012, the promissory note payable was paid in full.

In July 2012, we disposed of a company-owned automobile that secured the 7.5% secured equipment loan due February 2016 and paid in full, the outstanding balance due under the loan.  We are no longer obligated under such loan.

In November 2012, we entered into a promissory note with a third party to finance premiums related to certain insurance policies.  The promissory note bears an annual interest rate of 5.5% with principal and interest payments of $8,109 due monthly through maturity in August 2013.

In December 2012, we entered into an unsecured, non-interest bearing promissory note with a former vendor in the amount of $342,500 as a settlement for outstanding payables due to the former vendor.  The promissory note required an initial payment of $75,000 with monthly payments of $7,430.55 due through maturity, on December 31, 2015.  For the year ended December 31, 2012, we have recorded the promissory note as a discounted debt of $241,453, using an imputed interest rate of 7.5%.

F-17

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 8.  COMMITMENTS AND CONTINGENCIES

Leases

The Company leases certain equipment and office space under non-cancelable operating leases which provide for minimum annual rentals.  Future minimum obligations under these lease agreements at December 31, 2012 are as follows:

2013	$	80,234
2014	81,583
2015	71,791
2016	58,283
2017	—
Thereafter	—
	$	291,891

Total lease rental expense from continuing operations for the years ended December 31, 2012 and 2011 was $87,973 and $72,527, respectively.

Litigation

We may become involved from time to time in litigation on various matters, which are routine to the conduct of our business.  We believe that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial position or operations, although any adverse decision in these cases, or the costs of defending or settling such claims, could have a material adverse effect on our financial position, operations, and cash flows.

Environmental

We are subject to extensive federal, state, and local environmental laws and regulations.  These laws, which are constantly changing, regulate the discharge of materials into the environment and may require us to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites.  Environmental expenditures are expensed or capitalized depending on their future economic benefit.  Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed.  Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated.

NOTE 9.  STOCKHOLDERS’ EQUITY

The authorized capital of NYTEX Energy consists of 200 million shares of common stock, par value $0.001 per share; and 10 million shares of Series A Convertible Preferred Stock, par value $0.001 per share.  The holders of Series A Convertible Preferred Stock have the same voting rights and powers as the holders of common stock.  Each holder of Series A Convertible Preferred Stock may, at any time, convert their shares of Series A Convertible Preferred Stock into shares of common stock at an initial conversion ratio of one-to-one.  For the years ended December 31, 2012 and 2011, we issued no shares and 374,901 shares, respectively, of common stock related to conversions of the Company’s Series A Convertible Preferred Stock.

Private Placement — Common Stock

In August 2008, we initiated a private placement of our common stock, offering 2,200,000 common shares at $2.00 per share along with a three-year warrant exercisable at $1.00 per share.  In April 2009, the private placement offering of our common stock was expanded to $5,900,000 and further expanded in February 2010 to $8,000,000.  On July 22, 2010, we concluded the sale of 2,966,551 shares of our common stock pursuant to the private placement for total net proceeds of $5,900,000.  In addition, 110,275 shares of common stock were issued to certain holders as an inducement to purchase our common stock.  For the year ended December 31, 2010, we issued a total of 91,200 common shares under the private placement for net proceeds of approximately $181,100, along with warrants to purchase up to 91,200 shares of our common stock.  The warrants are exercisable at $1.00 per share for a period of three years from the effective date of the warrant.  During the first quarter 2012, we extended the exercise dates on these warrants for an additional 24 months from the original effective date of the warrant.

F-18

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Other Common Stock Issuances

For the years ended December 31, 2012 and 2011, we issued 165,026 and 277,417 shares, respectively, of our common stock to certain employees and individuals.  The fair value of the shares for the years ended December 31, 2012 and 2011 of approximately $106,945 and $846,541, respectively, was recorded as professional fees or stock-based compensation in the accompanying consolidated statements of operations.

Restructuring of Series A Convertible Preferred Stock

On August 31, 2012, NYTEX’s Amended and Restated Certificate of Designation in respect of the Series A Convertible Preferred Stock was approved by written consent of the holders of a majority of the total outstanding voting power of NYTEX’s voting securities (the “Restructuring”).  On September 12, 2012, we commenced mailing to all holders of the Company’s common stock and Series A Convertible Preferred Stock, a definitive information statement related to NYTEX’s Amended and Restated Certificate of Designation.   On October 2, 2012 (“Effective Date”), we filed the Amended and Restated Certificate of Designation with the Secretary of State of the State of Delaware.  The Amended and Restated Certificate of Designation amended the terms of our Series A Convertible Preferred Stock as follows:

(i)	The 9% dividend payable with respect to the shares of Series A Convertible Preferred Stock ceased to accrue effective as of June 15, 2012 (the “Termination Date”) and, thereafter, no dividends will be payable with respect to such shares unless declared by the Company’s board of directors;
(ii)	In exchange for all accrued and unpaid dividends as of the Termination Date, each holder of Series A Convertible Preferred Stock (a “Series A Holder”), as of the record date of July 24, 2012 (the “Record Date”), was issued shares of our common stock at a rate of one (1) share of our common stock for each $1.00 of accrued and unpaid dividends due such holder (collectively, the “Dividend Common Shares”). As a result, in October 2012 the Company issued an aggregate of approximately 768,090 Dividend Common Shares to the Series A Holders;
(iii)	The original terms of the Series A Convertible Preferred Stock also provided for a liquidation preference of $1.50 per share which would have been payable on a liquidation event involving the Company. As part of the Restructuring and in consideration for reducing the liquidation preference to $1.00 per share and eliminating the right to declare a deemed liquidation event, in October 2012 the Company issued to the Series A Holders, as of the Record Date, shares of our common stock at a rate of 0.42735 shares for each share of Series A Preferred held by them, or an aggregate of approximately 2,463,214 common shares (the “Liquidation Adjustment Common Shares”);
(iv)	As part of the Restructuring, in October 2012 we paid to the Series A Holders as of the Record Date, a restructuring fee in the amount of 0.0075% of the original $1.00 per share purchase price of the Series A Convertible Preferred Stock, with such fee totaling approximately $43,230; and
(v)	At any time following the Effective Date of the Restructuring, the Company has the right to redeem any or all of the outstanding shares of Series A Convertible Preferred Stock at the original purchase price of $1.00 per share. Further, the Company is required to redeem outstanding shares of Series A Convertible Preferred Stock, from time-to-time, upon any release to the Company of any portion of the $6,250,361 currently being held in the post-closing escrow fund (reported as restricted cash on the accompanying balance sheet at December 31, 2012) in connection with the sale of FDF on May 4, 2012, which mandatory redemption would be made by the Company out of funds legally available therefor to the extent of 100% of the amount of funds released at that time. Each redemption would be applied pro rata among all Series A Holders.

In October 2012, we issued the Dividend Common Shares and Liquidation Adjustment Common Shares to the Series A Holders, and along with the payment of the restructuring fee, were recognized as a charge to retained earnings as a dividend and a reduction to earnings available to common shareholders for the year ended December 31, 2012.  Accordingly, subsequent to the Effective Date, the Series A Convertible Preferred Stock is presented outside of permanent equity as mezzanine equity on the accompanying consolidated balance sheets.

Treasury Stock

As more fully discussed in Note 3, on May 4, 2012, in accordance with the Settlement Agreement effective with the disposition of FDF, we received as an assignment a total of 3,230,895 shares of the Company’s common stock.  On June 5, 2012, Michael K. Galvis, the Company’s President and Chief Executive Officer, surrendered one million shares of common stock pursuant to an agreement entered into with the Company on November 23, 2010.  All such shares are being held as treasury stock at cost.  In October 2012, 3,231,304 shares were re-issued from treasury to Series A Holders in connection

F-19

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

with the Restructuring described above.

Warrants

In connection with the private placement offering of Series A Convertible Preferred Stock, during the year ended December 31, 2011, we issued warrants to the holders to purchase up to 126,000 shares of common stock at an exercise price of $2.00 per share.  The warrants may be exercised for a period of three years from the date of grant.  The aggregate fair value of warrants issued during the year ended December 31, 2011 was $118,440.  There were no warrants issued during the year ended December 31, 2012.

In addition, during the year ended December 31, 2011, we issued warrants to purchase up to 16,800 shares of Series A Convertible Preferred Stock to the placement agent of the private placement offering of Series A Convertible Preferred Stock.  The warrants may be exercised for a period of three years from date of grant at an exercise price of $1.00 per share.  The aggregate fair value of these warrants on the date of grant was approximately $15,792 using the Monte Carlo simulation.

For the year ended December 31, 2012, we did not issue any shares of common stock related to the exercise of warrants granted in connection with the issuance of Series A Convertible Preferred Stock.  During the first quarter 2012, we extended the exercise dates on these warrants for an additional 24 months from the original effective date of the warrant.

On May 4, 2012, as a condition to the disposition of FDF, the Purchaser and Control Warrants held by WayPoint were forfeited and terminated.

The fair value of our warrants is determined using the Black-Scholes option pricing model and the Monte Carlo simulation.  The expected term of each warrant is estimated based on the contractual term or an expected time-to-liquidity event.  The volatility assumption is estimated based on expectations of volatility over the term of the warrant as indicated by implied volatility.  The risk-free interest rate is based on the U.S. Treasury rate for a term commensurate with the expected term of the warrant.  A summary of warrant activity for the years ended December 31, 2012 and 2011 is as follows:

	For the Years Ended December
	2012				2011
	Warrants		Weighted Average Exercise Price		Warrants		Weighted Average Exercise Price
Outstanding at beginning of period	46,335,949		$	0.13	44,061,330		$	0.18
Issued	—		—		142,800		1.88
Adjustment for WayPoint Warrant	—		—		3,283,224		0.01
Exercised	(3,600	)	1.27		(1,151,405	)	1.87
Forfeited or expired	(41,583,659	)	0.01		—		—
Outstanding at end of period	4,748,690		$	1.18	46,335,949		$	0.13

NOTE 10.  FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Our financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts payable, derivative liabilities, and long-term debt. Because of their short maturity, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value.  The fair value of debt is the estimated amount we would have to pay to repurchase our debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date.  Debt fair values are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments.  As of December 31, 2012 and 2011, we estimate the fair value of our debt to be $715,783 and $4,023,419, respectively.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs.  We utilize a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

·Level 1 — Quoted prices in active markets for identical assets or liabilities.  These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

F-20

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

·Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.  These are typically obtained from readily-available pricing sources for comparable instruments.

·Level 3 — Unobservable inputs, where there is little or no market activity for the asset or liability.  These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

As discussed in Notes 3 and 6, we consider certain of our warrants to be derivatives, and, as a result, the fair value of the derivative liabilities are reported on the accompanying consolidated balance sheets.  We value the derivative liabilities using a Monte Carlo simulation which contains significant unobservable, or Level 3, inputs.  The use of valuation techniques requires us to make various key assumptions for inputs into the model, including assumptions about the expected behavior of the instruments’ holders and expected future volatility of the price of our common stock.  At certain common stock price points within the Monte Carlo simulation, we assume holders of the instruments will convert into shares of our common stock.  In estimating the fair value, we estimated future volatility by considering the historic volatility of the stock of a selected peer group over a five year period.

For the years ended December 31, 2012 and 2011, the fair value of the derivative liabilities from continuing operations increased by an aggregate of $2,510 and $0, respectively.  These amounts were recorded within other income (expense) in the accompanying consolidated statements of operations.

We classify our marketable securities as available-for-sale, which are reported at fair value. Unrealized holding gains and losses, net of the related income tax effect, if any, on available-for-sale securities are excluded from income and are reported as accumulated other comprehensive income in stockholders’ equity.  Realized gains and losses from securities classified as available-for-sale are included in income.  We measure the fair value of our marketable securities based on quoted prices for identical securities in active markets, or Level 1 inputs.  As of December 31, 2012, available-for-sale securities consisted of the following:

	Cost		Gross Unrealized				Fair
	Basis		Gains		Losses		Value
Available For Sale
Fixed-income mutual funds	$	490,000	$	5,194	$	—	$	495,194
Money-market funds	19,050		—		—		19,050
	$	509,050	$	5,194	$	—	$	514,244

The realized earnings from our marketable securities portfolio include realized gains and losses, based upon specific identification, and dividend and interest income.  Realized earnings were $11,737 for the year ended December 31, 2012.  We did not have any marketable securities during year ended December 31, 2011.

In accordance with ASC Topic 320, Investments — Debt and Equity Securities, we review our marketable securities to determine whether a decline in fair value of a security below the cost basis is other than temporary. Should the decline be considered other than temporary, we write down the cost basis of the security and include the loss in current earnings as opposed to an unrealized holding loss. No losses for other than temporary impairments in our marketable securities portfolio were recognized during the year ended December 31, 2012.

F-21

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Financial assets and liabilities from continuing operations measured at fair value on a recurring basis are summarized below:

	Carrying Amount		Level 1		Level 2		Level 3
December 31, 2012
Marketable securities	$	514,244	$	514,244	$	—	$	—
Derivative liabilities	$	2,510	$	—	$	—	$	2,510

	Carrying Amount		Level 1		Level 2		Level 3
December 31, 2011
Derivative liabilities	$	—	$	—	$	—	$	—

Balance, December 31, 2011	$	—
Change in derivative liabilities	2,510
Issuance of warrant derivative	—
Balance, December 31, 2012	$	2,510
Balance, December 31, 2010	$	1,573,560
Change in derivative liabilities	(1,573,560		)
Issuance of warrant derivative	—
Balance, December 31, 2011	$	—

NOTE 11.  INCOME TAXES

For the years ended December 31, 2012 and 2011, we had income from continuing operations before income taxes of $3,678,228 and a loss from continuing operations before income taxes of $3,730,370, respectively.  For the year ended December 31, 2011, current and deferred tax amounts were related to discontinued operations.  Therefore, there is no income tax benefit (provision) from continuing operations for the prior year ended December 31, 2011.  The components of the income tax benefit (provision) from continuing operations are as follows:

	December 31,
	2012			2011
Current:
Federal	$	(163,642	)	$	—
State	(22,226		)	—
	(185,868		)	—
Deferred:
Federal	165,467			—
State	—			—
	165,467			—
Income tax provision from continuing operations	$	(20,401	)	$	—

At December 31, 2012, we have accumulated net operating losses totaling $6,795,211.  The net operating loss carryforwards will begin to expire in 2028 if not utilized.  Based upon all available objective evidence, including the Company’s loss history, management believes it is more likely than not that the net deferred assets related to our net operating losses will not be fully realized.  Accordingly, we have provided a valuation allowance against those deferred tax assets at December 31, 2012 and 2011.

F-22

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Total income taxes differed from the amounts computed by applying the statutory income tax rate to income (loss) from continuing operations before income taxes.  The sources of these differences are as follows:

	December 31,
	2012			2011
Expected income tax benefit (expense) based on U.S. statutory rate	$	(1,287,380	)	$	1,305,630
State income taxes (net of federal income tax benefit)	(22,226		)	—
Permanent differences	(2,083		)	(3,182		)
Other	32,519			(5,908		)
Valuation allowance	1,258,769			(1,296,540		)
Income tax benefit (provision)	$	(20,401	)	$	—

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities are presented below:

	December 31,
	2012			2011
Deferred tax assets:
Net operating loss carryforwards	$	2,378,324		$	4,262,087
Impairment of oil and gas properties	51,617			61,550
Fair value of derivative	1,075			—
Accretion expense	1,232			—
Other	373,939			1,455,173
Capital loss carryforward	4,612,359			730,774
Valuation allowance on deferred tax assets	(7,271,523		)	(6,012,754		)
Total deferred tax assets	147,023			496,830
Deferred tax liabilities:
Property, plant, and equipment	(133,178		)	(100,721		)
Fair value of derivative	2,947			—
Other	(16,792		)	(561,576		)
Total deferred tax liabilities	(147,023		)	(662,297		)
Net deferred tax liability	$	—		$	(165,467	)

Deferred tax assets and liabilities included in the consolidated balance sheets are as follows:

��

	December 31,
	2012			2011
Current deferred tax asset, net	$	3,452		$	—
Non-current deferred tax liability, net	(3,452		)	(165,467		)
	$	—		$	(165,467	)

We are subject to income taxes in the U.S. federal jurisdiction and various states jurisdictions.  Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply.  With few exceptions, we are no longer subject to U.S. federal, state and/or local income tax examinations by authorities for the tax years before 2008.

F-23

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 12.  EARNINGS PER SHARE

The following table reconciles net income (loss) and common shares outstanding used in the calculations of basic and diluted earnings (loss) per share.

	December 31,
	2012			2011
Basic net income (loss) per share:
Net earnings (loss) from continuing operations	$	3,657,827		$	(3,730,370	)
Net earnings (loss) from discontinued operations	(8,814,718		)	20,482,862
Net earnings (loss)	$	(5,156,891	)	$	16,752,492
Noncontrolling interest	65,015			—
Attributable to preferred stockholders	(643,829		)	(530,354		)
Net income (loss) attributable to common stockholders	$	(5,735,705	)	$	16,222,138
Weighted average common shares outstanding, basic	25,863,313			26,711,840
Basic earnings per share:
Continuing operations	$	0.14		$	(0.14	)
Discontinued operations	(0.34		)	0.77
Net income (loss)	$	(0.20	)	$	0.63
Net loss attirbutable to noncontrolling interest	—			—
Attributable to preferred shareholders	(0.02		)	(0.02		)
Net income (loss) attributable to common stockholders	$	(0.22	)	$	0.61
Diluted net income (loss) per share:
Net earnings (loss) from continuing operations	$	3,657,827		$	(3,730,370	)
Net earnings (loss) from discontinued operations	(8,814,718		)	20,482,862
Net earnings (loss)	$	(5,156,891	)	$	16,752,492
Noncontrolling interest	65,015			—
Net income (loss) attributable to common stockholders	$	(5,091,876	)	$	16,752,492
Weighted average common shares outstanding, basic	25,863,313			26,711,840
Plus: incremental shares from assumed conversions
Effect of dilutive warrants	413,732			43,637,257
Effect of dilutive convertible preferred stock	—			3,207,376
Shares used in calcuating diluted loss per share	26,277,045			73,556,473
Diluted earnings per share:
Continuing operations	$	0.14		$	(0.05	)
Discontinued operations	(0.34		)	0.28
Net income (loss)	$	(0.20	)	$	0.23
Noncontrolling interest	—			—
Net income (loss) attributable to common stockholders	$	(0.20	)	$	0.23

Basic earnings per share amounts are computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share amounts are computed by dividing net income or loss by the weighted average number of common shares and dilutive common share equivalents outstanding during the period.  Diluted earnings per share amounts assume the conversion, exercise, or issuance of all potential common stock instruments unless the effect is anti-dilutive, thereby reducing the loss or increasing the income per common share.

F-24

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

A total of 10,089,315 and 521,179 shares of common stock equivalents were excluded from the calculation of diluted earnings per share for the years ended December 31, 2012 and 2011, respectively, as the effect of including such shares was antidilutive.

NOTE 13.  DISCONTINUED OPERATIONS

On May 4, 2012, Acquisition Inc., together with New Francis Oaks, a wholly-owned subsidiary of Acquisition Inc., entered into the Merger Agreement with an unaffiliated third party, FDF Resources Holdings LLC, a Delaware limited liability company (“FDF Resources”).  Pursuant to the terms of the Merger Agreement, New Francis Oaks merged with and into FDF Resources, and FDF Resources continued as the surviving entity after the Disposition.  New Francis Oaks owns 100% of the outstanding shares of FDF, and, as a result of the disposition, we no longer own FDF.

We recognized a loss of approximately $1,470,000 from the sale transaction during the second quarter of 2012, which represents the excess of the sale price over the book value of the assets sold.

We determined that the disposition of FDF met the definition of a discontinued operation.  As a result, this business has been presented as a discontinued operation for all periods.  Financial information for the discontinued operation was as follows:

	For the Years Ended December
	2012 (1)			2011
Revenues
Oilfield Services	$	24,077,027		$	74,273,049
Drilling Fluids	3,576,111			10,280,622
Total revenues	27,653,138			84,553,671
Expenses
Cost of goods sold - drilling fluids	1,325,674			2,999,573
Depreciation and amortization	3,126,243			8,777,960
Selling, general, and administrative expenses	24,605,436			70,823,477
Loss on sale of assets	75,692			64,612
Interest expense	1,687,504			4,271,982
Change in fair value of derivative liabilities	4,267,000			(27,211,826		)
Accretion of preferred stock liability	1,299,495			3,772,727
Other	(5,878		)	13,037
Total expenses	36,381,166			63,511,542
Income (loss) before income taxes	$	(8,728,028	)	$	21,042,129

(1) Activity for 2012 is through May 4, 2012, the date of the FDF disposition.

	May 4, 2012		December 31, 2011
Current Assets	$	16,434,891	$	20,578,238
Property, plant, and equipement, net	38,627,582		40,968,628
Goodwill / intangible assets	17,959,829		18,473,464
Deferred financing cost	554,538		599,807
Other assets	173,148		112,869
Total assets	$	73,749,988	$	80,733,006
Current liabilities	$	41,733,594	$	40,645,850
Long-term debt	810,244		1,269,328
Senior Series A redeemable preferred stock	5,428,535		4,170,959
Deferred income taxes	13,486,361		14,592,928
Stockholder’s equity (deficit)	12,291,254		20,053,941
Total liabilities and stockholder’s equity	$	73,749,988	$	80,733,006

F-25

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 14.  SEGMENT INFORMATION

Our primary business segments are vertically integrated within the oil and gas industry.  These segments are separately managed due to distinct operational differences and unique technology, distribution, and marketing requirements.  Our two reportable operating segments are oil and gas exploration and professional staffing services.  The oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate, and NGLs.   The energy staffing segment consists of KS Search, which is a full-service staffing agency providing the energy marketplace with temporary and full-time professionals.  The oilfield services segment, which consisted solely of the operations of FDF, was disposed of on May 4, 2012, and is no longer reflected within segment information.

The following tables present selected financial information of our operating segments for the years ended December 31, 2012 and 2011.  Information presented below as “Corporate, Other, and Intersegment Eliminations” includes results from operating activities that are not considered operating segments, as well as corporate and certain financing activities.

For the year ended December 31, 2012, we had two customers that accounted for more than 10% of our total consolidated revenues at a rate of 31% and 20% respectively.  For the year ended December 31, 2011, we had two customers that accounted for more than 10% of our total consolidated revenues at a rate of 22% and 10%, respectively.

	Oil & Gas			Energy Staffing			Corporate and Intersegment Eliminations			Total
Year Ended December 31, 2012:
Revenues:
Land services	$	3,816,810		$	—		$	—		$	3,816,810
Oil & gas sales	182,473			—			—			182,473
Sale of oil and gas interests	2,006,922			—			—			2,006,922
Staffing services	—			117,433			—			117,433
Total Revenues	6,006,205			117,433			—			6,123,638
Expenses and other, net:
Lease operating expenses	104,642			—			—			104,642
Depreciation, depletion, and amortization	31,589			459			1,157			33,205
Selling, general and administrative expenses	228,212			456,894			2,048,067			2,733,173
Gain on settlement of accounts payables	—			—			(314,448		)	(314,448		)
Gain on sale of assets	(419,834		)	—			—			(419,834		)
Change in fair value of derivative liabilities	—			—			2,510			2,510
Interest and dividend income	—			—			(13,885		)	(13,885		)
Interest expense	56,688			—			268,244			324,932
Other	(4,885		)	—			—			(4,885		)
Total expenses and other, net	(3,588		)	457,353			1,991,645			2,445,410
Loss before income taxes	6,009,793			(339,920		)	(1,991,645		)	3,678,228
Income tax (provision) benefit	(22,226		)	—			1,825			(20,401		)
Net income (loss)	$	5,987,567		$	(339,920	)	$	(1,989,820	)	$	3,657,827

F-26

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

	Oil & Gas			Energy Staffing		Corporate and Intersegment Eliminations			Total
Year Ended December 31, 2011:
Revenues:
Land services	$	357,863		$	—	$	—		$	357,863
Oil & gas sales	349,707			—		—			349,707
Staffing services	—			—		—			—
Total Revenues	707,570			—		—			707,570
Expenses and other, net:
Lease operating expenses	70,096			—		—			70,096
Depreciation, depletion, and amortization	52,513			—		187			52,700
Selling, general and administrative expenses	616,863			—		3,656,452			4,273,315
Loss on litigation settlement	965,065			—		104,000			1,069,065
Gain on sale of assets	5,004			—		1,950			6,954
Interest income	(836		)	—		(393		)	(1,229		)
Interest expense	106,838			—		551,441			658,279
Change in fair value of derivative liabilities	—			—		(1,691,240		)	(1,691,240		)
Total expenses and other, net	1,815,543			—		2,622,397			4,437,940
Loss before income taxes	(1,107,973		)	—		(2,622,397		)	(3,730,370		)
Income tax provision	—			—		—			—
Net loss	$	(1,107,973	)	$	—	$	(2,622,397	)	$	(3,730,370	)

	Oil & Gas		Energy Staffing		Corporate and Intersegment Eliminations			Total
As of December 31, 2012:
Current Assets	$	2,780,912	$	69,668	$	1,806,067		$	4,656,647
Restricted cash	—		—		4,313,599			4,313,599
Property, plant, and equipement, net	642,347		4,227		34,981			681,555
Deferred financing cost	—		—		12,500			12,500
Other assets	9,296		—		—			9,296
Total assets	$	3,432,555	$	73,895	$	6,167,147		$	9,673,597
Current liabilities	$	485,604	$	18,800	$	770,174		$	1,274,578
Long-term debt	12,437		—		403,579			416,016
Derivative liabilities	—		—		2,510			2,510
Deferred income taxes	3,452		—		—			3,452
Mezzanine equity	—		—		5,763,869			5,763,869
Stockholder’s equity (deficit)	2,931,062		55,095		(772,985		)	2,213,172
Total liabilities and stockholder’s equity	$	3,432,555	$	73,895	$	6,167,147		$	9,673,597
Additions to long-lived assets	$	618,747	$	4,686	$	30,702		$	654,135

F-27

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

	Oil & Gas			Energy Staffing		Corporate and Intersegment Eliminations			Total
As of December 31, 2011:
Current Assets	$	77,159		$	—	$	31,704		$	108,863
Property, plant, and equipement, net	60,676			—		5,436			66,112
Goodwill / intangible assets	—			—		—			—
Deferred financing cost	—			—		1,023,269			1,023,269
Other assets	9,296			—		—			9,296
Total assets	$	147,131		$	—	$	1,060,409		$	1,207,540
Current liabilities	$	752,382		$	—	$	3,665,029		$	4,417,411
Long-term debt	1,212,611			—		233,324			1,445,935
Deferred income taxes	—			—		165,467			165,467
Stockholder’s equity (deficit)	(1,817,862		)	—		(3,003,411		)	(4,821,273		)
Total liabilities and stockholder’s equity	$	147,131		$	—	$	1,060,409		$	1,207,540
Additions to long-lived assets	$	58,174		$	—	$	5,624		$	63,798

F-28

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

NOTE 15.  SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is summarized below.

	Years Ended December 31,
	2012		2011
Supplemental disclosures of cash flow information:
Total cash paid for interest	$	250,455	$	1,284,634
Total cash paid for taxes	$	189,372	$	1,824,900
Cash paid for interest — related party	$	6,598	$	4,737
Supplemental disclosure of non-cash information:
Exchange of 12% debentures for common stock	$	—	$	114,999
Issuance of derivative liability	$	—	$	118,440
Exchange of accounts payable for debt	$	342,500	$	—
Treasury shares received	$	2,732,342	$	—
Shares issued to retire debt	$	33,000	$	—
Dividend declared	$	643,829	$	530,354
Stock dividend	$	487,127	$	—
Waypoint receivable	$	1,075,000	$	—

NOTE 16.  SUPPLEMENTAL DISCLOSURE OF OIL & GAS OPERATIONS (Unaudited)

The following tables set forth supplementary disclosures for oil and gas producing activities in accordance with FASB ASC Topic 932, Extractive Activities — Oil and Gas.  For the year ended December 31, 2011, we did not have any significant oil and gas producing activities.

Costs Incurred

A summary of costs incurred in oil and gas property acquisition, development, and exploration activities (both capitalized and charged to expense) for the year ended December 31, 2012, is as follows.  There was no such significant activity for 2011.

	2012
Acquisition of proved properties	$	—
Acquisition of unproved properties	$	518,682
Development costs	$	100,065
Exploration costs	$	—

F-29

NYTEX ENERGY HOLDINGS, INC.

Notes to Consolidated Financial Statements

Results of Operations for Producing Activities

The following table presents the results of operations for our oil and gas producing activities for the year ended December 31, 2012.  There was no such significant activity for 2011.

	2012
Revenues	$	182,473
Production costs	(104,642		)
Exploration expenses	—
Depreciation, depletion and valuation provisions	(12,058		)
	65,773
Income tax expenses	(22,226		)
Results of operations from producing activities	$	43,547

Reserve Quantity Information

During 2011, we did not have any significant oil- and gas-producing activity.  As we re-focused our strategy during 2012 on the acquisition, development, and production of oil and gas, nearly all of the wells in which we have interests were not completed nor in production until late in the fourth quarter of 2012.  Accordingly, there was not a sufficient seasoning of the well production nor is there a sufficient number of existing wells to appropriately establish the amount of oil and gas reserves at December 31, 2012.  Therefore, we do not present reserve data for the year ended December 31, 2012.

F-30

EXHIBIT INDEX

Exhibit	Document
2.1	Agreement and Plan of Merger, dated as of May 4, 2012, by and among FDF Resources Holdings LLC, New Francis Oaks, LLC and NYTEX FDF Acquisition, Inc. (filed as Exhibit 2.1 to the Registrant’s Form 8-K filed May 10, 2012 and incorporated herein by reference)
3.1	Certificate of Incorporation of the Registrant, as amended (filed as Exhibit 3.1 to the Registrant’s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference)
3.2	Bylaws of Registrant, as amended (filed as Exhibit 3.2 to the Registrant’s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference)
4.1	Amended and Restated Certificate of Designation in respect of Senior Series A Redeemable Preferred Stock (filed as Exhibit 10.9 to the Registrant’s Form 8-K filed November 30, 2010 and incorporated herein by reference)
4.2	Amended and Restated Certificate of Designation in respect of Senior Series B Redeemable Preferred Stock (filed as Exhibit 10.10 to the Registrant’s Form 8-K filed November 30, 2010 and incorporated herein by reference)
4.3	Amended and Restated Certificate of Designation in respect of Series A Convertible Preferred Stock (filed as Exhibit 4.3 to the Registrant’s Form 10-Q filed November 6, 2012 and incorporated herein by reference)
4.4	Amended and Restated Certificate of Designation in respect of Senior Series A Redeemable Preferred Stock (filed as Exhibit 10.9 to the Registrant’s Form 8-K filed November 30, 2010 and incorporated herein by reference)
4.5	Amended and Restated Certificate of Designation in respect of Senior Series B Redeemable Preferred Stock (filed as Exhibit 10.10 to the Registrant’s Form 8-K filed November 30, 2010 and incorporated herein by reference)
4.6	NYTEX Energy Holdings, Inc. 2013 Equity Incentive Plan (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 28, 2013 and incorporated herein by reference)
4.7	NYTEX Energy Holdings, Inc. Amendment No. 1 to 2013 Equity Incentive Plan (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with on February 7, 2013 and incorporated herein by reference)
10.1	Escrow Agreement, dated as of May 4, 2012, by and among FDF Resources Holdings LLC, NYTEX FDF Acquisition, Inc. and The Bank of New York Mellon Trust Company, N.A., as Escrow Agent (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed May 10, 2012 and incorporated herein by reference)
10.2	Omnibus Agreement, entered into as of May 4, 2012, by and among NYTEX Energy Holdings, Inc., NYTEX Petroleum, Inc., WayPoint Capital Partners, LLC, WayPoint NYTEX, LLC, NYTEX FDF Acquisition, Inc., New Francis Oaks, LLC, Francis Drilling Fluids, Ltd., and FDF-Cessna 210 N6542U, Inc. (filed as Exhibit 10.2 to the Registrant’s Form 8-K filed May 10, 2012 and incorporated herein by reference)
10.3	Settlement Agreement, entered into as of May 4, 2012, by and among NYTEX Energy Holdings, Inc., NYTEX Petroleum, Inc., WayPoint Capital Partners, LLC, WayPoint Nytex, LLC, NYTEX FDF Acquisition, Inc., New Francis Oaks, LLC, Francis Drilling Fluids, Ltd., FDF-Cessna 210 N6542U, Inc., Michael G. Francis and Bryan Francis (filed as Exhibit 10.3 to the Registrant’s Form 8-K filed May 10, 2012 and incorporated herein by reference)
21*	List of Subsidiaries of Registrant
23.1*	Consent of Whitley Penn LLP

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002***
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

*Filed herewith

**Furnished herewith

***In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.