Correlate Energy Corp. - Annual Report: 2012 (Form 10-K)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the Fiscal Year Ended December 31, 2012

OR

Commission File No. 0-30746

FRONTIER OILFIELD SERVICES INC.

(Formerly TBX Resources, Inc.)

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

On March 27, 2013, the aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $26,352,722. This amount was calculated by reducing the total number of shares of the registrant’s common stock outstanding by the total number of shares of common stock held by officers and directors, and stockholders owning in excess of 5% of the registrant’s common stock, and multiplying the remainder by the average of the bid and asked price for the registrant’s common stock on March 27, 2013 as reported on the Over-The-Counter Pink Sheet Market. As of March 27, 2013, the Company had 20,169,383 issued and outstanding shares of common stock.

Documents Incorporated by Reference:

None

Table of Contents

TABLE OF CONTENTS

FRONTIER OILFIELD SERVICES, INC.

INDEX

Table of Contents

PART I

Forward Looking Statements

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

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

Item 1. Business

The Company and Its Business

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

The Company’s current business, through its operating subsidiaries, is in the oil field services industry, primarily the transportation and disposal of salt water and other oil field fluids in Texas and Oklahoma. The Company currently owns and operates thirteen (13) permitted disposal wells in Texas. The Company’s customer base includes national, integrated, and independent oil and gas exploration companies with no customer accounting for more than ten percent (10%) of the Company’s gross revenues. In addition, the Company has a minor overriding interest in two (2) producing gas wells in Wise County, Texas and seven (7) producing gas wells in Denton County, Texas. Prior to engaging in the oilfield services industry Frontier was in the business of acquiring and developing oil and gas properties, providing contract services to an affiliate and sponsoring and managing joint venture oil and gas development partnerships.

1

Table of Contents

Recent Developments

As of December 31, 2012, the Company was in technical default of its term loans with two financial institutions resulting from its inability to maintain two required financial ratios of the respective loan agreement debt covenants and accordingly classified the year end note balances as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliant by the end of the second quarter of 2013.

On September 2, 2011 Frontier, under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000 shares of Frontier’s 2011 Series A 8% Preferred Stock (the “Stock”) for the sum of $5,500,000 contingent upon the Company using the proceeds of the Stock to acquire a majority 51% membership interest in FIG which through its wholly owned subsidiaries; Trinity Disposal & Trucking, LLC and Trinity Disposal Wells, LLC transports and disposes salt water and other oilfield fluids. The attributes of the Stock allowed the holder to convert the preferred share into two shares of Frontier’s common stock and a warrant for an additional share at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and Frontier completed the acquisition of 51% of FIG in June 2012 (see below). Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the common stock and 5,500,000 warrants.

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

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

Oil and Gas Wells Held By the Company

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

Development and Operating Activities

Economic factors prevailing in the oil and gas industry change from time to time. The uncertain nature and trend of economic conditions and energy policy in the oil and gas business generally make flexibility of operating policies important in achieving desired profitability. We intend to evaluate continuously all conditions and risks affecting our potential activities and to react to those conditions, as we deem appropriate from time to time by engaging in businesses we believe will be the most profitable for us.

2

Table of Contents

In addition, in order to finance future development and operating activities, we may secure additional capital through business alliances with third parties or other debt/equity financing arrangements. However, potential investors should note that while we currently have in place two definite financing arrangement there can be no assurance that we will be able to enter into additional financing arrangements or that if we are able to enter into such arrangements, we will be able to achieve any profitability as a result of our operations.

General Regulations

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

Federal Regulatory Controls

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

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

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

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

Currently pending in the United States Congress is a comprehensive energy bill which among other things calls for the reduction or elimination of certain tax incentives currently in place for domestic oil companies including the tax deductions permitted for intangible costs and depletion allowances. In the event such legislation became law the loss of these tax benefits would likely have a negative material effect on the finances of the company. Federal legislation has also been introduced which may have an affect on the use of fracing to increase oil and gas production, primarily in shales, due to concerns primarily with potential water supply contamination.

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

3

Table of Contents

State Regulatory Controls

In each state where we conduct or contemplate oil and gas activities, these activities are subject to various regulations. The regulations relate to the extraction, production, transportation and sale of oil and natural gas, the issuance of drilling permits, the methods of developing new production, the spacing and operation of wells, the conservation of oil and natural gas reservoirs and other similar aspects of oil and gas operations. In particular, the State of Texas (where we have conducted the majority of our salt water disposal activities and oil and gas operations to date) regulates the rate of daily production allowable from both oil and gas wells on a market demand or conservation basis. At the present time, no significant portion of our production has been curtailed due to reduced allowables. Our salt water and drilling fluid disposal activities are subject to inspection and permitting by state authorities. There have been recent regulatory and legislative proposals due to concerns primarily with potential water supply contamination due to claims that such contamination could potentially be caused by fracing operations.

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

Environmental Regulations

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

Employees

Currently we employ 11 full time employees in our corporate headquarters and 351 full time employees in our field operations for a total of 362 employees. We currently do not have any part time employees.

Item 1A. Business Risks

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

Due to the changes occurring in the oil industry we have adopted and implemented a revised business plan which caused the Company to change its primary focus from oil production activities to acquiring businesses and assets that are involved in the oil field services industry with an emphasis on salt water disposal. The Company currently has very limited financial resources and there can be no assurance that we will be successful in locating additional salt water disposal businesses or assets and if we are successful in locating them that we will be able to successfully acquire them.

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

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

4

Table of Contents

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

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

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

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

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

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

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

There are risks inherent in reworking, completing and operating disposal wells.

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

5

Table of Contents

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

Our company success will likely depend upon the continuing availability of certain disposal sites.

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

The Company may not be insured or insured in sufficient amounts or against all liabilities.

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

The Company is dependent upon trucking and is subject to potential liability.

The Company’s primary method of collecting salt water from its disposal customers is by truck. Consequently the Company has a number of trucks operating on the roads and highways where potential accidents and liability may occur. While the Company insures itself from certain risks, there is no assurance that the Company will be able to obtain such insurance in the future or if available that the insurance will be adequate to cover all of any potential liability or judgment rendered against the Company. Should the Company not be insured or the amount of its insurance be inadequate to cover any finding of liability against the Company then it is likely that the Company would not be able to continue as a going concern.

We may not obtain necessary permits.

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

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

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

Our business may fail.

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

6

Table of Contents

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

We will require additional funding to implement our business plan.

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

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

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

Competition may adversely affect us.

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

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

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:

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

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

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

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

7

Table of Contents

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

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

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

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

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

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

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

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

Our future financial condition is significantly impacted by results of our skim oil operations which depend upon the prices we receive for our oil processing. Oil prices historically have been volatile and likely will continue to be volatile in the future, especially given world geopolitical conditions. Our cash flow from operations is somewhat dependent on the prices that we receive for skim oil. This price volatility also affects the amount of our cash flow available for capital expenditures and our ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include:

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

8

Table of Contents

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

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

Our success is dependent upon the continued services and skills of our current executive management. The loss of services of any of these key personnel could have a negative impact on our business because of such personnel’s skills and industry experience and the difficulty of promptly finding qualified replacement personnel.

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

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

Risks Related to Our Common Stock

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

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

We may issue additional shares of Preferred Stock.

Pursuant to our certificate of incorporation, our board of directors has the authority to issue additional series of preferred stock and to determine the rights and restrictions of shares of those series without the approval of our stockholders. The rights of the holders of the current series of common stock may be junior to the rights of preferred stock that may be issued in the future.

There may be future dilution of our Common Stock.

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

9

Table of Contents

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

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

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

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

Item 1B. Unresolved Staff Comments.

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

Item 2. Description of Properties.

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

The Company owns ten (10) acres of vacant land in Johnson County and 7.055 acres in Chico, Texas on which it has five (5) buildings used for its water disposal operations in that area. The Company also owns 7.49 acres in Harrison County, Texas on which three (3) of its disposal wells are located along with a small manufacture and repair shop. In addition, the Company is obligated under long-term leases for the use of land where seven of its disposal wells are located. Three of the leases are for extended periods of time. The first lease expires on February 7, 2023 (with two options to renew for an additional 10 years each). The second lease expires on December 1, 2034 with no option to renew, and the third lease expires on May 31, 2022 with no option to renew. The monthly lease payment for the disposal well leases is $10,300.

Following is information concerning production from our oil and gas wells, productive well counts and both producing and undeveloped acreage. We currently have a minor overriding interest in seven (7) Barnett Shale gas wells in Denton County, Texas and two (2) Barnett Shale gas wells in Wise County, Texas.

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

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

Productive Wells and Acreage

10

Table of Contents

Notes:

Forfeiture of Oil and Gas Interests

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

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

Item 3. Legal Proceedings

The Company is not currently the subject of or involved in any material litigation.

PART II

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

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

11

Table of Contents

The above information was obtained from the Pink Sheet OTC Market, Inc. web site. Because these are over-the-counter market quotations, these quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions. We have 976 shareholders of record for our common stock as of December 31, 2012.

Item 6. Selected Financial Data

Not applicable as we are a smaller reporting company.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Twelve Months Ended December 31, 2012 and November 30, 2011.

Cautionary Statement

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

Recent Financial Developments

As of December 31, 2012, the Company was in technical default of its term loans with two financial institutions resulting from its inability to maintain two financial ratios of the debt covenants and accordingly classified the year end note balances as a current liability. The Company is working to cure the financial ratio deficiencies and expects to be compliant by the end of the second quarter of 2013.

On September 2, 2011 Frontier, under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000 shares of the Stock for the sum of $5,500,000 contingent upon the Company using the proceeds of the Stock to acquire a majority 51% membership interest in FIG which through its wholly owned subsidiaries; Trinity Disposal & Trucking, LLC and Trinity Disposal Wells, LLC transports and disposes salt water and other oilfield fluids. The attributes of the Stock allowed the holder to convert the preferred share into two shares of Frontier’s common stock and two warrants for an additional share at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and Frontier completed the acquisition of 51% of FIG in June 2012 (see below). Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the common stock and 5,500,000 warrants.

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

12

Table of Contents

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

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

Other Developments

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

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

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

Results of Operations

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

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

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

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

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

13

Table of Contents

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

As of December 31, 2012, we had total assets of $33,623,294 of which property, equipment and provisional goodwill amounted to $25,922,659 or 77.1% of the total. As of November 30, 2011, we had total assets of $3,161,688 of which investments in unconsolidated affiliated company amounted to $3,136,553 or 99.2% of the total. Our revenues for the current year totaled $21,706,435 while the revenues for the previous fiscal year totaled $6,873. Our accumulated losses as of December 31, 2012 and November 30, 2011 totaled $18,127,139 and $11,890,719, respectively. At December 31, 2012, we had $67,824 in cash as compared to $13,871 for November 30, 2011. As of December 31, 2012 the ratio of current assets to current liabilities was .30:1 as compared to .04:1 for November 30, 2011. Long-term debt totaled $2,225,570 at December 31, 2012. We had no long-term debt at November 30, 2011. As of December 31, 2012, our shareholders’ equity was $4,491,785. As of November 30, 2011 our shareholders’ equity was $2,756,452.

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

14

Table of Contents

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

In the past we have primarily acquired producing oil and gas properties with opportunities for future development and contracted well operations to contractors. Currently, our primary focus is to secure additional capital through business alliances with third parties or other debt/equity financing arrangements to acquire water disposal companies and/or assets. Any such additional funding will be done on an “as needed” basis and will only be done in those instances in which we believe such additional expenditures will increase our profitability. However, actual results may differ from management’s plan and the amount may be material.

Our ability to secure additional capital through business alliances with third parties or other debt/equity financing arrangements to acquire companies and/or assets which will allow the Company to further operate in the water disposal segment of the oilfield services industry is strictly contingent upon our ability to locate adequate financing or equity to pay for these additional companies and/or assets. There can be no assurance that we will be able to obtain the opportunity to buy companies and/or assets that are suitable for our investment or that we may be able to obtain financing or equity to pay for the costs of these additional companies and/or assets at terms that are acceptable to us. Additionally, if economic conditions justify the same, we may hire additional employees although we do not currently have any definite plans to make additional hires.

The oil and gas industry is subject to various trends including the availability of capital for drilling new wells, prices received for crude oil and natural gas, sources of crude oil outside our area of operations, interest rates, and the overall health of the economy. We are not aware of any specific trends that are unusual to our company, as compared to the rest of the oil and gas industry.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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

15

Table of Contents

Item 8. CONSOLIDATED FINANCIAL STATEMENTS.

FRONTIER OILFIELD SERVICES, INC.

(Formerly TBX Resources, Inc.)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

16

Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Frontier Oilfield Services, Inc. and subsidiaries

Dallas, Texas

We have audited the accompanying consolidated balance sheets of Frontier Oilfield Services, Inc. and subsidiaries, (the “Company”) as of December 31, 2012 and 2011 and November 30, 2011 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2012 and November 30, 2011 and for the one month period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Frontier Oilfield Services, Inc. and subsidiaries at December 31, 2012 and 2011 and November 30, 2011 and the results of their consolidated operations and cash flows for the years ended December 31, 2012 and November 30, 2011 and for the one month period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ Turner, Stone & Company, L.L.P.

Certified Public Accountants

Dallas, Texas

April 1, 2013

F-1

Table of Contents

FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

(Formerly TBX Resources, Inc.)

CONSOLIDATED BALANCE SHEETS

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

F-2

Table of Contents

FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

(Formerly TBX Resources, Inc.)

CONSOLIDATED BALANCE SHEETS

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

F-3

Table of Contents

FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

(Formerly TBX Resources, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

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

F-4

Table of Contents

FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

(Formerly TBX Resources, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

F-5

Table of Contents

FRONTIER OILFIELD SERVICES, INC. AND SUBSIDIARIES

(Formerly TBX Resources, Inc.)

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY