##### Table of Contents



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, 2010
 Commission File Number: 53915
 NYTEX ENERGY HOLDINGS, INC.
  Delaware
    
    84-1080045(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 12222 Merit Drive, Suite 1850Dallas, Texas
    
    75251(Address of principal executive offices)
    
    (Zip Code)
 972-770-4700
 None
 Common Stock, $0.001 par value per share
 o þ
 o þ
 þ  o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   Documents Incorporated by Reference




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    21Item 2. Properties
    
    
    22Item 3. Legal Proceedings
    
    
    26PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    27Item 6. Selected Financial Data
    
    
    28Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8. Financial Statements and Supplementary Data
    
    
    37Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    37Item 9A. Controls and Procedures
    
    
    37Item 9B. Other Information
    
    
    39PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
    
    
    40Item 11. Executive Compensation
    
    
    43Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    47Item 13. Certain Relationships and Related Transactions and Director Independence
    
    
    50Item 14. Principal Accounting Fees and Services
    
    
    50PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    51Signatures
    
    
    52EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-10.8EX-10.9EX-10.10EX-10.11EX-10.13EX-10.14EX-10.18EX-21EX-31.1EX-31.2EX-32.1EX-99




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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 downturn and credit crisis, 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, adverse regulatory determinations, litigation, competition, business and
equipment acquisition risks, availability of equipment, weather, availability of financing,
financial condition of our industry partners, ability to obtain permits 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.
 3




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PART I
 
 Item 1. Business
 http://www.fdfltd.com
 Managements Discussion and Analysis of Financial Condition and Results of Operations 
OverviewOilfield Services
 www.nytexenergyholdings.com
 www.sec.gov
 Strategy
  
    
    Continuously improving the efficiency, productivity and quality of our products and
services and their respective delivery in order to grow revenues and operating margins
in all of our geographic markets at a rate exceeding underlying market activity;
    
    Further extending our infrastructure and U.S. leadership position throughout North
America by acquiring, consolidating and integrating other oilfield fluid service and
fracture proppant distribution companies at competitive acquisition costs;
    
    Preserving our dynamic, long tenured workforce by attracting, developing, and
retaining the best talent; and
    
    Upholding the ethical and business standards of the Company and maintaining the
highest standards of health, safety, and environmental performance.
 Oilfield Services  FDF
  4




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FDF Product Offerings
 Specialized fluids and specialty additive products
  Liquid Water-Based Mud
  Oil Water-Based Mud
  Completion Fluids
  
    
    sodium chloride (NaCl Solutions);
    
    potassium chloride (KCl Solutions);
    
    ammonium chloride;
    
    calcium chloride; and
    
    zinc bromide.
 FDF Perfseal FDF Liquid HEC HEC 10 FDF Supersweep 298 FDF Supersweep OB FDF
Supertron 62 Supertron 87, FDF Supertron 6200 FDF DEFOAM CF
 Specialized Mixing
  Barite & Hematite
 FDF Barite Bulk FDF Barite
Sack FDF Hematite Bulk FDF Hematite Sack
 Viscosifiers
 FDF Benex FDF
Bentonite DF Bentonite NT FDF Bentonite Bulk FDF Attipulgite FDF Vistek II FDF XCD Polymer
 5




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Fluid Conditioners
 D/FLOC-L FDF CLS FDF CLS Chrome Free Desco FDF Lignite FDF Sapp FDF Envirocal FDF Polyplex
 Filtration Control Agents
 CM Starch Starlose FDF Pac Regular FDF Pac S/L FDF CMC High Vis FDF CMC
Low Vis
 Shale Stabilizers
 FDF NO-PHALT Soltex FDF PHPA FDF PHPA
 Lubricants, Detergents, & Defoamers
 FDF
Detergent FDF DMS FDF LUBE II FDF DEFOAM
 Alkalinity Control
 FDF KOH FDF
Caustic Soda FDF Gypsum FDF Lime
 Lost Circulation & Sealing Products
 Diaseal M.D.E Kwik-Seal FDF Mica (F.M.C.) DELTA P FDF NUT PLUG (F.M.C.) VENLUBE II MAGNAFIBER REGULAR MAGNAFIBER FINE FDF VISPLUG
 FDF Service Offerings
 Equipment Rentals
  Transportation
    
    
    Vacuum Trucks
    
    Winch Trucks
    
    Pneumatic Hauling
    
    Specialized Hauling
    
    Warehouse Management
    
    Logistical Support
    
    Super Vacs
 Transloading Services
  
    
    Faster Transit Times
 6




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
    
    Reliable Delivery
    
    Online Reporting
    
    Inventory Control
    
    Single Point Accountability
    
    Timely Delivery of Products
    
    Product Integrity
    
    Contract Warehousing
    
    Railcar Loading/Unloading
    
    Computerized Inventory Control
  
    
    Lake Charles, LA
    
    Coushatta, LA
    
    Alice, TX
    
    Kermit, TX
    
    Jefferson, TX
    
    Odessa, TX
    
    Clinton, OK
    
    Weatherford, OK
    
    Rock Springs, WY
    
    Plaza, ND
 Technical Services
  
    
    Drilling Fluids Engineering
    
    Completion Fluids Engineering
    
    Fluid Auditing
    
    In-House Tech Support
    
    Certified Tankerman
 Environmental Support
  Fluids Services
  
    
    Water-based Liquid Mud
    
    Liquid Mud Storage
    
    Specialized Mixing
    
    Water-Based Chemicals
    
    Completion Fluids
    
    Completion Fluids Chemicals
    
    Casing Scrubs
    
    Corrosion Inhibitors
 Cleaning Services
   
    
    Industrial Cleaning
    
    Vessel Cleaning
    
    Barge Cleaning
    
    Tank Cleaning
    
    Rig Cleaning
    
    Equipment Cleaning
 7




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Specialized Cleaning Equipment
  FDF Hydro Excavator  HV-56 GapVax Industrial Vacuum Loader w/ Hydro Excavation Package
  FDF SuperVac  VTX-820 GAPVAX Tractor  Mounted Vacuum System
  FDF SuperVac II  HV-57 GAPVAX Vacuum Loader Airmover
  FDF Hot Water Washer
  FDF Hydro Blaster
  FDF Super Wash II
 FDF SUPERWASH II
  FDF Mobile Cleaning Unit
  Oil and Gas  NYTEX Petroleum
   8




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Supreme Vacuum
    Other Business Data
 FDF Locations
  Competitive Edge
  9




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Environmental Regulations
  Seasonality
  Government Regulations
  Competition and Other External Factors
    Raw materials
  10




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Customers
  Employees
  Additional Information
  
 Item 1A. Risk Factors
 An investment in our common stock involves a high degree of risk. Before making an investment
decision, you should carefully consider all of the risks described or incorporated by reference in
this prospectus. If any of the risks discussed in this 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.
 Risk Factors Relating to Our Oilfield Services Operations
 Our business depends on domestic spending by the oil and gas industry, and this spending and
our business have been, and may continue to be, adversely affected by industry and financial market
conditions that are beyond our control.
    If oil and gas prices remain volatile, or decline further, the demand for our services could
be adversely affected.
  11




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Our indebtedness could restrict our operations and make us more vulnerable to adverse economic
conditions.
  1. Debentures
 Debenture Offering Debenture Debenture s Warrant Warrants
    2. Senior Facility
 Senior Facility Term Loan Revolving Loan
  3. WayPoint
 WayPoint Purchase Agreement WayPoint Senior Series A
Redeemable Preferred Stock Series B Redeemable
Preferred Stock Purchaser Warrant
 12




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Control Warrant WayPoint Warrants WayPoint Transaction
   Default Conditions Default Change of
Control
  13




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4. Series A Convertible Preferred Stock
 " Offering " Unit Units Series A Preferred Stock Series A Warrant Series A Warrants Series A Warrant Share Series A Warrant Shares
     
    
    impair our ability to make investments and obtain additional financing for working
capital, capital expenditures, acquisitions or other general corporate purposes;
    
    limit our ability to use operating cash flow in other areas of our business because
we must dedicate a substantial portion of these funds to make principal and interest
payments on our indebtedness; and
    
    make us more vulnerable to a downturn in our business, our industry or the economy
in general as a substantial portion of our operating cash flow will be required to make
principal and interest payments.
 Competition within the well services industry may adversely affect our ability to market our
services.
  We depend on several significant customers, and a loss of one or more significant customers
could adversely affect our results of operations.
  14




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We may not be able to grow successfully through future acquisitions or successfully manage
future growth, and we may not be able to effectively integrate the businesses we do acquire.
   Our industry has experienced a high rate of employee turnover. Any difficulty we experience
replacing or adding personnel could adversely affect our business.
   Our success depends on key members of our management, the loss of any of whom could disrupt
our business operations.
  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.
  
    
    personal injury or loss of life;
    
    damage to or destruction of property and equipment (including the collateral
securing the Senior Facility) and the environment; and
    
    suspension of our operations.
   15




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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 laws and government regulations could increase our costs of
doing business.
  Risk Factors Relating to an Investment In Our Securities
 Our independent auditors have expressed doubt about our ability to continue our activities as a going concern, which may hinder our ability to obtain future financing.
    The WayPoint Warrants possess full anti-dilution provisions; and may result in a duplication
of dilution.
   The WayPoint Control Warrant, if it becomes exercisable, will allow for a change in control.
  16




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We are required to register various securities with the SEC.
    The terms of our indebtedness to PNC and our transaction with WayPoint restrict our
operations.
  The issuance of shares upon conversion of the Convertible Debentures and Series A Convertible
Preferred Stock, as well as exercise of outstanding warrants may cause immediate and substantial
dilution to our existing stockholders.
  The holder of our Series B Preferred Stock may exercise certain warrants and other rights that
would have an immediate and substantial dilutive effect to existing and future stockholders, and
cause a change in control .
 Series B Redeemable Preferred Stock Purchaser
Warrant Control
Warrant WayPoint Warrants
  17




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Default
Conditions Default Change of Control
 We are subject to the reporting requirements of federal securities laws, compliance with which
is expensive.
  Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls will be
time consuming, difficult, and costly.
  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 any market price of our common stock to decrease substantially.
  18




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Our stock price may be volatile, which may result in losses to our stockholders.
  
    
    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;
    
    WayPoints exercise of the Purchase Warrant or the Control Warrant;
    
    additions or departures of key personnel; and
    
    future sales of our common stock.
  Our common stock has only recently begun trading. We expect our common stock to be
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 do not anticipate paying any cash dividends.
  Our common stock may be subject to penny stock rules, which may make it more difficult for our
stockholders to sell their common stock.
  19




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We may need additional capital, and the sale of additional shares or other equity securities
could result in additional dilution to our stockholders.
  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.
   Other Risk Factors
 Reserve data are estimates based on assumptions that may be inaccurate.
    20




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Item 1B. Unresolved Staff Comments
  21




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Item 2. Properties
   Leased or
    
    Approximate
    
    
    ApproximateLocation
    
    Owned
    
    Sq. Ft.
    
    
    Acreage
    
    
    Faciltiy TypeAda, OK
    
    Leased
    
    
    100
    
    
    
    1.00
    
    
    Trucking Terminal, OfficeAlice, TX
    
    Leased
    
    
    53,700
    
    
    
    8.87
    
    
    Office, Warehouses, Mud Plant, Tanks, SilosAlice, TX
    
    Owned
    
    
    100,000
    
    
    
    20.00
    
    
    Mixing Pits, Trucking Terminal, Wash Rack, WarehouseBerwick, LA
    
    Leased
    
    
    18,984
    
    
    
    2.25
    
    
    Warehouse, Office, Mobile Residences, Docks, Mud Plant, Tanks, Mixing Pits, Wash RackCameron, LA
    
    Leased
    
    
    11,841
    
    
    
    3.50
    
    
    Mud Plant, Office Building, Tanks, Mixing PitsClinton, OK
    
    Owned
    
    
    9,600
    
    
    
    6.26
    
    
    Docks, Residential Quarters Office, Mechanics Garage, Silos, Weigh StationRail Spur, Trucking TerminalCoushatta, LA
    
    Owned
    
    
    3,510
    
    
    
    17.00
    
    
    Rail Spur, Wash Rack, Mud PlantCrowley, LA
    
    Owned
    
    
    65,542
    
    
    
    31.60
    
    
    Office Building, Warehouses, Mechanics Garage, Mud Plant, Tanks, Mixing Pits, Wash Rack, Blasting ShedCrowley, LA
    
    Leased
    
    
    12,800
    
    
    
    2.08
    
    
    Airstrip and hangarDayton, TX
    
    Owned
    
    
    8,200
    
    
    
    6.00
    
    
    Mud Plant, Warehouse, Mixing Pits, Wash Rack, Mobile Residence/Office, Mixing Pits, TanksFourchon, LA
    
    Leased
    
    
    18,593
    
    
    
    3.70
    
    
    Mud Plant, Office building, Mud Plant, Tanks, Mobile Residences, Mixing Pits, DocksIntracoastal City, LA
    
    Leased
    
    
    5,109
    
    
    
    2.38
    
    
    Warehouse, Mud Plants, Mud Tanks, Dock, Mixing PitsJefferson, TX
    
    Santrol
    
    
    300
    
    
    
    3.50
    
    
    Trucking Terminal, Rail Spur, Weigh StationKermit, TX
    
    Leased
    
    
    300
    
    
    
    5.50
    
    
    Rail Spur, Weigh Station, SilosLake Charles, LA
    
    Leased
    
    
    5,109
    
    
    
    2.38
    
    
    Office and Warehouse, Trucking TerminalLake Charles Port, LA
    
    Leased
    
    
    140,000
    
    
    
    
    
    
    Warehouse, Docks, SilosLafayette, LA
    
    Leased
    
    
    9,000
    
    
    
    
    
    
    Office spaceOdessa, TX
    
    Owned
    
    
    12,750
    
    
    
    43.44
    
    
    Office and Warehouse, Rail Spur, Weigh Station, Silos, Trucking TerminalPlaza, ND
    
    Leased
    
    
    
    
    
    
    
    
    
    Rail Spur, YardRock Springs, WY
    
    Owned
    
    
    12,800
    
    
    
    5.58
    
    
    Office and Warehouse, Silos, Weigh Station, Rail Spur, Trucking TerminalRock Springs, WY
    
    Leased
    
    
    40
    
    
    
    5.90
    
    
    Rail Spur, Weigh StationSallisaw, OK
    
    Owned
    
    
    11,140
    
    
    
    6.00
    
    
    Office and Warehouse, Trucking Terminal, Mechanics GarageVictoria, TX
    
    Owned
    
    
    11,300
    
    
    
    3.83
    
    
    Office and Warehouse, Mud Plant, Wash Rack, Tanks, Mixing Pits, Residential QuartersWeatherford, OK
    
    Leased
    
    
    
    
    
    
    3.60
    
    
    Rail Spur, YardDallas, TX
    
    Leased
    
    
    2,415
    
    
    
    
    
    
    Corporate office space
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Reserve Rule Changes
  
    
    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-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
  2010
    
    
    2009
    
    
    2008ProductionAverage gas sales price per mcf
    
    $
    4.10
    
    
    $
    5.61
    
    
    $
    9.28Average oil sales price per bbl
    
    $
    73.79
    
    
    $
    66.71
    
    
    $
    91.65Average production cost per boe
    
    $
    27.82
    
    
    $
    39.97
    
    
    $
    5.90Net oil production (bbl)
    
    
    3,751
    
    
    
    1,666
    
    
    
    251Net gas production (mcf)
    
    
    8,709
    
    
    
    8,468
    
    
    
    4,212Productive wells  oilGross
    
    
    12
    
    
    
    12
    
    
    
    2Net
    
    
    7
    
    
    
    7
    
    
    
    Productive wells  gasGross
    
    
    21
    
    
    
    21
    
    
    
    17Net
    
    
    3
    
    
    
    3
    
    
    
    Developed acreageGross
    
    
    5,605
    
    
    
    5,485
    
    
    
    5,157Net
    
    
    541
    
    
    
    541
    
    
    
    301Undeveloped acreageGross
    
    
    
    
    
    
    12,000
    
    
    
    12,000Net
    
    
    
    
    
    
    2,400
    
    
    
    2,400Drilling activityNet productive exploratory wells
drilled
    
    
    
    
    
    
    
    
    
    
    10Net dry exploratory wells drilled
    
    
    
    
    
    
    
    
    
    
    1
  23




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Table 1  TOTAL PROVED RESERVES (12/31/2010 as of date)
 Net Proved Developed
    
    
    Net Proved Undeveloped
    
    
    Net Total ProvedPDP & PDnP
    
    
    PUD
    
    
    PDP, PDnP & PUDPV 10
    
    
    
    
    
    
    
    
    
    
    PV 10
    
    
    
    
    
    
    
    
    
    
    PV 10($)
    
    
    
    
    
    
    
    
    
    
    ($)
    
    
    
    
    
    
    
    
    
    
    ($)Oil (bbl)
    
    
    Gas (mcf)
    
    
    (1) (2)
    
    
    Oil (bbl)
    
    
    Gas (mcf)
    
    
    (1) (2)
    
    
    Oil (bbl)
    
    
    Gas (mcf)
    
    
    (1) (2)Misc.
Non-Operated
    
    
    1,911
    
    
    
    2,181
    
    
    
    43,250
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,911
    
    
    
    2,181
    
    
    
    43,250Panhandle Field
    
    
    114,190
    
    
    
    172,180
    
    
    
    4,108,339
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    114,190
    
    
    
    172,180
    
    
    
    4,108,339TOTALS:
    
    
    116,101
    
    
    
    174,361
    
    
    
    4,151,589
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    116,101
    
    
    
    174,361
    
    
    
    4,151,589
 TABLE 1A  TOTAL PROVED RESERVES WITH BOE (12/31/2010 as of date, 6 mcf per barrel of oil)
 Net Proved Developed
    
    
    Net Proved Undeveloped
    
    
    Net Total ProvedPDP & PDnP
    
    
    PUD
    
    
    PDP, PDnP & PUDOil (bbl)
    
    
    Gas (mcf)
    
    
    BOE
    
    
    Oil (bbl)
    
    
    Gas (mcf)
    
    
    BOE
    
    
    Oil (bbl)
    
    
    Gas (mcf)
    
    
    BOEMisc.
Non-Operated
    
    
    1,911
    
    
    
    2,181
    
    
    
    2,275
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,911
    
    
    
    2,181
    
    
    
    2,275Panhandle Field
    
    
    114,190
    
    
    
    172,180
    
    
    
    142,887
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    114,190
    
    
    
    172,180
    
    
    
    142,887TOTALS:
    
    
    116,101
    
    
    
    174,361
    
    
    
    145,162
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    116,101
    
    
    
    174,361
    
    
    
    145,162
 
 (1)
    
    The PV-10 value as of December 31, 2010 is pre-tax and was determined utilizing the
twelve-month un-weighted arithmetic average of the first day of the month price for the
period January through December 2010. Gas prices are referenced to a Henry Hub (HH) price
of $4.38 per MMBtu, as published in Platts Gas Daily, and are adjusted for energy content,
transportation fees, and regional price differentials. Oil and NGL prices are referenced
to a West Texas Intermediate (WTI) crude oil price of $75.96 per barrel, as posted by
Plains Marketing, L.P., and are adjusted for gravity, crude quality, transportation fees,
and regional price differentials. These reference prices are held constant in accordance
with SEC guidelines. The weighted average prices after adjustments over the life of the
properties are $75.15 per barrel for oil, $4.37 per mcf for gas, and $52.66 per barrel for
NGL. Management believes that the presentation of PV-10 value may be considered a non-GAAP
financial measure as defined in Item 10(e) of Regulation S-K. Therefore, we have included a
reconciliation of the measure to the most directly comparable GAAP financial measure
(standardized measure of discounted future net cash flows in footnote (2) below).
Management believes that the presentation of PV-10 value provides useful information to
investors because it is widely used by professional analysts and sophisticated investors in
evaluating oil and gas companies. Because many factors that are unique to each individual
company may impact the amount of future income taxes to be paid, the use of the pre-tax
measure provides greater comparability when evaluating companies. It is relevant and useful
to investors for
evaluating the relative monetary significance of NYTEX Petroleums oil and natural gas
properties. Further, investors may utilize the measure as a basis for comparison of the
relative size and value of NYTEX Petroleums reserves to other companies. Management also
uses this pre-tax measure when assessing the potential return on investment related to its
oil and natural gas properties and in evaluating acquisition candidates. The PV-10 value is
not a measure of financial or operating performance under GAAP, nor is it intended to
represent the current market value of the estimated oil and natural gas reserves owned by
NYTEX Petroleum. PV-10 value should not be considered in isolation or as a substitute for
the standardized measure of discounted future net cash flows as defined under GAAP.(2)
    
    Future income taxes and present value discounted (10%) future income taxes were
$1,064,010 and $930,029, respectively. Accordingly, the after-tax PV-10 value of Net Total
Proved Reserves (or Standardized Measure of Discounted Future Net Cash Flows) is
$3,221,560. 25




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##### Table of Contents



Item 3. Legal Proceedings
  Plaintiffs Company th th Panhandle Property NYTEX Petroleum Purchase Document
 Item 4. [Removed and Reserved]
 26




---



##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information
 FINRA OTCBB NYTE
 Holders
  Rule 144 Shares
 provided
   Dividends
  Securities Authorized For Issuance Under Equity Compensation Plans
  Total Securities to be Issued Upon Exercise of OutstandingOptions or Vesting of Restricted StockSecurities remainingavailable for futureissuance under equitycompensation plansWeighted-average
    
    
    (excluding securitiesNumber
    
    
    exercise price
    
    
    reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Equity compensation
plans not approved
by security holders
    
    
    3,883,801
    
    
    
    
    
    
    
    Total
    
    
    3,883,801
    
    
    
    
    
    
    
    
 27




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##### Table of Contents



Item 6. Selected Financial Data
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   Oilfield Services-
    
    consisting of our wholly-owned subsidiary,Francis Drilling
Fluids, Ltd. (FDF), 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; andOil and Gas -
    
    consisting of our wholly-owned subsidiary, NYTEX Petroleum, Inc.
(NYTEX Petroleum), an exploration and production company concentrating on the
acquisition and development of oil and natural gas reserves.
  General Industry Overview
  Oilfield Services
 Acquisition of FDF
   28




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##### Table of Contents



Oil and Gas
        Supreme Vacuum
  29




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##### Table of Contents



Results of Operations
  Selected Data
 2010
    
    
    2009Financial ResultsRevenues  Oilfield Services
    
    $
    7,090,463
    
    
    $
    Revenues  Oil and Gas
    
    
    781,887
    
    
    
    567,559Total revenues
    
    
    7,872,350
    
    
    
    567,559Total operating expenses
    
    
    11,806,228
    
    
    
    2,857,421Total other (income) expense
    
    
    15,713,688
    
    
    
    1,067,634Loss before income taxes
    
    $
    (19,647,566
    )
    
    $
    (3,357,496
    )Income tax benefit (provision)
    
    
    (3,299
    )
    
    
    Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )Loss per share  basic and diluted
    
    $
    (0.98
    )
    
    $
    (0.18
    )Weighted average shares outstanding  basic and diluted
    
    
    20,149,999
    
    
    
    18,688,976Operating ResultsAdjusted EBITDA  Oilfield Services
    
    $
    918,869
    
    
    
    
    (2)Adjusted EBITDA  Oil and Gas
    
    
    (1,443,047
    )
    
    
    
    (2)Adjusted EBITDA  Corporate and Intersegment Eliminations
    
    
    (3,818,411
    )
    
    
    
    (2)Consolidated Adjusted EBITDA(1)
    
    $
    (4,342,589
    )
    
    $
    (2,956,079
    )
 
 (1)
    
    See Results of Operations  Adjusted EBITDAfor 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 loss,which is presented in accordance with GAAP.(2)
    
    The Company operated as a single segment for the year ended December 31, 2009. Year ended December 31, 2010 compared to the year ended December 31, 2009
 Revenues
 30




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##### Table of Contents



Oil & gas lease operating expenses
 Depreciation, depletion, and amortization
 Selling, general, and administrative expenses
 Gain on sale of assets, net.
 Interest expense
 Change in fair value of derivative liabilities
 Accretion of preferred stock liability
 Equity in loss of unconsolidated subsidiaries
 Loss on sale of unconsolidated subsidiary
 Adjusted EBITDA
   31




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##### Table of Contents



2010
    
    
    2009Reconciliation of Adjusted EBITDA to GAAP Net Loss:Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )Income tax provision
    
    
    3,299
    
    
    
    Interest expense
    
    
    832,164
    
    
    
    170,486DD&A
    
    
    772,826
    
    
    
    83,457Impairment of long-lived assets
    
    
    
    
    
    
    147,474Change in fair value of derivative liabilities
    
    
    13,301,755
    
    
    
    Accretion of preferred stock liability
    
    
    398,232
    
    
    
    Consolidated Adjusted EBITDA
    
    $
    (4,342,589
    )
    
    $
    (2,956,079
    )
 Liquidity and Capital Resources
  Defaults Under Lending Agreements
      $2.15 Million 12% Convertible Debenture Offering
  WayPoint Transaction
  32




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##### Table of Contents



Senior Revolving Credit and Term Loan Facility
   Private Placement  Series A Convertible Preferred Stock
   Other Financings
     33




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##### Table of Contents



Cash Flows
  December 31,2010
    
    
    2009Cash flow used in operating activities
    
    $
    (1,054,155
    )
    
    $
    (2,096,089
    )Cash flow used in investing activities
    
    
    (41,566,581
    )
    
    
    (1,156,031
    )Cash flow provided by financing activities
    
    
    42,812,098
    
    
    
    2,970,172Net increase (decrease) in cash and cash equivalents
    
    
    191,362
    
    
    
    (281,948
    )Beginning cash and cash equivalents
    
    
    18,136
    
    
    
    300,084Ending cash and cash equivalents
    
    $
    209,498
    
    
    $
    18,136
    Off-Balance Sheet Arrangements
  34




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##### Table of Contents



Critical Accounting Policies
 Use of Estimates
  Accounts Receivable
  Inventory
  Property, plant, and equipment
   Long-lived Assets
   Wells in Progress
  35




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##### Table of Contents



Goodwill and Acquired Intangible Assets
   Asset Retirement Obligations
  Fair Value Measurements
   Revenue Recognition
   Share Based Compensation
  Income Taxes
  36




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting
    37




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##### Table of Contents



Material Weaknesses in Internal Controls Over Financial Reporting
  
    
    The Company did not maintain sufficient personnel with an appropriate level of technical
accounting knowledge, experience, and training in the application of GAAP commensurate with
its complexity and its financial accounting and reporting requirements. The Company has
limited experience in the areas of financial reporting and disclosure controls and
procedures. Also, the Company did not have an independent audit committee. As a result,
there is a lack of monitoring of the financial reporting process and there is a reasonable
possibility that material misstatements of the consolidated financial statements, including
disclosures, will not be prevented or detected on a timely basis; and
 
    
    Due to its small staff, the Company did not have a proper segregation of duties in
certain areas of its financial reporting process. The areas where the Company has a lack of
segregation of duties include cash receipts and disbursements, approval of purchases and
approval of accounts payable invoices for payment. This control deficiency, which is
pervasive in nature, results in a reasonable possibility that material misstatements of the
consolidated financial statements will not be prevented or detected on a timely basis.
 Managements Remediation Plans
    Changes in Internal Control Over Financial Reporting
  38




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##### Table of Contents



Additional Information
  
 Item 9B. Other Information
   39




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Executive Officers
  Name
    
    Age
    
    PositionMichael K. Galvis
    
    
    54
    
    
    President, Chief Executive Officer and
Director of NYTEX; Chairman of FDFKenneth K. Conte
    
    
    52
    
    
    Executive Vice President and Chief Financial
Officer of NYTEXMichael G. Francis
    
    
    63
    
    
    Director of NYTEX;
President and Chief Executive Officer of FDFWilliam G. Brehmer
    
    
    52
    
    
    Chief Operating Officer and DirectorGeorgianna Hanes
    
    
    57
    
    
    Treasurer and Controller and Chief Financial
Officer of NYTEXJude Gregory
    
    
    43
    
    
    Chief Financial Officer of FDF
 Michael K. Galvis FDF
 Kenneth K. Conte
 Michael G.
Francis
 40




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##### Table of Contents



William G. Brehmer
 Georgianna Hanes
 Jude N. Gregory
 Members of Our Board of Directors
  Name
    
    Age
    
    PositionMichael K. Galvis
    
    
    54
    
    
    President, Chief Executive Officer and
Director of NYTEX; Chairman of FDFWilliam G. Brehmer
    
    
    52
    
    
    DirectorJonathan Rich
    
    
    42
    
    
    DirectorThomas W. Drechsler
    
    
    33
    
    
    DirectorJohn Henry Moulton
    
    
    41
    
    
    Director
 41




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##### Table of Contents



Michael K. Galvis . See Executive Officers for biographical information about Mr. Galvis.
 William G. Brehmer . See Executive Officers for biographical information about Mr. Brehmer.
 Jonathan Rich
 Thomas W. Drechsler
 John
Henry Moulton
 2010 Director Compensation
  Code of Ethics
  Corporate Governance Board Meetings and Committees; Annual Meeting Attendance
  Audit Committee
  Personnel and Compensation Committee
  Nominating and Corporate Governance Committee
  42




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##### Table of Contents



Item 11. Executive Compensation
 43




---



##### Table of Contents



Summarized Compensation Table
   44




---



##### Table of Contents



Name and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All OtherPosition
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)(1)
    
    
    Stock Awards ($)(2)
    
    
    Compensation ($)(7)
    
    
    Total ($)Michael K. Galvis,
    
    
    12/31/10
    
    
    $
    407,217
    
    
    $
    205,000
    
    
    $
    31,000
    
    
    $
    36,975
    
    
    $
    680,192President and
    
    
    12/31/09
    
    
    $
    478,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    37,800
    
    
    $
    515,800CEO(3)Georgianna Hanes,
    
    
    12/31/10
    
    
    $
    152,900
    
    
    $
    35,000
    
    
    $
    0
    
    
    $
    4,800
    
    
    $
    192,700CFO, Treasurer &
    
    
    12/31/09
    
    
    $
    168,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    4,800
    
    
    $
    172,800Secretary(4)Kenneth K.
    
    
    12/31/10
    
    
    $
    91,666
    
    
    $
    520,000
    
    
    $
    312,000
    
    
    $
    2,586
    
    
    $
    926,252Conte,EVP & CFO(5)William G. Brehmer,
    
    
    12/31/10
    
    
    $
    35,467
    
    
    $
    0
    
    
    $
    0
    
    
    $
    4,800
    
    
    $
    40,267VP & COO(6)
    
    
    12/31/09
    
    
    $
    168,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    4,800
    
    
    $
    172,800
 
 (1)
    
    All bonuses are discretionary based on each individual executives performance as determined
by the Company, except certain formulaic bonuses as set forth in footnote 7.(2)
    
    Stock awards are valued at $1.04 and $1.86 per share of common stock for purposes of this annual report.(3)
    
    Michael Galviss base salary is comprised of $275,000 under an employment agreement with the
Company for his role as President and CEO of the Company, and another $275,000 under an
employment agreement with FDF for his role as Chairman of FDF.(4)
    
    Georgianna Hanes ceased being CFO of the Company on June 1, 2010.(5)
    
    Kenneth K. Conte became Executive Vice President and CFO of the Company on June 1, 2010.(6)
    
    William Brehmer ceased being COO of the Company on March 24, 2010 but remains as a Director.(7)
    
    Michael K. Galviss NYTEX Employment Agreement contemplates a car and health insurance
allowance which equals in the aggregate $2,375 per month.
Kenneth K. Contes NYTEX Employment Agreement contemplates a car allowance which equals approximately $431 per month.
Georgianna Hanes and William G.
Brehmer received a health insurance allowance of approximately $400 per month. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
  Agreements with Michael K. Galvis NYTEX Employment Agreement FDF Employment Agreement
  45




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##### Table of Contents



Agreement with Kenneth K. Conte
 Agreement with William G. Brehmer
 Agreement with Georgianna Hanes
 Outstanding Equity Awards at Fiscal Year-End Table
  Stock AwardsMarket Or PayoutMarket Value of
    
    
    Number of Unearned
    
    
    Value of UnearnedNumber of Shares or
    
    
    Shares or Units of
    
    
    Shares, Units or
    
    
    Shares, Units orUnits That Have Not
    
    
    Stock That Have not
    
    
    Other Rights That
    
    
    Other Rights ThatName
    
    Vested
    
    
    Vested
    
    
    Have not Vested
    
    
    Have Not VestedMichael K. Galvis,
    
    
    33,333
    
    
    $
    61,999
    
    
    
    150,000
    
    
    $
    279,000President and CEO
of NYTEX(1)
 
 (1)
    
    Mr. Galvis was awarded 50,000 shares of Common Stock which vest over three years in equal
installments. In November 23, 2011, Mr. Galvis is eligible to receive a grant for 75, 000
shares of Common Stock and another 75,000 shares of Common Stock in November 23, 2012. For more information see Narrative to Summary
Compensation Table and Grant Based Awards Table on pg. 41. 46




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##### Table of Contents



Option Exercises and Stock Vested Table:
  Stock AwardsNumber of Shares
    
    
    Value Realized onName
    
    Acquired on Vesting
    
    
    VestingMichael K. Galvis,
    
    
    16,667
    
    
    $
    31,001President & CEOKenneth K. Conte,
    
    
    300,000
    
    
    $
    312,000EVP & CFO
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
  Amount and natureTitle
    
    Name and address of
    
    of beneficial
    
    Percentof class
    
    beneficial owner
    
    ownership
    
    of classBeneficial Owners of More than 5% of Companys EquityCommon Stock
    
    WayPoint Nytex, LLC 
555 Theodore Fremd Ave., 
Suite C207
Rye, NY 10580
    
    
    19,809,245
    (1)
    
    
    35.0
    %Common Stock
    
    Diana Istre Francis
416 North Avenue K
Crowley, LA 70526
    
    
    2,058,125
    
    
    
    7.8
    %Common Stock
    
    Buccel, LLC
9 Hidden Hollow Terrace
Holmdel, NJ 07733
    
    
    1,976,179
    
    
    
    7.5
    %Executive Officers and Directors of the CompanyCommon Stock
    
    Michael K. Galvis 
President and CEO of NYTEX 
12222 Merit Drive 
Suite 1850
Dallas, TX 75251
    
    
    9,016,667
    
    
    
    34.4
    %Common Stock
    
    Michael G. Francis 
President and CEO of FDF 
240 Jasmine Road 
Crowley, LA 70526
    
    
    2,822,063
    
    
    
    10.8
    %
 47




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##### Table of Contents



Amount and natureTitle
    
    Name and address of
    
    of beneficial
    
    Percentof class
    
    beneficial owner
    
    ownership
    
    of classCommon Stock
    
    William Brehmer 
Director of NYTEX 
12222 Merit Drive 
Suite 1850
Dallas, TX 75251
    
    
    1,013,425
    
    
    
    3.9
    %Common Stock
    
    John Henry Moulton 
Director of NYTEX 
555 Theodore Fremd Ave. 
Suite C207
Rye, NY 10580
    
    
    19,809,245
    (2)
    
    
    35.0
    %Common Stock
    
    Thomas W. Drechsler
Director of NYTEX
555 Theodore Fremd Ave.
Suite C207
Rye, NY 10580
    
    
    
    
    
    
    0
    %Common Stock
    
    Jonathan Rich
Director of NYTEX
330 Madison Ave., 18th Floor
New York, NY 10017
    
    
    
    
    
    
    0
    %Common Stock
    
    Georgianna Hanes 
Controller, Secretary and
Treasurer of NYTEX 
12222 Merit Drive 
Suite 1850
Dallas, TX 75251
    
    
    1,013,425
    
    
    
    3.9
    %Common Stock
    
    Kenneth K. Conte 
Executive Vice President 
and CFO of NYTEX 
12222 Merit Drive 
Suite 1850
Dallas, TX 75251
    
    
    300,000
    
    
    
    1.1
    %All officers and
directors as a group
(5 persons)
    
    
    33,974,825
    
    
    
    65.8
    %
 
 (1)
    
    WayPoint Nytex, LLC, holds a warrant to purchase up to 35% of the outstanding shares of common stock of the Company, measured at the
time of exercise of such warrant. WayPoint Nytex, LLC has shared voting power of the shares
issuable upon exercise of the warrants with John Henry Moulton, Director of NYTEX.(2)
    
    John Henry Moulton has shared voting power of the WayPoint Nytex, LLC shares of common stock issuable upon
the conversion of the warrants held by WayPoint Nytex LLC. Changes In Control
 Default
Conditions Default Change of
Control
 48




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##### Table of Contents



Compliance with Section 16(a) of the Exchange Act
 Michael K. Galvis
 Michael G. Francis
 Kenneth K. Conte
 William G. Brehmer
 Georgianna Hanes
 Waypoint Nytex, LLC
 49




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions, and Director Independence
 Director Independence
   
 Item 14. Principal Accounting Fees and Services
 Independent Registered Public Accounting Firm
  Audit and Other Fees
  2010
    
    
    2009Audit fees(1)
    
    $
    161,700
    
    
    $
    80,600Audit-related fees
    
    
    
    
    
    
    Tax fees(2)
    
    
    13,225
    
    
    
    All other fees(3)
    
    
    80,000
    
    
    
    Total Fees
    
    $
    254,925
    
    
    $
    80,600
 
 (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 2010, other fees consisted of professional services performed in connection with
certain agreed-upon procedures related to our acquisition activity in 2010. 50




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 (a) List of Documents Filed.
 1.
    
    Financial StatementsThe 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.
    
    ExhibitsThe list of exhibits filed as part of this Annual Report on Form 10-K is submitted in the
Exhibit Index following the financial statements in response to Item 601 of Regulation S-K.
 (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.
 51




---



##### Table of Contents



SIGNATURES
  NYTEX Energy Holdings, Inc.By:
    /s/ Michael K. GalvisMichael K. GalvisPresident and Chief Executive Officer   /s/ Michael K. Galvis
    
    President, Chief Executive Officer, and Director
    
    April 15, 2011Michael K. Galvis/s/ Kenneth K. Conte
    
    Executive Vice President and Chief Financial Officer
    
    April 15, 2011Kenneth K. Conte/s/ Michael G. Francis
    
    President, Chief Executive Officer of FDF,  Director
    
    April 15, 2011Michael G. Francis/s/ William G. Brehmer
    
    Director
    
    April 15, 2011William G. Brehmer/s/ Thomas Drechsler
    
    Director
    
    April 15, 2011Thomas Drechsler/s/John Henry Moulton

John Henry Moulton
    
    Director
    
    April 15, 2011/s/ Jonathan Rich

Jonathan Rich
    
    Director
    
    April 15, 2011
 52




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageFinancial StatementsReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-3Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009
    
    
    F-4Consolidated Statements of Stockholders Equity (Deficit) for the Years
Ended December 31, 2010 and 2009
    
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-2




---



##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 
 Consolidated Balance Sheets
 At December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    209,498
    
    
    $
    18,136Accounts receivable, net
    
    
    12,230,782
    
    
    
    82,124Inventories
    
    
    1,237,149
    
    
    
    Prepaid expenses and other
    
    
    2,028,968
    
    
    
    Deferred tax asset, net
    
    
    13,487
    
    
    
    Total current assets
    
    
    15,719,884
    
    
    
    100,260Property,
plant, and equipment, net
    
    
    45,156,873
    
    
    
    1,075,468Other assets:Deferred financing costs
    
    
    2,014,561
    
    
    
    Intangible assets
    
    
    14,322,604
    
    
    
    Goodwill
    
    
    4,558,394
    
    
    
    Investments in unconsolidated subsidiaries
    
    
    
    
    
    
    1,479,159Deposits and other
    
    
    169,752
    
    
    
    68,640Total assets
    
    $
    81,942,068
    
    
    $
    2,723,527Liabilities and stockholders equity (deficit)Current liabilities:Accounts payable
    
    $
    7,907,001
    
    
    $
    511,624Accrued expenses
    
    
    3,327,030
    
    
    
    131,201Revenues payable
    
    
    36,345
    
    
    
    33,684Wells in progress
    
    
    403,415
    
    
    
    163,891Deferred revenue
    
    
    46,665
    
    
    
    46,665Derivative liability-current portion
    
    
    32,554,826
    
    
    
    Debt  current portion
    
    
    22,516,398
    
    
    
    1,148,363Total current liabilities
    
    
    66,791,680
    
    
    
    2,035,428Other liabilities:Debt
    
    
    1,127,980
    
    
    
    9,807Senior Series A redeemable preferred stock
    
    
    398,232
    
    
    
    Derivative liabilities
    
    
    1,573,560
    
    
    
    Asset retirement obligations
    
    
    50,078
    
    
    
    40,883Deferred tax liabilities
    
    
    14,215,838
    
    
    
    Total liabilities
    
    
    84,157,368
    
    
    
    2,086,118Commitments and contingencies (Note 12)Stockholders equity (deficit):Preferred
stock, Series A convertible, $0.001 par value; 10,000,000 shares
authorized; 5,580,000 and no shares issued and outstanding at
December 31, 2010 and 2009, respectively
    
    
    5,580
    
    
    
    Preferred stock, Series B, $0.001 par value; 1 share authorized; 1 and no
shares issued and outstanding at December 31, 2010 and 2009,
respectively
    
    
    
    
    
    
    Common
stock, $0.001 par value; 200,000,000 shares authorized; 26,219,665
and 19,129,123 shares issued and outstanding at December 31,
2010 and
2009, respectively
    
    
    26,219
    
    
    
    19,129Additional paid-in capital
    
    
    24,750,200
    
    
    
    7,911,434Accumulated deficit
    
    
    (26,997,299
    )
    
    
    (7,293,154
    )Total stockholders equity (deficit)
    
    
    (2,215,300
    )
    
    
    637,409Total liabilities and stockholders equity (deficit)
    
    $
    81,942,068
    
    
    $
    2,723,527
 See accompanying Notes to Consolidated Financial Statements
 F-3




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 
 Consolidated Statements of Operations
 Years Ended December 31,2010
    
    
    2009Revenues:Oilfield services
    
    $
    6,031,455
    
    
    $
    Drilling fluids
    
    
    1,059,008
    
    
    
    Oil and gas
    
    
    204,906
    
    
    
    206,026Other
    
    
    576,981
    
    
    
    361,533Total revenues
    
    
    7,872,350
    
    
    
    567,559Operating expenses:Cost of goods sold  drilling fluids
    
    
    437,230
    
    
    
    Oil & gas lease operating expenses
    
    
    143,361
    
    
    
    331,893Depreciation, depletion, and amortization
    
    
    772,826
    
    
    
    83,457Selling, general, and administrative expenses
    
    
    10,919,713
    
    
    
    2,294,597Impairment of long-lived assets
    
    
    
    
    
    
    147,474Gain on sale of assets, net
    
    
    (466,902
    )
    
    
    Total operating expenses
    
    
    11,806,228
    
    
    
    2,857,421Loss from operations
    
    
    (3,933,878
    )
    
    
    (2,289,862
    )Other income (expense):Interest income
    
    
    1,230
    
    
    
    686Interest expense
    
    
    (832,164
    )
    
    
    (170,486
    )Change in fair value of derivative liabilities
    
    
    (13,301,755
    )
    
    
    Accretion of preferred stock liability
    
    
    (398,232
    )
    
    
    Equity in loss of unconsolidated subsidiaries
    
    
    (317,158
    )
    
    
    (897,834
    )Loss on sale of unconsolidated subsidiary
    
    
    (870,750
    )
    
    
    Other
    
    
    5,141
    
    
    
    Total other expense
    
    
    (15,713,688
    )
    
    
    (1,067,634
    )Loss before income taxes
    
    
    (19,647,566
    )
    
    
    (3,357,496
    )Income tax benefit (provision)
    
    
    (3,299
    )
    
    
    Net loss
    
    
    (19,650,865
    )
    
    
    (3,357,496
    )Preferred
stock dividends
    
    
    (53,280
    )
    
    
    Net loss
attributable to common stockholders
    
    $
    (19,704,145
    )
    
    $
    (3,357,496
    )Net loss per share, basic and diluted
    
    $
    (0.98
    )
    
    $
    (0.18
    )Weighted average shares outstanding, basic and diluted
    
    
    20,149,999
    
    
    
    18,688,976
 See accompanying Notes to Consolidated Financial Statements
 F-4




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 
 Consolidated
Statement of Stockholders Equity (Deficit)
 Series A Convertible
    
    
    Series BPreferred Stock
    
    
    Preferred Stock
    
    
    Common StockAdditionalPaid-In
    
    
    AccumulatedShares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    18,068,372
    
    
    $
    18,068
    
    
    $
    5,734,956
    
    
    $
    (3,935,658
    )
    
    $
    1,817,366Issuance of common stock and
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060,751
    
    
    
    1,061
    
    
    
    2,105,941
    
    
    
    
    
    
    
    2,107,002Shares to be issued at maturity
of loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,537
    
    
    
    
    
    
    
    70,537Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,357,496
    )
    
    
    (3,357,496
    )Balance at December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,129,123
    
    
    
    19,129
    
    
    
    7,911,434
    
    
    
    (7,293,154
    )
    
    
    637,409Issuance of common stock and
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,200
    
    
    
    91
    
    
    
    181,009
    
    
    
    
    
    
    
    181,100Shares issued for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    871,337
    
    
    
    871
    
    
    
    1,014,654
    
    
    
    
    
    
    
    1,015,525Shares and warrants issued with
12% convertible debenture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,000
    
    
    
    45
    
    
    
    207,661
    
    
    
    
    
    
    
    207,706Shares issued in connection with
acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,023,630
    
    
    
    6,024
    
    
    
    11,197,928
    
    
    
    
    
    
    
    11,203,952Shares issued at maturity of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,375
    
    
    
    59
    
    
    
    (59
    )
    
    
    
    
    
    
    Warrants issued to private
placement agent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    778,769
    
    
    
    
    
    
    
    778,769Warrants issued for short-term
loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,934
    
    
    
    
    
    
    
    8,934Issuance of Series A Convertible
Preferred Stock
    
    
    5,580,000
    
    
    
    5,580
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,449,869
    
    
    
    
    
    
    
    3,455,449Issuance of Series B preferred
stock in connection with
acquistion
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Dividends on Series A
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,280
    )
    
    
    (53,280
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,650,865
    )
    
    
    (19,650,865
    )Balance at December 31, 2010
    
    
    5,580,000
    
    
    $
    5,580
    
    
    
    1
    
    
    $
    
    
    
    
    26,219,665
    
    
    $
    26,219
    
    
    $
    24,750,200
    
    
    $
    (26,997,299
    )
    
    $
    (2,215,300
    )
 See accompanying Notes to Consolidated Financial Statements
 F-5




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 
 Consolidated Statements of Cash Flows
 Years Ended December 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Depreciation, depletion, and amortization
    
    
    772,826
    
    
    
    83,457Equity in loss of unconsolidated subsidiaries
    
    
    317,158
    
    
    
    897,834Impairment of long-lived assets
    
    
    
    
    
    
    147,474Bed debt expense
    
    
    21,272
    
    
    
    Share-based compensation
    
    
    1,015,525
    
    
    
    Deferred
income taxes
    
    
    (10,311
    )
    
    
    Accretion of discount on asset retirement obligations
    
    
    4,080
    
    
    
    27,652Amortization of debt discount
    
    
    134,073
    
    
    
    Amortization of deferred financing fees
    
    
    35,766
    
    
    
    58,781Accretion of Senior Series A redeemable preferred stock liability
    
    
    398,232
    
    
    
    Change in fair value of derivative liabilities
    
    
    13,301,755
    
    
    
    (Gain)/loss on disposal, net
    
    
    403,848
    
    
    
    Change in working capital:Accounts receivable
    
    
    1,111,958
    
    
    
    (47,629
    )Inventories
    
    
    103,050
    
    
    
    Prepaid expenses and other
    
    
    10,305
    
    
    
    (52,529
    )Accounts payable and accrued expenses
    
    
    827,136
    
    
    
    523,380Other liabilities
    
    
    150,037
    
    
    
    (377,013
    )Net cash used in operating activities
    
    
    (1,054,155
    )
    
    
    (2,096,089
    )Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (40,802,873
    )
    
    
    Investments in oil and gas properties
    
    
    (28,161
    )
    
    
    (855,168
    )Investments in unconsolidated subsidiaries
    
    
    (108,750
    )
    
    
    (283,796
    )Additions to property, plant, and equipment
    
    
    (1,886,205
    )
    
    
    (17,067
    )Proceeds from divestitures
    
    
    1,259,408
    
    
    
    Net cash used in investing activities
    
    
    (41,566,581
    )
    
    
    (1,156,031
    )Cash flows from financing activities:Proceeds from the issuance of common stock and warrants
    
    
    181,100
    
    
    
    2,107,002Proceeds from the issuance of Series A convertible preferred stock
    
    
    5,029,011
    
    
    
    Proceeds from the issuance of 12% convertible debentures
    
    
    2,150,000
    
    
    
    Proceeds from the issuance of derivative liability
    
    
    19,253,071
    
    
    
    Borrowings under notes payable
    
    
    27,684,343
    
    
    
    963,450Payments on notes payable
    
    
    (10,213,869
    )
    
    
    (100,280
    )Issuance costs
    
    
    (1,271,558
    )
    
    
    Net cash provided by financing activities
    
    
    42,812,098
    
    
    
    2,970,172Net increase (decrease) in cash and cash equivalents
    
    
    191,362
    
    
    
    (281,948
    )Cash and cash equivalents at beginning of year
    
    
    18,136
    
    
    
    300,084Cash and cash equivalents at end of year
    
    $
    209,498
    
    
    $
    18,136
 See accompanying Notes to Consolidated Financial Statements
 F-6




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 
 Notes to Consolidated Financial Statements
 NOTE 1. NATURE OF BUSINESS
      Liquidity and Events of Default
     NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation and Basis of Presentation
    Use of Estimates
  F-7




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Cash and Cash Equivalents
  Accounts Receivable
  Inventory
  Property, plant, and equipment
   Long-lived Assets
   F-8




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 Wells in Progress
  Goodwill and Acquired Intangible Assets
   Asset Retirement Obligations
  Fair Value Measurements
      F-9




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 Revenue Recognition
   Selling, General, and Administrative Expenses
  December 31,2010
    
    
    2009Salary, wages, and benefits
    
    $
    4,051,119
    
    
    $
    1,114,674Legal, accounting, and professional fees
    
    
    1,945,787
    
    
    
    659,356Acquisition
- related expenses
    
    
    1,247,997
    
    
    
    Contract labor
    
    
    254,917
    
    
    
    72,490Rent and operating lease expenses
    
    
    253,957
    
    
    
    60,113Insurance
    
    
    326,461
    
    
    
    28,274Fuel
    
    
    806,752
    
    
    
    Other
    
    
    2,032,723
    
    
    
    359,690$
    10,919,713
    
    
    $
    2,294,597
 Share Based Compensation
  Income Taxes
   Net Loss Per Common Share
   F-10




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 Recently Issued Accounting Standards
  NOTE 3. ACCOUNTS RECEIVABLE
  December 31,2010
    
    
    2009Trade receivables
    
    $
    11,833,532
    
    
    $
    4,342Other
    
    
    418,522
    
    
    
    77,782Total accounts receivable
    
    
    12,252,054
    
    
    
    82,124Allowance for doubtful accounts
    
    
    (21,272
    )
    
    
    Accounts receivable, net
    
    $
    12,230,782
    
    
    $
    82,124
 NOTE 4. PROPERTY, PLANT, AND EQUIPMENT
  December 31,2010
    
    
    2009Land
    
    $
    2,180,000
    
    
    $
    Plant, machinery & equipment
    
    
    36,587,798
    
    
    
    50,055Construction in progress
    
    
    5,165,424
    
    
    
    Oil and gas properties
    
    
    1,951,312
    
    
    
    1,133,370Total property, plant, & equipment
    
    
    45,884,534
    
    
    
    1,183,425Accumulated DD&A
    
    
    (727,661
    )
    
    
    (107,957
    )Property, plant, & equipment, net
    
    $
    45,156,873
    
    
    $
    1,075,468
  F-11




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 5. BUSINESS COMBINATIONS
 Francis Drilling Fluids
  Proceeds
from the issuance of Series A Convertible Preferred Stock of NYTEX Energy(1)
    
    $
    2,887,597Proceeds from the issuance of Series B Preferred Stock of NYTEX Energy
    
    
    1Proceeds
from the issuance of Senior Series A Redeemable Preferred Stock of Acquisition Inc.(2)
    
    
    19,253,071Proceeds
from long-term debt(3)
    
    
    19,159,222Total cash consideration
    
    $
    41,299,891
 
 (1)
    
    Represents a portion of the proceeds, net of offering costs and
fair value of the embedded warrant, from the private placement of our Series A
Convertible Preferred Stock concluded in January 2011 for gross proceeds of
$6,000,000. See Note 13.(2)
    
    Along with Acquisition Inc., we entered into a Preferred Stock
and Warrant Purchase Agreement with a third party (WayPoint), whereby, in exchange for
$20,000,001 (net of offering costs), we issued to them 20,750 shares of
Acquisition Inc. 14% Senior Series A Redeemable Preferred Stock, one share of
Series B Preferred Stock of NYTEX Energy, a warrant
(Purchaser Warrant) to purchase up to 35% of
the then outstanding shares of our common stock, and a warrant
(Control Warrant) to
purchase additional shares of our outstanding common stock such that
when combined with the Purchaser Warrant, provides WayPoint with an
aggregate 51% of the total outstanding common stock. Further, such warrant
becomes exercisable only if certain conditions of default are met as
set forth in
the Preferred Stock and Warrant Purchase Agreement. See Note 9.(3)
    
    Acquisition Inc. and FDF, as co-borrowers, entered into a
revolving credit and term loan facility with a third-party lender providing
for loans up to $24,000,000.   Pro Forma for the Year Ended December 31,2010
    
    
    2009Revenue
    
    $
    75,853,294
    
    
    $
    53,451,289Net loss
    
    $
    (7,608,055
    )
    
    $
    (10,723,311
    )Net loss per share, basic and diluted
    
    $
    (0.31
    )
    
    $
    (0.47
    )
  
    
    Additional depreciation and amortization expense of approximately $8,325,000 and
$8,241,000 for the years ended December 31, 2010 and 2009, respectively;
 F-12




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 
    
    Additional interest expense of approximately $3,046,000 and $3,243,000 for the years
ended December 31, 2010 and 2009, respectively, related to the incremental debt we
incurred to finance the acquisition;
    
    Accretion expense of approximately $3,773,000 for each of the years ended December
31, 2010 and 2009, related to the $20,750,000 face amount of
Acquisition Inc. redeemable preferred
stock over the term of the instrument of approximately 5.5 years; and
    
    Elimination of approximately $4,839,000 and $4,972,000 of lease expenses incurred
for the years ended December 31, 2010 and 2009, respectively, related to operating
leases that were terminated and paid-in-full at acquisition.
   Estimated fair value of assets aquired and liabilities assumed:Cash and cash equivalents
    
    $
    497,018Accounts receivable
    
    
    13,281,888Inventory
    
    
    1,340,199Prepaid expenses and other
    
    
    2,273,834Property and equipment
    
    
    38,692,890Construction in Progress
    
    
    3,308,270Identifiable intangible assets
    
    
    14,447,000Other assets acquired
    
    
    112,868Accounts payable
    
    
    (7,065,761
    )Accrued expenses
    
    
    (2,912,987
    )Francis Group debt assumed
    
    
    (2,240,949
    )Deferred tax liability
    
    
    (14,458,978
    )Subtotal of estimated fair value of net assets acquired
    
    $
    47,275,292Goodwill
    
    $
    4,558,394
    Panhandle Field Producing Property
  F-13




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Lease and well equipment
    
    $
    41,000Proved properties
    
    
    672,231Total assets acquired
    
    
    713,231Asset retirement obligation
    
    
    (13,231
    )Net assets acquired
    
    $
    700,000
  Pro Formafor theYear EndedDecember 31,2009Revenue
    
    $
    678,047Net loss
    
    $
    (3,336,731
    )Net loss per share, basic and diluted
    
    $
    (0.18
    )
     Lease and well equipment
    
    $
    93,536Proved properties
    
    
    1,389,040Total assets acquired
    
    
    1,482,576Asset retirement obligation
    
    
    (30,718
    )Net assets acquired
    
    $
    1,451,858
 F-14




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Pro Formafor theYear EndedDecember 31,2010Revenue
    
    $
    8,014,070Net loss
    
    $
    (20,150,727
    )Net loss per share, basic and diluted
    
    $
    (0.97
    )
 NOTE 6. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
 Waterworks
  Supreme Vacuum
   F-15




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Year EndedDecember 31,2009Operaing results:Service revenue
    
    $
    2,780,613Operating expenses
    
    
    3,666,556Loss from operations
    
    $
    (885,943
    )Net loss
    
    $
    (1,170,122
    )
 December 31,2009Balance Sheet:Current assets
    
    $
    668,506Non-current assets
    
    
    4,078,930Total assets
    
    $
    4,747,436Current liabilities
    
    $
    1,559,880Non-current liabilities
    
    
    2,111,605Total liabilities
    
    
    3,671,485Equity
    
    
    1,075,951Total liabilities and equity
    
    $
    4,747,436
 NOTE 7. GOODWILL AND ACQUIRED INTANGIBLE ASSETS
   NetGross Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AmortizationAmount
    
    
    Amortization
    
    
    Amount
    
    
    ExpenseNon-compete agreements
    
    $
    6,033,000
    
    
    $
    (109,171
    )
    
    $
    5,923,829
    
    
    $
    109,171Customer relationships
    
    
    3,654,000
    
    
    
    (15,225
    )
    
    
    3,638,775
    
    
    
    15,225$
    9,687,000
    
    
    $
    (124,396
    )
    
    $
    9,562,604
    
    
    $
    124,396
  F-16




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  2011
    
    $1,492,7572012
    
    1,492,7572013
    
    1,086,0572014
    
    795,5572015
    
    795,5572016 and thereafter
    
    3,899,919
 NOTE 8. ASSET RETIREMENT OBLIGATION
  December 31,2010
    
    
    2009Asset retirement obligation as of beginning of year
    
    $
    40,883
    
    
    $
    Liabilities incurred
    
    
    30,718
    
    
    
    38,780Liabilities settled
    
    
    (25,603
    )
    
    
    (25,549
    )Revision of estimated obligation
    
    
    
    
    
    
    Accretion expense
    
    
    4,080
    
    
    
    27,652Asset retirement obligation as of end of year
    
    $
    50,078
    
    
    $
    40,883
 NOTE 9. WAYPOINT TRANSACTION
  14% Senior Series A Redeemable Preferred Stock
   F-17




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 Series B Preferred Stock
  Warrants
   Other Obligations
   Initial Accounting
   F-18




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Default Under WayPoint Purchase Agreement
  NOTE 10. DERIVATIVE LIABILITIES
  WayPoint Warrant Derivative
    
    $
    32,554,826Warrrants  Series A Convertible Preferred Stock
    
    
    1,573,560Total derivative liabilities at December 31, 2010
    
    $
    34,128,386
    F-19




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 11. DEBT
  December 31,2010
    
    
    200925% Bridge Loan due January 2010
    
    $
    
    
    
    $
    100,00025% Bridge Loan due July 2011
    
    
    
    
    
    
    100,00018% Bridge Loan due December 2010
    
    
    
    
    
    
    150,00018% Bridge Loan due July 2011
    
    
    234,919
    
    
    
    600,0009% Demand Notes due February 2011
    
    
    237,458
    
    
    
    0% Secured Equipment Loan due March 2011
    
    
    2,098
    
    
    
    3.75% Secured Equipment Loan due June 2011
    
    
    1,388,807
    
    
    
    6% Related Party Loan due September 2011
    
    
    168,000
    
    
    
    195,00012% Convertible Debentures due October 2011
    
    
    2,064,867
    
    
    
    5.5% Mortgage Note due July 2012
    
    
    343,696
    
    
    
    7.41% Secured Equipment Loan due November 2013
    
    
    10,149
    
    
    
    13,1705.75% Secured Equipment Loan due November 2013
    
    
    43,086
    
    
    
    7.41% Secured Equipment Loan due July 2015
    
    
    19,765
    
    
    
    Francis Promissory Note (non-interest bearing) due October 2015
    
    
    478,710
    
    
    
    Senior Facility  Term Loan due November 2015
    
    
    11,857,144
    
    
    
    Senior Facility  Revolver due November 2015
    
    
    5,895,579
    
    
    
    6% Secured Equipment Loan due December 2015
    
    
    900,100
    
    
    
    Total debt
    
    
    23,644,378
    
    
    
    1,158,170Less: current maturities
    
    
    (22,516,398
    )
    
    
    (1,148,363
    )Total long-term debt
    
    $
    1,127,980
    
    
    $
    9,807
   2011
    
    
    22,516,3982012
    
    
    244,0322013
    
    
    248,3582014
    
    
    235,3642015
    
    
    756,6502016 and thereafter
    
    
    Unamortized Discount
    
    
    (356,424
    )$
    23,644,378
 Senior Revolving Credit and Term Loan Facility
  F-20




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
   $2.15
Million 12% Convertible Debentures
  Francis Promissory Note
  Related Party Loan
   Other Debentures and Loans
   F-21




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  NOTE 12. COMMITMENTS AND CONTINGENCIES
 Leases
  2011
    
    $
    1,634,6702012
    
    
    1,120,1212013
    
    
    905,0112014
    
    
    845,4982015
    
    
    612,258Thereafter
    
    
    971,247$
    6,088,805
  Litigation
  Plaintiffs th th Panhandle Property Purchase Document
 Environmental
  F-22




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 13. STOCKHOLDERS EQUITY
   Private Placement  Common Stock
  Other Common Stock Issuances
     Private Placement  Series A Convertible Preferred Stock
   arrant Issuances
  F-23




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
        WeightedAverageWarrants
    
    
    Exercise PriceOutstanding at December 31, 2009
    
    
    2,899,251
    
    
    $
    1.00Issued
    
    
    41,162,079
    
    
    
    0.12Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at December 31, 2010
    
    
    44,061,330
    
    
    $
    0.18
 F-24




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 14. FAIR VALUE MEASURMENTS
  
    
    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.
    
    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.
    CarryingAmount
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Derivative liabilities
    
    $
    34,128,386
    
    
    $
    
    
    
    $
    
    
    
    $
    34,128,386
  Balance, December 31, 2009
    
    $
    Issuance of derivative instruments
    
    
    20,826,631Change in derivative liabilities
    
    
    13,301,755Balance, December 31, 2010
    
    $
    34,128,386
 NOTE 15. OIL CONTAINMENT BOOM ACTIVITIES
   F-25




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
     NOTE 16. INCOME TAXES
    December 31,2010
    
    
    2009Expected income tax benefit based on U.S. statutory
rate of 34%
    
    $
    (6,680,172
    )
    
    $
    (1,141,549
    )State income taxes (net of federal income tax benefit)
    
    
    13,609
    
    
    
    Net book/tax differences on unconsolidated subsidiaries
    
    
    (308,981
    )
    
    
    281,577Acquisition
costs
    
    
    407,749
    
    
    
    Other
    
    
    5,502
    
    
    
    2,997Valuation allowance
    
    
    6,565,592
    
    
    
    856,975Income tax provision (benefit)
    
    $
    3,299
    
    
    $
    
  December 31,2010
    
    
    2009Deferred tax assets:Net operating loss carryforwards
    
    $
    3,667,779
    
    
    $
    1,361,839Impairment of oil and gas properties
    
    
    249,099
    
    
    
    219,876Intangible assets
    
    
    383,048
    
    
    
    Fair value of derivative
    
    
    5,123,679
    
    
    
    Accretion expense
    
    
    
    
    
    
    13,900Deferred revenue
    
    
    
    
    
    
    15,866Other
    
    
    367,074
    
    
    
    Valuation allowance on deferred tax
assets
    
    
    (9,124,025
    )
    
    
    (1,455,496
    )Total deferred tax assets
    
    
    666,654
    
    
    
    155,985Deferred tax liabilities:Property, plant, and equipment
    
    
    (9,094,577
    )
    
    
    (155,985
    )Intangible assets
    
    
    (5,691,850
    )
    
    
    Other
    
    
    (82,578
    )
    
    
    Total deferred tax liabilities
    
    
    (14,869,005
    )
    
    
    (155,985
    )Net deferred tax liability
    
    $
    (14,202,351
    )
    
    $
    
  December 31,2010
    
    
    2009Current deferred tax asset, net
    
    $
    13,487
    
    
    $
    155,985Non-current deferred tax liability, net
    
    
    (14,215,838
    )
    
    
    (155,985
    )$
    (14,202,351
    )
    
    $
    
 F-26




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 17. LOSS PER SHARE
 Participating Securities and the Two Class Method
  December 31,2010
    
    
    2009Numerator:Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )Attributable to participating securities
    
    
    (53,280
    )
    
    
    Net loss used in calculating basic and diluted loss per share
    
    $
    (19,704,145
    )
    
    $
    (3,357,496
    )Denominator:Weighted average common shares outstanding, basic
    
    
    20,149,999
    
    
    
    18,688,976Attributable to participating securities
    
    
    
    
    
    
    Shares used in calcuating basic and diluted loss per share
    
    
    20,149,999
    
    
    
    18,688,976Basic and diluted loss per share
    
    $
    (0.98
    )
    
    $
    (0.18
    )
 F-27




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 18. SEGMENT INFORMATION
    Corporate andOil Field
    
    
    
    
    
    
    IntersegmentServices
    
    
    Oil and Gas
    
    
    Eliminations
    
    
    TotalYear Ended December 31, 2010:Revenues:Oil field services
    
    $
    6,031,455
    
    
    $
    
    
    
    $
    
    
    
    $
    6,031,455Drilling fluids
    
    
    1,059,008
    
    
    
    
    
    
    
    
    
    
    
    1,059,008Oil & gas
    
    
    
    
    
    
    204,906
    
    
    
    
    
    
    
    204,906Other
    
    
    
    
    
    
    576,981
    
    
    
    
    
    
    
    576,981Total Revenues
    
    
    7,090,463
    
    
    
    781,887
    
    
    
    
    
    
    
    7,872,350Expenses and other, net:Cost of goods sold  drilling fluids
    
    
    437,230
    
    
    
    
    
    
    
    
    
    
    
    437,230Production cost  oil & gas
    
    
    
    
    
    
    14,489
    
    
    
    
    
    
    
    14,489Lease operating expenses
    
    
    
    
    
    
    128,872
    
    
    
    
    
    
    
    128,872Depreciation, depletion, and amortization
    
    
    690,369
    
    
    
    82,457
    
    
    
    
    
    
    
    772,826Selling, general and administrative expenses
    
    
    5,739,505
    
    
    
    2,539,725
    
    
    
    2,640,483
    
    
    
    10,919,713Gain on sale of assets
    
    
    
    
    
    
    (466,902
    )
    
    
    
    
    
    
    (466,902
    )Interest income
    
    
    
    
    
    
    
    
    
    
    (1,230
    )
    
    
    (1,230
    )Interest expense
    
    
    427,117
    
    
    
    21,687
    
    
    
    383,360
    
    
    
    832,164Accretion of preferred stock
    
    
    398,232
    
    
    
    
    
    
    
    
    
    
    
    398,232Equity in loss of unconsolidated subsidiaries
    
    
    
    
    
    
    8,750
    
    
    
    308,408
    
    
    
    317,158Loss on sale of unconsolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    870,750
    
    
    
    870,750Change in fair value of derivative
    
    
    13,301,755
    
    
    
    
    
    
    
    
    
    
    
    13,301,755Other income
    
    
    (5,141
    )
    
    
    
    
    
    
    
    
    
    
    (5,141
    )Total expenses and other, net
    
    $
    20,989,067
    
    
    
    2,329,078
    
    
    
    4,201,771
    
    
    
    27,519,916Loss before income taxes
    
    
    (13,898,604
    )
    
    
    (1,547,191
    )
    
    
    (4,201,771
    )
    
    
    (19,647,566
    )Income tax benefit (provision)
    
    
    (3,299
    )
    
    
    
    
    
    
    
    
    
    
    (3,299
    )Net loss
    
    $
    (13,901,903
    )
    
    $
    (1,547,191
    )
    
    $
    (4,201,771
    )
    
    $
    (19,650,865
    )
 F-28




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 Corporate andOil Field
    
    
    
    
    
    
    IntersegmentServices
    
    
    Oil & Gas
    
    
    Eliminations
    
    
    TotalAs of December 31, 2010:Current Assets
    
    $
    15,311,299
    
    
    $
    243,185
    
    
    $
    165,400
    
    
    $
    15,719,884Property, plant, and equipement, net
    
    
    43,295,611
    
    
    
    1,861,262
    
    
    
    
    
    
    
    45,156,873Goodwill / intangible assets
    
    
    18,880,998
    
    
    
    
    
    
    
    
    
    
    
    18,880,998Deferred financing cost
    
    
    735,612
    
    
    
    
    
    
    
    1,278,949
    
    
    
    2,014,561Other assets
    
    
    112,868
    
    
    
    56,884
    
    
    
    
    
    
    
    169,752Total assets
    
    $
    78,336,388
    
    
    $
    2,161,331
    
    
    $
    1,444,349
    
    
    $
    81,942,068Current liabilities
    
    $
    62,694,911
    
    
    $
    1,183,510
    
    
    $
    2,913,259
    
    
    $
    66,791,680Long-term debt
    
    
    861,581
    
    
    
    22,822
    
    
    
    243,577
    
    
    
    1,127,980Senior Series A redeemable preferred stock
    
    
    398,232
    
    
    
    
    
    
    
    
    
    
    
    398,232Warrant derivative
    
    
    
    
    
    
    
    
    
    
    1,573,560
    
    
    
    1,573,560Asset retirement obligation
    
    
    
    
    
    
    50,078
    
    
    
    
    
    
    
    50,078Deferred income taxes
    
    
    14,215,838
    
    
    
    
    
    
    
    
    
    
    
    14,215,838Stockholders equity (deficit)
    
    
    165,826
    
    
    
    904,921
    
    
    
    (3,286,047
    )
    
    
    (2,215,300
    )Total liabilities and stockholders equity
    
    $
    78,336,388
    
    
    $
    2,161,331
    
    
    $
    1,444,349
    
    
    $
    81,942,068Additions to long-lived assets
    
    $
    1,864,622
    
    
    $
    
    
    
    $
    21,583
    
    
    $
    1,886,205Acquisition of proved properties
    
    $
    
    
    
    $
    1,451,858
    
    
    $
    
    
    
    $
    1,451,858
 NOTE 19. SUPPLEMENTAL CASH FLOW INFORMATION
  Years Ended December 31,2010
    
    
    2009Interest paid
    
    $
    362,940
    
    
    $
    13,747Non-cash investing and financing activities:Additions to property and asset retirement obligations
    
    $
    5,115
    
    
    $
    38,780Additions to property and equipment through issuance
of common stock and debt
    
    $
    1,425,795
    
    
    $
    Exchange of interests in oil and gas properties
    
    $
    42,036
    
    
    $
    Common stock issued in connection with acquisitions
    
    $
    11,203,951
    
    
    $
    Debt issued/assumed in acquisitions
    
    $
    3,228,407
    
    
    $
    Common stock issued for debt
    
    $
    
    
    
    $
    70,537Issuance of derivative liability
    
    $
    1,573,560
    
    
    $
    
 NOTE 20. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS
    F-29




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
Condensed Balance Sheets
 At December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    165,400
    
    
    $
    1,407Total current assets
    
    
    165,400
    
    
    
    1,407Deferred financing costs
    
    
    1,278,949
    
    
    
    Investment in subsidiaries
    
    
    1,136,542
    
    
    
    221,748Investments in unconsolidated subsidiaries
    
    
    
    
    
    
    1,479,159Total assets
    
    $
    2,580,891
    
    
    $
    1,702,314Liabilities and stockholders equity (deficit)Current liabilities:Accrued expenses
    
    $
    444,135
    
    
    $
    126,661Debt  current portion
    
    
    2,534,919
    
    
    
    938,244Total current liabilities
    
    
    2,979,054
    
    
    
    1,064,905Debt
    
    
    243,577
    
    
    
    Derivative liabilities
    
    
    1,573,560
    
    
    
    Total liabilities
    
    
    4,796,191
    
    
    
    1,064,905Stockholders equity:Preferred stock, Series A
    
    
    5,580
    
    
    
    Preferred stock, Series B
    
    
    
    
    
    
    Common stock
    
    
    26,219
    
    
    
    19,129Additional paid-in capital
    
    
    24,750,200
    
    
    
    7,911,434Accumulated deficit
    
    
    (26,997,299
    )
    
    
    (7,293,154
    )Total stockholders equity
    
    
    (2,215,300
    )
    
    
    637,409Total liabilities and stockholders equity
    
    $
    2,580,891
    
    
    $
    1,702,314
 F-30




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
Condensed Statements of Operations
 Years Ended December 31,2010
    
    
    2009Revenues
    
    $
    62,500
    
    
    $
    Operating expenses:Selling, general, and administrative
expenses
    
    
    2,640,483
    
    
    
    27,850Total operating
expenses
    
    
    2,640,483
    
    
    
    27,850Loss from operations
    
    
    (2,577,983
    )
    
    
    (27,850
    )Other income (expense):Interest income
    
    
    1,230
    
    
    
    600Interest expense
    
    
    (383,360
    )
    
    
    (157,739
    )Equity in loss of subsidiaries
    
    
    (15,511,594
    )
    
    
    (2,344,338
    )Equity in loss of unconsolidated
subsidiaries
    
    
    (308,408
    )
    
    
    (828,169
    )Loss on sale of unconsolidated subsidiary
    
    
    (870,750
    )
    
    
    Total other expense
    
    
    (17,072,882
    )
    
    
    (3,329,646
    )Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )
 F-31




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
Condensed Statements of Cash Flows
 Years Ended December 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (19,650,865
    )
    
    $
    (3,357,496
    )Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:Equity in loss of unconsolidated
subsidiaries
    
    
    308,408
    
    
    
    828,169Equity in loss of subsidiaries
    
    
    15,511,594
    
    
    
    2,344,338Share-based compensation
    
    
    1,015,525
    
    
    
    Amortization of deferred financing fees
    
    
    35,766
    
    
    
    Loss on disposal, net
    
    
    870,750
    
    
    
    Change in working capital:Accounts payable
and accrued
expenses
    
    
    276,694
    
    
    
    126,661Net cash used in operating activities
    
    
    (1,632,128
    )
    
    
    (58,328
    )Cash flows from investing activities:Investments in subsidiaries
    
    
    (4,621,335
    )
    
    
    (3,303,001
    )Investments in unconsolidated subsidiaries
    
    
    (99,999
    )
    
    
    Proceeds from divestitures
    
    
    400,000
    
    
    
    Net cash used in investing activities
    
    
    (4,321,334
    )
    
    
    (3,303,001
    )Cash flows from financing activities:Proceeds from the issuance of common stock and warrants
    
    
    181,100
    
    
    
    2,177,538Proceeds from the issuance of Series A convertible
preferred stock
    
    
    5,029,011
    
    
    
    Proceeds from the issuance of 12% convertible debentures
    
    
    2,150,000
    
    
    
    Borrowings under notes payable
    
    
    
    
    
    
    938,244Payments on notes payable
    
    
    (706,710
    )
    
    
    Issuance costs
    
    
    (535,946
    )
    
    
    Net cash provided by financing activities
    
    
    6,117,455
    
    
    
    3,115,782Net increase (decrease) in cash and cash equivalents
    
    
    163,993
    
    
    
    (245,547
    )Cash and cash equivalents at beginning of year
    
    
    1,407
    
    
    
    246,954Cash and cash equivalents at end of year
    
    $
    165,400
    
    
    $
    1,407
 F-32




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
 NOTE 21. SUPPLEMENTAL DISCLOSURE OF OIL & GAS OPERATIONS (Unaudited)
 Extractive Activities  Oil and Gas
 Costs Incurred
  2010
    
    
    2009Acquisition of proved properties
    
    $
    1,451,858
    
    
    $
    714,995Development costs
    
    $
    
    
    
    $
    178,953Exploration costs
    
    $
    
    
    
    $
    47,744
 Results of Operations for Producing Activities
  2010
    
    
    2009Revenues
    
    $
    204,906
    
    
    $
    206,026Production costs
    
    
    (143,361
    )
    
    
    (284,149
    )Exploration expenses
    
    
    
    
    
    
    (47,744
    )Depreciation, depletion, and valuation provisions
    
    
    (61,865
    )
    
    
    (224,485
    )(320
    )
    
    
    (350,352
    )Income tax expenses
    
    
    
    
    
    
    Results of operations from producing activities
    
    $
    (320
    )
    
    $
    (350,352
    )
 Reserve Quantity Information
   F-33




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  Oil
    
    
    Gas(Bbls)
    
    
    (Mcf)Proved developed and undeveloped reserves:Balance at December 31, 2008
    
    
    4,940
    
    
    
    155,090Revisions of previous estimates
    
    
    (10,150
    )
    
    
    65,282Purchase of minerals in place
    
    
    129,730
    
    
    
    239,990Production
    
    
    (1,610
    )
    
    
    (6,702
    )Balance at December 31, 2009
    
    
    122,910
    
    
    
    453,660Revisions of previous estimates
    
    
    5,565
    
    
    
    (34,469
    )Purchase of minerals in place
    
    
    64,688
    
    
    
    105,761Sales of minerals in place
    
    
    (75,081
    )
    
    
    (340,306
    )Production
    
    
    (1,981
    )
    
    
    (10,285
    )Balance at December 31, 2010
    
    
    116,101
    
    
    
    174,361Proved developed reserves:December 31, 2009
    
    
    121,620
    
    
    
    453,660December 31, 2010
    
    
    116,101
    
    
    
    174,361Proved undeveloped reserves:December 31, 2009
    
    
    1,290
    
    
    
    December 31, 2010
    
    
    
    
    
    
    
 Standardized Measure of Discounted Future Net Cash Flows and Changes Therein Relating to
Proved Oil and Gas Reserves
   F-34




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##### Table of Contents



NYTEX ENERGY HOLDINGS, INC.
 Notes to Consolidated Financial Statements
  2010
    
    
    2009Future cash inflows
    
    $
    9,621,827
    
    
    $
    9,386,770Future production and development costs
    
    
    (3,923,945
    )
    
    
    (4,233,130
    )Future income taxes
    
    
    (1,064,010
    )
    
    
    (1,122,580
    )Future net cash flows
    
    
    4,633,872
    
    
    
    4,031,06010% annual discount for estimated timing of cash flows
    
    
    (1,412,312
    )
    
    
    (1,297,540
    )Standardized measure of discounted net cash flows
    
    $
    3,221,560
    
    
    $
    2,733,520
  2010
    
    
    2009Beginning of year
    
    $
    2,733,520
    
    
    $
    379,050Sales of oil and gas produced, net of operating costs
    
    
    (61,545
    )
    
    
    78,123Net change in prices and production costs
    
    
    1,859,690
    
    
    
    (1,204,160
    )Purchases and sales of minerals in place
    
    
    (198,690
    )
    
    
    3,126,030Estimated future development costs
    
    
    (132,990
    )
    
    
    118,870Revisions of previous estimates
    
    
    (729,963
    )
    
    
    (445,173
    )Accretion of discount
    
    
    (261,193
    )
    
    
    373,240Net change in income taxes
    
    
    12,731
    
    
    
    307,540End of year
    
    $
    3,221,560
    
    
    $
    2,733,520
  F-35




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    Document2
    
    Membership Interests Purchase Agreement by and among Registrant, Francis Drilling Fluids,
Ltd., Francis Oaks, L.L.C. and the Members of Francis Oaks, L.L.C. dated November 23,
2010 (filed as Exhibit 10.1 to the Registrants Form 8-K filed November 30, 2010 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
    
    Form of Purchaser Warrant (filed as Exhibit 10.7 to the Registrants Form 8-K filed
November 30, 2010 and incorporated herein by reference)4.2
    
    Form of Control Warrant (filed as Exhibit 10.7 to the Registrants Form 8-K filed
November 30, 2010 and incorporated herein by reference)4.3
    
    Form of Registration Rights Agreement between WayPoint Nytex, LLC and the Registrant
dated November 23, 2010 (filed as Exhibit 10.8 to the Registrants Form 8-K filed
November 30, 2010 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)10.1
    
    Revolving Credit, Term Loan and Security Agreement among Registrant, Francis Oaks,
L.L.C., Francis Drilling Fluids, Ltd. and PNC Bank, National Association, dated November
23, 2010 (filed as Exhibit 10.5 to the Registrants Form 8-K filed November 30, 2010 and
incorporated herein by reference)10.2
    
    Preferred Stock and Warrant Purchase Agreement among Registrant, NYTEX FDF Acquisition,
Inc. and Waypoint NYTEX, LLC, dated November 23, 2010 (filed as Exhibit 10.6 to the
Registrants Form 8-K filed November 30, 2010 and incorporated herein by reference)10.3
    
    Placement Agency Agreement between Registrant and National Securities Corporation, dated
October 12, 2010.*10.4
    
    Lease with Capital One Bank,
Account Number 3109321057*10.5
    
    Lease with Capital One Bank,
Account Number 3109321058*10.6
    
    Lease with Capital One Bank,
Account Number 3109321059*10.7
    
    Lease with Capital One Bank,
Account Number 3109321061*10.8
    
    Lease with Capital One Bank,
Account Number 3109321063*10.9
    
    Lease with PACCAR Financial,
Account Number 900-651-600-00006063374*




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##### Table of Contents



Exhibit
    
    Document10.10
    
    Lease with PACCAR Financial,
Account Number 900-651-600-00006068985*10.11
    
    Lease with PACCAR Financial,
Account Number 900-681-600-00006070502*10.12
    
    Employment Agreement between the Registrant and Michael K. Galvis, dated April 28, 2009
(filed as Exhibit 10.1 to the Registrants Form 10-12G/A filed August 12, 2010 and
incorporated herein by reference), as amended on November 22, 201010.13
    
    Employment Agreement between Francis Drilling Fluids, Ltd. and Michael K. Galvis, dated
November 23, 2010.*10.14
    
    Employment Agreement between the
Registrant and Kenneth K. Conte, dated November 22, 2010.*10.15
    
    Employment Agreement between the Registrant and Georgianna Hanes, dated April 28, 2009
(filed as Exhibit 10.3 to the Registrants Form 10-12G/A filed August 12, 2010 and
incorporated herein by reference)10.16
    
    Employment Agreement between the Registrant and William G. Brehmer, dated April 28, 2009
(filed as Exhibit 10.2 to the Registrants Form 10-12G/A filed August 12, 2010 and
incorporated herein by reference)10.17
    
    Employment Agreement between Francis Drilling Fluids, Ltd. and Michael G. Francis, dated
November 23, 2010 (filed as Exhibit 10.3 to the Registrants Form 8-K filed November 30,
2010 and incorporated herein by reference)10.18
    
    Employment Agreement between Francis Drilling Fluids, Ltd. and Jude Gregory, dated
November 23, 2010*21
    
    List of Subsidiaries of Registrant*31.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 200231.2*
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1*
    
    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**99*
    
    Report of LaRoche Petroleum
Consultants, Ltd. regarding oil and gas reserves, dated March 3, 2011.
 
 *
    
    Filed 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.