exv10w1






Exhibit 10.1









Board of Directors

TBX Resources, Inc.

3030 LBJ Freeway, Suite 1320

Dallas, TX 75234




Gentlemen,




We are providing this letter to confirm our understanding of the terms and objectives of our
engagement to audit the consolidated balance sheet at November 30, 2007 and the related
consolidated statements of operations, stockholders’ equity and cash flows of TBX Resources, Inc.,
TBX Acquisition, Inc. and Grasslands L.L.P. (collectively hereafter referred to as “the Company”)
for the year then ended for the purpose of expressing an opinion on them.



The objective of our audit is the expression of an opinion about whether your consolidated
financial statements are fairly presented, in all material respects, in conformity with U.S.
generally accepted accounting principles. Our audit will be conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and will
include tests of your accounting records and other procedures we consider necessary to enable us
to express such an opinion. Our ability to express that opinion and the wording of our opinion
will, of course, be dependent on the facts and circumstances at the date of our report. If, for
any reason, we are unable to complete the audit or are unable to form or have not formed an
opinion, we may decline to express an opinion or to issue a report as a result of this engagement.
If circumstances preclude us from issuing an unqualified opinion, we will discuss the reasons with
you in advance.



An audit includes examining, on a test basis, evidences supporting the amounts and disclosures in
the consolidated financial statements. Accordingly, the areas and number of transactions selected
for testing will involve our professional judgment. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. Our procedures will include, where
applicable, tests of documentary evidence supporting the transactions recorded in the accounts,
tests of the physical existence of inventory, and direct confirmation of receivables and certain
other assets and liabilities by correspondence with selected customers, creditors, legal counsel,
and financial institutions.



Turner, Stone & Company, L.L.P.

Accountants and Consultants

12700 Park Central Drive” Suite 1400

Dallas, Texas 75251

Telephone: 972-2.39-1660 / Facsimile: 972-239-1665

Toll Free; 877-853-4195

Web site: turnerstone.com




 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Two




In order to expedite the completion of our audit and to keep audit costs at a minimum, we
understand you will assign Company personnel to assist us by performing certain duties; including
locating, removing from, and returning to the files the checks, invoices, deposits and other
documentation required to be examined by us; completing from Company records the financial
information on audit work papers to be furnished by us; typing confirmation requests; and searching
the Company records for explanation of exceptions or differences arising from our procedures. We
may also request written representations from your attorneys as part of our audit and they may bill
you for responding to this inquiry. At the conclusion of our audit, we will require certain written
representations from the appropriate level of management about the consolidated financial
statements and related matters.



We are responsible for conducting the audit in accordance with the standards of the PCAOB. Those
standards require that we obtain reasonable rather than absolute assurance about whether the
financial statements are tree of material misstatement, whether caused by errors, fraud, or
violations of laws or governmental regulations that are attributable to the Company or to acts by
management or employees acting on behalf of the Company. However, because of the characteristics
of fraud, particularly those involving collusion, concealment and falsified documentation
(including forgery), a properly planned and performed audit may not detect a material
misstatement. Our procedures will also include gathering information necessary to identify risks
of material misstatement due to fraud, evaluating the Company’s programs and controls that address
the identified risks of material misstatement due to fraud, and assessing the risks taking into
account this evaluation. We are also required to consider whether identified misstatements may be
indicative of fraud and, if so, we are required to evaluate their implication. Any fraud, whether
or not material, that involves management or other employees who have a significant role in the
Company’s internal controls and procedures for financial reporting should be disclosed to us.



Because an audit conducted in accordance with the standards of the PCAOB is designed to provide
reasonable, but not absolute. assurance and because we will not perform a detailed
examination of all transactions, there is the risk that material misstatements may exist and not
be detected by us. In addition, an audit is not designed to detect immaterial misstatements or
violations of laws or governmental regulations that do not have a material and direct effect on
the financial statements. However, we will inform the appropriate level of management of any
material errors, fraudulent financial reporting or misappropriation of assets, or violations of
laws or governmental regulations that come to our attention, unless clearly inconsequential. Our
responsibility as auditors is limited to the period covered by our audit and does not extend to
any later periods for which we are not engaged as auditors.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Three




Additionally, an audit includes obtaining an understanding of internal control sufficient to plan
the audit and to determine the nature, timing, and extent of audit procedures to be performed. An
audit is not designed to provide assurance on internal control or to identify reportable
conditions, that is, significant deficiencies in the design or operation of internal control.
However, we are responsible for communicating to the appropriate level of management any
reportable conditions which come to our attention.



While our audit will be conducted with due regard to the rules and regulations of the Securities
and Exchange Commission (SEC) relative to matters of accounting, it should be understood that our
report and the consolidated financial statements and schedules, if any, are subject to review by
the SEC and to its interpretation of the applicable rules and regulations.



The Private Securities Litigation Reform Act of 1995 (the Act) imposes additional responsibilities
on SEC registrants, their management, audit committees and boards of directors, as well as
independent auditors regarding the reporting of illegal acts that have or may have occurred.
During the course of our audit, we will ask you specific representations about this. To fulfill
our responsibilities under the Act, we may need to consult with your attorney or an attorney of
our choosing about any such illegal acts that we become aware of Additional fees, including legal
fees if any, are your responsibility and will be billed to you. In this regard, you agree to
cooperate with any procedures that we may deem necessary to perform.



Management’s Responsibility 




The consolidated financial statements are the responsibility of the Company’s management.
Encompassed within that responsibility is the establishment and maintenance of effective internal
controls over financial reporting, the establishment and maintenance of proper records, the
selection of appropriate accounting principles, the safeguarding of assets, and compliance with
relevant laws and regulations. In addition, management is responsible for adjusting the
consolidated financial statements to correct material misstatements and for affirming to us in the
representation letter that the effects of any uncorrected misstatements aggregated by us during
the audit and pertaining to the latest period presented are immaterial, both individually and in
the aggregate, to the consolidated financial statements taken as a whole.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Four




Management is also responsible for making all financial records and related information available
to us and for the accuracy and completeness of that information. We will advise you about
appropriate accounting principles and their application and will assist in the preparation of your
consolidated financial statements, but the responsibility for the consolidated financial
statements remains with you, including the overall accuracy of the consolidated financial
statements and their conformity with U.S. generally accepted accounting principles. This
responsibility includes the establishment and maintenance of adequate records and effective
internal controls over financial reporting, the selection and application of accounting
principles, properly recording transactions in the accounting records, making appropriate
estimates, the safeguarding of assets and identifying and ensuring the Company complies with the
laws and regulations applicable to its business activities.



As part of our engagement we may propose standard, adjusting, or correcting journal entries to
your consolidated financial statements. You are responsible for reviewing the entries and
understanding the nature of any proposed entries and the impact they have on your financial
statements. Further, you are responsible for designating a qualified management-level individual
to be responsible and accountable for overseeing these services.



Management is responsible for ensuring and management represents to us that before audit fieldwork
begins, the Company will appropriately reconcile its general ledger accounts to their related
supporting information. All related reconciling items considered to be material, individually and
in the aggregate, will be identified and included on the reconciliations and will be appropriately
adjusted in the financial statements. If not adjusted in the financial statements, which may not
be feasible in all cases, management will, at the very least, identify and report to us at or
before the beginning of fieldwork any adjustments yet to be made.



Management is also responsible for ensuring and management further represents to us that the
unaudited interim financial information has been prepared and presented in conformity with
accounting principles generally accepted in the United States of America applicable to interim
financial information and with Item 302(a) of Regulation S-K and has been prepared on a basis
consistent with prior interim periods and years.




 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Five




Establishing and maintaining a sound system of internal control is the best means of preventing or
detecting errors, fraudulent financial reporting and misappropriation of assets. Therefore, you are
responsible for the design and implementation of programs and controls to prevent and detect fraud,
and informing us about all known or suspected fraud affecting the Company involving (a) management,
(b) employees who have significant roles in internal control, and (c) others where the fraud could
have a material effect on the consolidated financial statements. All significant deficiencies and
material weaknesses in the design or operations of internal controls and procedures for financial
reporting, including any corrective actions, which could affect the Company’s ability to record,
process, summarize and report financial information are required to be disclosed to us. You are
also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud
affecting the Company received in communications from employees, former employees, regulators, or
others.



As stated above, we will require various written representations from management including, but not
limited to, management’s responsibility for the design and implementation of programs and controls
to prevent and detect fraud, including management’s knowledge of fraud, suspected fraud or
allegations of fraud affecting the Company. Furthermore, additional representations will be
required regarding management’s responsibility to establish and maintain adequate internal controls
and procedures for financial reporting as well as management’s conclusions about the effectiveness
of the Company’s internal controls and procedures, including any significant changes in the
Company’s internal controls and procedures for financial reporting or in other factors that could
significantly affect internal controls and procedures relating to financial reporting. We will also
request various other representations determined by the nature of our audit and the unique
characteristics of the Company’s business operations and financial activities. These written
representations, which are required by the PCAOB, are part of the audit evidence that we will rely
on in forming our opinion on the Company’s consolidated financial statements.



Management is also responsible for the preparation of Management’s Discussion and Analysis (MD&A)
prepared pursuant to the rules and regulations of the SEC, which is presented in annual reports to
stockholders, quarterly interim filings and in other documents. These rules require management to
interpret the criteria, accurately derive the historical amounts from the Company’s accounting
records, make determinations as to the relevancy of information to be included, and make estimates
and assumptions that affect reported information.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Six




If the Company intends to publish or otherwise reproduce in any document our report on the
Company’s consolidated financial statements, or otherwise make reference to our firm in a document
that contains other information in addition to the audited financial statements (e.g. in a debt or
equity offering circular or in a private placement memorandum), the Company agrees that, prior to
making any such use of our report or reference to our firm, the Company’s management will provide
us with a draft of the document to read and obtain our approval for the inclusion or incorporation
by reference of our report, or the reference to our firm, in such document before the
document is printed and distributed. Accordingly, to avoid unnecessary delay or misunderstanding,
it is important that you give us timely notice of your intention to issue any such document.



When applicable, with respect to the electronic dissemination of audited consolidated financial
statements, including consolidated financial statements published electronically on the Company’s
internet website, the Company understands that electronic sites are a means to distribute
information and, therefore, we are not required to read the information contained in these sites
or to consider the consistency of other information in the electronic site with the original
document.



Our reports should not be included in the SEC’s EDGAR electronic filing system until you have
received a manually signed report from us. The inclusion or incorporation by reference of
our report in any such document would constitute the reissuance of our report and any request by
the Company to reissue our report or to consent to its inclusion or incorporation by reference in
any such document will be considered based on the facts and circumstances existing at the time of
such request.



Additionally, when applicable, the Company agrees to inform us of its intent to use our report in
a registration statement filed under the Securities Act of 1933 or the Securities Exchange Act of
1934. In this regard, the Company agrees to provide us a complete copy of every deficiency
(comment) letter received from the SEC. The complete letter should be sent to us immediately so
that we may determine the extent to which the SEC’s comments concern, directly or indirectly, the
consolidated financial statements. This requirement not only pertains to comments related to
filings under the Securities Act of 1933 but also to filings under the Securities Exchange Act of
1934 such as proxy statements, Form 10-K(SB), Form 10-Q(SB), Form 8-K and Form 10 filings. To
facilitate this process, please coordinate with Company counsel to forward all copies of such
letters to us.



Furthermore, the Company should not make any public filing of information in the SEC’s EDGAR
electronic filing system or through press releases until we have had the opportunity to review and
approve such filing or press release.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Seven




Other Communications Arising from the Audit 




As required by the PCAOB, we will report directly to the Audit Committee/Board of Directors any
fraud of which we become aware that involves senior management and any fraud that causes a material
misstatement of the consolidated financial statements. We will also report to senior management any
fraud perpetrated by lower level employees of which we become aware that does not cause a material
misstatement of the consolidated financial statements. In addition, we will communicate certain
other matters required by professional standards related to the conduct of our audit and your
financial reporting process.



We will inform the appropriate level of management and the Audit Committee/Board of Directors of
illegal acts that have been detected or have otherwise come to our attention in the course of our
audit, unless the illegal act is clearly inconsequential.



We will also report directly to Company management and the Audit Committee/Board of Directors
matters coming to our attention during the course of our audit that we believe are significant
deficiencies or material weaknesses. A deficiency, or a combination of deficiencies, in internal
control over financial reporting that is less severe than a material weakness, yet important
enough to merit attention by those responsible for oversight of the registrant’s financial
reporting. A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material misstatement of the
consolidated financial statements will not be prevented or detected.



We may also have other comments for management relating to matters that we observe, possible ways
to improve the efficiency of the Company’s operations or other recommendations concerning internal
controls. These matters will be discussed with the level of management responsible for the matters
and, if significant, we will also communicate them to senior management and/or the Audit
Committee/Board of Directors.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Eight




Fees and Payments 




Our fee for this audit will be at our standard rates for the level of work and professional staff
involved, for the time required to complete the engagement in the highest professional manner,
plus out-of-pocket costs. Our statements will be rendered monthly as work progresses and at the
completion of the audit and are payable upon presentation. They are considered past due after 30
days and a finance charge not to exceed the maximum lawful rate will be added to all past due
balances. In accordance with our firm policies, work may be suspended if your account balance
becomes forty-five (45) days or more overdue and will not be resumed until your account is brought
current. If we elect to terminate our services for nonpayment, our engagement will be deemed
completed at the time you are notified, even if we have not issued our report, and you agree to be
obligated to compensate us for the time expended and any out of pocket costs incurred through the
date of termination.



Based upon our preliminary planning and discussions, we estimate our fee for this audit will range
between $35,000 and $39,000, plus out of pocket costs. An initial retainer of $10,000 is required
for us to begin our field work. This estimate assumes we will receive the aforementioned
assistance and cooperation from your personnel and that we will not encounter unexpected
circumstances. We will notify you immediately if changing circumstances or other unforeseen
factors require us to change our estimate by more than 10%.



The Company is also required to have interim financial reports filed on Form 10-Q or Form 10QSB
reviewed by us prior to filing. The SEC does not require an audit of the interim financials, but
it does require independent auditors to follow the Statement of Auditing Standards No. 100,
“Interim Financial Information,” procedures for conducting the interim quarterly review. The SEC
considers it a clear violation of the securities laws for a company to file a quarterly report
without having its auditor perform the review of the interim information in advance of the
filing. A review report generally is not and wi11 not be issued in conjunction with our quarterly
review procedures because it is not required by the SEC to be included in your quarterly filings.
However, if you request such a report, we will be happy to provide one to you. We estimate our fee
for each quarterly review will approximate $2,000, which is not included in the above estimated
audit fee.



The provisions of this engagement letter relating to our review of the Company’s Form 10-Q or Form
10-QSB will also apply to any interim quarter subsequent to the year-end date covered in this
engagement letter until the execution of a subsequent engagement letter.



It is anticipated that the PCAOB will require us to perform some procedures on the Section 404
compliance portions for the year ended November 30, 2007. However, at this time, no guidance has
been issued. The above fee estimate does not include any work related to this matter.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Nine




Timing: and Completion of Audit Work 




We plan to perform our work according to the timetables you will provide us and complete our audit
within two weeks of receiving all requested information. Once we have mutually agreed to an
acceptable timetable for fieldwork, it is extremely important that the Company’s management and
staff be ready and available for us to efficiently and effectively proceed through audit
fieldwork. Accordingly, it is important that you have the information we have requested assembled
and available by the beginning of our field work (or earlier for audit planning purposes if
specifically arranged with you). It is also important that your personnel assigned to assisting us
promptly devote attention of our inquiries and requests for documentation to insure we do not
encounter any undue delays. Should this not be the case, then our work in connection with the
audit of the Company’s consolidated financial statements may be delayed due to scheduling
conflicts with other engagements. In such cases, we cannot be held responsible for missed filing
deadlines. Delays in the performance of our audit, which would cause us to be unable to meet these
timetables, will be brought to your attention immediately.



We plan to conduct certain tests of transactions and other audit procedures during December 2007
and January 2008 and complete our audit by January 31, 2008 and complete our audit within two
weeks of receiving all requested information.



 









 





Board of Directors

TBX Resources, Inc.

September 19, 2007

Page Ten




Document Retention Policy 



It is not our practice or policy to retain work papers, emails, notes or data files that have
been updated or superseded, unless shared with you or a third party working with you. However, if
you wish us to follow a retention practice that differs from the above, please indicate your
specific request(s) in writing when returning a copy of this engagement letter. In addition, a
complete copy of our document retention policy is available upon request.



If the terms of the engagement set forth above are acceptable to you and in accordance with your
understanding, please sign and return one copy of this letter to us. We appreciate the
opportunity to be of service to you and we look forward to working with you.



Very truly yours,



Turner Stone & Company, LLP



Certified Public Accountants



Approved:



	 	 	 	 	 
	 	 	 
	 	By:  	     /s/ Tim Burroughs
 	 
	 	 	 	 
	 	Date: