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  **SECURITY AND EXCHANGE COMMISSION****WASHINGTON, D.C. 20549****FORM 10-KSB**(Mark One)   þ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****For the Fiscal Year Ended November 30, 2007****OR**   o **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****Commission File No. 0-30746****TBX RESOURCES, INC.**(Name of Small Business Issuer in its charter)   Texas 75-2592165   (State of incorporation) (IRS Employer Identification No.)   3030 LBJ Freeway, Suite 1320  Dallas, Texas 75234 75234   (Address of Principal Executive Office) Zip CodeRegistrant’s telephone number, including Area Code: (972) 243-2610Securities registered pursuant to Section 12(b) of the Act: NoneSecurities registered pursuant to Section 12(g) of the Act: Common Stock(Title of Class)Check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period thatthe Registrant was required to file such reports) and (2) has been subject to such filingrequirements for the past 90 days.     Yes   o      No   þCheck if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not containedin this form, and no disclosure will be contained, to the best of the Registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in Part III of this Form10-KSB or any amendment to this Form 10-KSB.   þIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o No þThe Issuer’s revenues for the most recent fiscal year were $300,272.On December 19, 2008, the aggregate market value of voting and non-voting common equity held bynon-affiliates of the registrant was approximately $711,404. This amount was calculated by reducingthe total number of shares of the registrant’s common stock outstanding by the total number ofshares of common stock held by officers and directors, and stockholders owning in excess of 5% ofthe registrant’s common stock, and multiplying the remainder by the average of the bid and askedprice for the registrant’s common stock on December 19, 2008, as reported on the Over-The-CounterPink Sheet Market.As of December 19, 2008, the Company had 4,027,442 issued and outstanding shares of common stock.Documents Incorporated by Reference: NoneTransitional Small Business Disclosure Format: Yes   o      No   þ  
 

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**PART I**ITEM 1. DESCRIPTION OF BUSINESSTBX Resources, Inc. was incorporated in the state of Texas in March 1995. Currently, our primaryfocus is to secure additional capital through business alliances with third parties or otherdebt/equity financing arrangements to acquire producing oil and gas leases and wells. We haveexplored and will continue to explore all avenues possible to raise the funds required. However,there is no assurance that we will be able to raise sufficient funds to execute our plans or thatif successful in securing the funds our actual financial results will improve.As of November 30, 2007, we had total assets of $319,633 of which net oil and gas propertiesamounted to $223,638 or 70.0% of our total assets. At November 30, 2007, we had $23,821 in cash anda working capital deficit of $876,499. Our cumulative losses through November 30, 2007, totaled$11,739,483. Our revenues for our fiscal year ended November 30, 2007 were $300,272 and our netloss for the same period was $775,389. Our ratio of current assets to current liabilities is0.09:1; we have no long-term debt other than our asset retirement obligation of $153,370. As ofNovember 30, 2007, our shareholders’ equity was a negative $872,020.Our company has experienced operating losses over the past several years. We do not have sufficientworking capital or revenues to sustain our operations. If no additional funds are received, we willbe forced to rely on existing oil and gas revenue and upon additional funds which may or may not beloaned by an affiliate, Gulftex Operating, Inc., a company in which our president, Tim Burroughs,is a 50% stockholder, to preserve the viability of the corporate entity. During the fiscal yearended November 2007 Gulftex loaned our company $507,000. No formal commitments or arrangementscurrently exist with the affiliate to advance or loan funds to the Company. In the event we areunable to acquire sufficient funds, the Company’s ongoing operations will be negatively impactedand we may not be able to continue as a going concern and we may have to curtail or terminate ouroperations and liquidate our business.Our mission is to be a publicly traded, independent oil and gas production company which can takefull advantage of opportunities resulting from the major oil companies’ lack of interest indomestic oil and gas properties. In particular, most major oil companies are currently moreinterested in devoting their exploration dollars toward the development of oil and gas fields thatare either offshore and/or not located in the United States, primarily because of the assumption bythe major oil companies that domestic oil and gas properties have been significantly depleted. Inaddition, due to the extent of the development of domestic oil and gas properties, it is morelikely that a significant new discovery in the oil and gas industry would likely be conducted inthose areas that have not been so heavily developed, generally being properties that are notcontained within the United States. Because major oil companies are more interested in developingtheir offshore and overseas holdings, they often ignore on-shore opportunities and sell theirdomestic properties at prices that are attractive to independent oil companies who havesignificantly lower administrative and operating costs. Due to our lower infrastructure costs, webelieve that our costs of owning and operating domestic oil and gas properties are lower whichallows us to acquire and operate properties that could be profitable for us but would not beprofitable for most major oil companies.MERGER AND JOINT VENTURE AGREEMENTSMerger AgreementOn September 8, 2006, TBX Resources, Inc., entered into a merger agreement (the “Agreement”) withEarthwise Energy, Inc., a Nevada corporation, and TBX Acquisition, Inc., a Texas corporation and awholly owned subsidiary of TBX. Earthwise purportedly is an oil and gas company, located in Dallas,Texas, which represented it had certain oil and gas lease assets and managed several oil and gasjoint venture partnerships. The original agreement was subject to an automatic expiration if thebusiness combination did not occur effective December 31, 2007. When the parties did not reachagreement by the expiration date the parties agreed to continue to attempt to complete the businesscombination. We have terminated all negotiations with Earthwise and are no longer anticipating anybusiness combination with them. There is no penalty or other assessment due to either party as aresult of the termination of negotiations.Company AgreementsDuring fiscal year 2004, we entered into a management contract with a company in which Mr.Burroughs is a 50% shareholder, Gulftex Operating, Inc. Under the terms of the agreement, thecompany provides project generation services
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and administrative assistance to Gulftex. The management services provided by TBX to Gulftex are ona venture by venture basis for a fixed fee. The services continued until August 31, 2006 when theagreement was mutually terminated.WELLS HELD BY THE COMPANYAs further described in the description of properties section, during the fiscal year ended 2007 weowned all or a portion of 22 wells located in Hopkins, Franklin, and Wood Counties, Texas (EastTexas). Of the 22 wells located in East Texas, 9 wells were producing oil, 5 wells were designatedas water supply wells and the remaining 8 wells were either shut-in, scheduled to be brought backinto production or were designated as injection wells. Injection wells are wells into which saltwater is injected to either assist in causing oil or gas to flow to a particular well that isdesignated as a production well or to simply dispose of salt water that is often produced alongwith oil We also have an interest in two producing oil wells in Wise County, Texas. In addition,we have a minor overriding interest in one producing gas well in Parker County, Texas and fiveproducing gas wells in Denton County, Texas. Also, we have a minor interest in three wells in EllisCounty, Oklahoma. All three of the wells are in production for oil and natural gas.Effective April 1, 2008, we sold our East Texas properties to Gulftex Operating, Inc. (a company inwhich Mr. Burroughs, our president, is a 50% shareholder) in exchange for Gulftex agreeing to payour outstanding payables and in repayment for the advances already owed to Gulftex. As additionalconsideration, Gulftex assumed our East Texas asset retirement obligations. The total sum of thepayables and advances at the time of the exchange was $1,066,387.76DEVELOPMENT AND OPERATING ACTIVITIESEconomic factors prevailing in the oil and gas industry change from time to time. The uncertainnature and trend of economic conditions and energy policy in the oil and gas business generallymake flexibility of operating policies important in achieving desired profitability. We intend toevaluate continuously all conditions affecting our potential activities and to react to thoseconditions, as we deem appropriate from time to time by engaging in businesses most profitable forus.In addition, in order to finance future development and operating activities, we will sponsor ormanage public or private partnerships depending upon the number, size and economic feasibility ofour generated prospects, the level of participation of industry partners and various other factors.However, potential investors should note that we currently do not have in place any definitefinancing opportunities and there can be no assurance that we will be able to enter into suchfinancing arrangements or that if we are able to enter into such arrangements, we will be able toachieve any profitability as a result of our operations.General RegulationsBoth state and federal authorities regulate the extraction, production, transportation, and sale ofoil, gas, and minerals. The executive and legislative branches of government at both the state andfederal levels have periodically proposed and considered proposals for establishment of controls onalternative fuels, energy conservation, environmental protection, taxation of crude oil imports,limitation of crude oil imports, as well as various other related programs. If any proposalsrelating to the above subjects were to be enacted, we cannot predict what effect, if any,implementation of such proposals would have upon our operations. A listing of the more significantcurrent state and federal statutory authority for regulation of our current operations and businessare provided below.Federal Regulatory ControlsHistorically, the transportation and sale of natural gas in interstate commerce have been regulatedby the Natural Gas Act of 1938 (the (“NGA”), the Natural Gas Policy Act of 1978 (the “NGPA”) andassociated regulations by the Federal Energy Regulatory Commission (“FERC”). The Natural GasWellhead Decontrol Act (the “Decontrol Act”) removed, as of January 1, 1993, all remaining federalprice controls from natural gas sold in “first sales.” The FERC’s jurisdiction over natural gastransportation was unaffected by the Decontrol Act.In 1992, the FERC issued regulations requiring interstate pipelines to provide transportation,separate or “unbundled,” from the pipelines’ sales of gas (Order 636). This regulation fosteredincreased competition within all phases of the natural gas industry. In December 1992, the FERCissued Order 547, governing the issuance of blanket market sales certificates to all natural gassellers other than interstate pipelines, and applying to non-first sales that remain subject to
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the FERC’s NGA jurisdiction. These orders have fostered a competitive market for natural gas bygiving natural gas purchasers access to multiple supply sources at market-driven prices. Order No.547 increased competition in markets in which we sell our natural gas.The natural gas industry historically has been very heavily regulated; therefore, there is noassurance that the less stringent regulatory approach pursued by the FERC and Congress willcontinue.State Regulatory ControlsIn each state where we conduct or contemplate oil and gas activities, these activities are subjectto various regulations. The regulations relate to the extraction, production, transportation andsale of oil and natural gas, the issuance of drilling permits, the methods of developing newproduction, the spacing and operation of wells, the conservation of oil and natural gas reservoirsand other similar aspects of oil and gas operations. In particular, the State of Texas (where wehave conducted the majority of our oil and gas operations to date) regulates the rate of dailyproduction allowable from both oil and gas wells on a market demand or conservation basis. At thepresent time, no significant portion of our production has been curtailed due to reducedallowables. We know of no proposed regulation that will significantly impede our operations.Environmental RegulationsOur extraction, production and drilling operations are subject to environmental protectionregulations established by federal, state, and local agencies. To the best of our knowledge, webelieve that we are in compliance with the applicable environmental regulations established by theagencies with jurisdiction over our operations. We are acutely aware that the applicableenvironmental regulations currently in effect could have a material detrimental effect upon ourearnings, capital expenditures, or prospects for profitability. Our competitors are subject to thesame regulations and therefore, the existence of such regulations does not appear to have anymaterial effect upon our position with respect to our competitors. The Texas Legislature hasmandated a regulatory program for the management of hazardous wastes generated during crude oil andnatural gas exploration and production, gas processing, oil and gas waste reclamation andtransportation operations. The disposal of these wastes, as governed by the Railroad Commission ofTexas, is becoming an increasing burden on the industry.Revenues from oil and gas production are subject to taxation by the state in which the productionoccurred. In Texas, the state receives a severance tax of 4.6% for oil production and 7.5% for gasproduction. These high percentage state taxes can have a significant impact upon the economicviability of marginal wells that we may produce and require plugging of wells sooner than would benecessary in a less arduous taxing environment.BUSINESS RISKS*Our ability to continue as a going concern is dependent upon our ability to attract additionalcapital*.We are in need of additional capital in the form of new equity or debt in an amount which willallow us to maintain our operations and acquire additional producing oil and gas properties. Shouldwe raise additional capital through a public or private offering our current stockholders could besubstantially diluted. If we are unable to find sufficient capital to sustain our operations thenwe will have no choice but to cease operations.*Our future success depends upon our ability to find, develop and acquire additional oil and gasreserves that are economically recoverable*.The rate of production from oil and natural gas properties declines as reserves are depleted. As aresult, we must locate and develop or acquire new oil and gas reserves to replace those beingdepleted by production. We must do this even during periods of low oil and gas prices when it isdifficult to raise the capital necessary to finance activities. Without successful exploration oracquisition activities, our reserves and revenues will decline. We may not be able to find anddevelop or acquire additional reserves at an acceptable cost or have necessary financing for theseactivities.*Oil and gas drilling is a high-risk activity*.Our future success will depend on the success of our drilling programs. In addition to thenumerous operating risks described in more detail below, these activities involve the risk that nocommercially productive oil or gas reservoirs will be discovered. In addition, we are oftenuncertain as to the future cost or timing of drilling, completing and producing
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wells. Furthermore, our drilling operations may be curtailed, delayed or canceled as a result of avariety of factors, including, but not limited to, the following: - unexpected drilling conditions;  - pressure or irregularities in formations;  - equipment failures or accidents;  - adverse weather conditions;  - inability to comply with governmental requirements; and  - shortage or delays in the availability of drilling rigs and the delivery of equipment.If we experience any of these problems, our ability to conduct operations could be adverselyaffected.*Factors beyond our control affect our ability to market oil and gas.*Our ability to market oil and gas from our wells depends upon numerous factors beyond our control.These factors include, but are not limited to, the following: - the level of domestic production and imports of oil and gas;  - the proximity of gas production to gas pipelines;  - the availability of pipeline capacity;  - the demand for oil and gas by utilities and other end users;  - the availability of alternate fuel sources;  - the effect of inclement weather;  - state and federal regulation of oil and gas marketing; and  - federal regulation of gas sold or transported in interstate commerce.If these factors were to change dramatically, our ability to market oil and gas or obtain favorableprices for our oil and gas could be adversely affected.*The marketability of our production may be dependent upon transportation facilities over which wehave no control.*The marketability of our production depends in part upon the availability, proximity, and capacityof pipelines, natural gas gathering systems and processing facilities. Any significant change inmarket factors affecting these infrastructure facilities could harm our business. We deliver someof our oil and natural gas through gathering systems and pipelines that we do not own. Thesefacilities may not be available to us in the future.*Oil and natural gas prices are volatile. A substantial decrease in oil and natural gas pricescould adversely affect our financial results.*Our future financial condition, results of operations and the carrying value of our oil and naturalgas properties depend primarily upon the prices we receive for our oil and natural gas production.Oil and natural gas prices historically have been volatile and likely will continue to be volatilein the future, especially given world geopolitical conditions. Our cash flow from operations ishighly dependent on the prices that we receive for oil and natural gas. This price volatility alsoaffects the amount of our cash flow available for capital expenditures and our ability to borrowmoney or raise additional capital. The amount we can borrow or have outstanding under or bankcredit facility is subject to semi-annual redeterminations. Oil prices are likely to affect usmore than natural gas prices because approximately 70% of our proved reserves are oil. The pricesfor oil and natural gas are subject to a variety of additional factors that are beyond our control.These factors include: - the level of consumer demand for oil and natural gas;  - the domestic and foreign supply of oil and natural gas;  - the ability of the members of the Organization of Petroleum Exporting Countriesto agree to and maintain oil price and production controls;  - the price of foreign oil and natural gas;  - domestic governmental regulations and taxes;  - the price and availability of alternative fuel sources;  - weather conditions, including hurricanes and tropical storms in and around the Gulf of Mexico;  - market uncertainty;  - political conditions in oil and natural gas producing regions, including the Middle East; and  - world wide economic conditions.
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These factors and the volatility of the energy markets generally make it extremely difficult topredict future oil and natural gas price movements with any certainty. Also, oil and natural gasprices do not necessarily move in tandem. Declines in oil and natural gas prices would not onlyreduce revenue, but could reduce the amount of oil and natural gas that we can produce economicallyand, as a result, could have a material adverse effect upon our financial condition, results ofoperations, oil and natural gas reserves and the carrying values of our oil and natural gasproperties. If the oil and natural gas industry experiences significant price declines, we may,among other things, be unable to meet our financial obligations or make planned expenditures.Since the end of 1998, oil prices have gone from near historic low prices to historic highs. Atthe end of 1998, NYMEX oil prices were at historic lows of approximately $1.00 per Bbl, but havegenerally increased since that time, albeit with fluctuations. For 2007, NYMEX oil prices werehigh throughout the year, averaging over $72.00 per Bbl for 2007. While we attempt to obtain thebest price for our crude in our marketing efforts, we cannot control these market price swings andare subject to the market volatility for this type of oil. These price differentials relative toNYMEX prices can have as much of an impact on our profitability as does the volatility in the NYMEXoil prices.Natural gas prices have also experienced volatility during the last few years. During 1999,natural gas prices averaged approximately $2.35 per Mcf and, like crude oil, have generally trendedupward since that time, although with significant fluctuations along the way. During 2006, NUMEXnatural gas prices averaged $7.33 per MMBtu and in 2007, averaged $8.73 per MMBtu.*We may not be able to replace our reserves or generate cash flows if we are unable to raisecapital.*We make, and will continue to make, substantial capital expenditures for the acquisition andproduction of oil and gas reserves. Historically, we have financed these expenditures primarilywith cash generated by operations and proceeds from bank borrowings and equity financing. If ourrevenues or borrowing base decrease as a result of lower oil and gas prices, operating difficultiesor decline in reserves, we may have limited ability to expend the capital necessary to undertake orcomplete future drilling programs. Additional debt or equity financing or cash generated byoperations may not be available to meet these requirements.*We face strong competition from other energy companies that may negatively affect our ability tocarry on operations.*We operate in the highly competitive areas of oil and gas exploration, development and production.Factors that affect our ability to successfully compete in the marketplace include, but are notlimited to, the following: - the availability of funds and information relating to a property;  - the standards established by us for the minimum projected return on investment;  - the availability of alternate fuel sources; and  - the intermediate transportation of gas.Our competitors include major integrated oil companies, substantial independent energy companies,affiliates of major interstate and intrastate pipelines and national and local gas gatherers. Manyof these competitors possess greater financial and other resources than we do.*The inability to control other associated entities could adversely affect our business.*To the extent that we do not operate all of our properties, our success depends in part uponoperations on certain properties in which we may have an interest along with other businessentities. Because we have no control over such entities, we are able to neither direct theiroperations, nor ensure that their operations on our behalf will be completed in a timely andefficient manner. Any delay in such business entities’ operations could adversely affect ouroperations.*There are substantial risks in acquiring producing properties.*We constantly evaluate opportunities to acquire oil and natural gas properties and frequentlyengage in bidding and negotiating for these acquisitions. If successful in this process, we mayalter or increase our capitalization through the issuance of additional debt or equity securities,the sale of production payments or other measures. Any change in capitalization affects our riskprofile.A change in capitalization, however, is not the only way acquisitions affect our risk profile.Acquisitions may alter the nature of our business. This could occur when the character of acquiredproperties is substantially different from our existing properties in terms of operating orgeologic characteristics.
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*Operating hazards may adversely affect our ability to conduct business*.Our operations are subject to risks inherent in the oil and gas industry, including but not limitedto the following: - blowouts;  - cratering;  - explosions;  - uncontrollable flows of oil, gas or well fluids;  - fires;  - pollution; and  - other environmental risks.These risks could result in substantial losses to us from injury and loss of life, damage to anddestruction of property and equipment, pollution and other environmental damage and suspension ofoperations. Governmental regulations may impose liability for pollution damage or result in theinterruption or termination of operations.*Losses and liabilities from uninsured or underinsured drilling and operating activities could havea material adverse effect on our financial condition and operations.*Although we maintain several types of insurance to cover our operations, we may not be able tomaintain adequate insurance in the future at rates we consider reasonable, or losses may exceed themaximum limits under our insurance policies. If a significant event that is not fully insured orindemnified occurs, it could materially affect our financial condition and results of operations.*Compliance with environmental and other government regulations could be costly and could negativelyimpact production.*Our operations are subject to numerous laws and regulations governing the discharge of materialsinto the environment or otherwise relating to environmental protection. Without limiting thegenerality of the foregoing, these laws and regulations may: - require the acquisition of a permit before drilling commences;  - restrict the types, quantities and concentration of various substances that canbe released into the environment from drilling and production activities;  - limit or prohibit drilling activities on certain lands lying within wilderness,wetlands, and other protected areas;  - require remedial measures to mitigate pollution from former operations, such asplugging abandoned wells; and  - impose substantial liabilities for pollution resulting from our operations.The recent trend toward stricter standards in environmental legislation and regulation is likely tocontinue. The enactment of stricter legislation or the adoption of stricter regulation could havea significant impact on our operating costs, as well as on the oil and gas industry in general.Our operations could result in liability for personal injuries, property damage, oil spills,discharge of hazardous materials, remediation and clean-up costs and other environmental damages.We could also be liable for environmental damages caused by previous property owners. As a result,substantial liabilities to third parties or governmental entities may be incurred which could havea material adverse effect on our financial condition and results of operations. We maintaininsurance coverage for our operations, but we do not believe that insurance coverage forenvironmental damages that occur over time or complete coverage for sudden and accidentalenvironmental damages is available at a reasonable cost. Accordingly, we may be subject toliability or may lose the privilege to continue exploration or production activities uponsubstantial portions of our properties if certain environmental damages occur.*You should not place undue reliance on reserve information because reserve information representsestimates*.While estimates of our and gas reserves, and future net cash flows attributable to those reserves,were prepared by independent petroleum engineers, there are numerous uncertainties inherent inestimating quantities of proved reserves and cash flows from such reserves, including factorsbeyond our control and the control of engineers. Reserve engineering is a subjective process ofestimating underground accumulations of oil and gas that cannot be measured in an
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exact manner. The accuracy of an estimate of quantities of reserves, or of cash flows attributableto these reserves, is a function of many factors, including but not limited to, the following: - the available data;  - assumptions regarding future oil and gas prices;  - expenditures for future development and exploitation activities; and  - engineering and geological interpretation and judgment.Reserves and future cash flows may also be subject to material downward or upward revisions basedupon production history, development and exploitation activities and oil and gas prices. Actualfuture production, revenue, taxes, development expenditures, operating expenses, quantities ofrecoverable reserves and value of cash flows from those reserves may vary significantly from theestimates. In addition, reserve engineers may make different estimates of reserves and cash flowsbased on the same available data. For the reserve calculations, oil was converted to gasequivalent at six Mcf of gas for one Bbl of oil. This ration approximates the energy equivalencyof gas to oil on a Btu basis. However, it may not represent the relative prices received from thesale of our oil and gas production.The estimated quantities of proved reserves and the discounted present value of future net cashflows attributable to those reserves included in this document were prepared by independentpetroleum engineers in accordance with the rules of the SFA69 and the SEC. These estimates are notintended to represent the fair market value of our reserves.*Loss of executive officers or other key employees could adversely affect our business.*Our success is dependent upon the continued services and skills of our current executivemanagement. The loss of services of any of these key personnel could have a negative impact on ourbusiness because of such personnel’s skills and industry experience and the difficulty of promptlyfinding qualified replacement personnel.*Acquisition of entire businesses may be a component of our growth strategy; our failure to completefuture acquisitions successfully could reduce the earnings and slow our growth.*While our business strategy does not currently contemplate the acquisition of entire businesses, itis possible that we might acquire entire businesses in the future. Potential risks involved in theacquisition of such businesses include the inability to continue to identify business entities foracquisition or the inability to make acquisitions on terms that we consider economicallyacceptable. Furthermore, there is intense competition for acquisition opportunities in ourindustry. Competition for acquisitions may increase the cost of, or cause us to refrain from,completing acquisitions. Our strategy of completing acquisitions would be dependent upon, amongother things, our ability to obtain debt and equity financing and, in some cases, regulatoryapprovals. Our ability to pursue our growth strategy may be hindered if we are not able to obtainfinancing or regulatory approvals. Our ability to grow through acquisitions and manage growthwould require us to continue to invest in operational, financial and management information systemsand to attract, retain, motivate and effectively manage our employees. The inability toeffectively manage the integration of acquisitions could reduce our focus on subsequentacquisitions and current operations, which, in turn, could negatively impact our earnings andgrowth. Our financial position and results of operation may fluctuate significantly from period toperiod, based on whether or not significant acquisitions are completed in particular periods.*Risks Related to Our Common Stock**We may issue additional shares of Common Stock.*Pursuant to our certificate of incorporation, our board of directors has the authority to issueadditional series of common stock and to determine the rights and restrictions of shares of thoseseries without the approval of our stockholders. The rights of the holders of the current series ofcommon stock may be junior to the rights of common stock that may be issued in the future.*There may be future dilution of our Common Stock.*To the extent options to purchase common stock under employee and director stock option plans areexercised, holders of our common stock will be diluted. If available funds and cash generated fromour operations are insufficient to satisfy our needs, we may be compelled to sell additional equityor convertible debt securities. The sale of additional equity or convertible debt securities couldresult in additional dilution to our stockholders.
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*Our management controls a significant percentage of our outstanding common stock and theirinterests may conflict with those of our stockholders*.Our executive officers and their affiliates beneficially own a substantial percentage of ouroutstanding common stock. This concentration of ownership could have the effect of delaying orpreventing a change in control of the company, or otherwise discouraging a potential acquirer fromattempting to obtain control of the company. This could have a material adverse effect on themarket price of the common stock or prevent our stockholders from realizing a premium over the thenprevailing market prices for their shares of common stock.*Sales of substantial amounts of our common stock may adversely affect our stock price and makefuture offerings to raise more capital difficult.*Sales of a large number of shares of our common stock in the market or the perception that salesmay occur could adversely affect the trading price of our common stock. We may issue restrictedsecurities or register additional shares of common stock in the future for our use in connectionwith future acquisitions. Except for volume limitations and certain other regulatory requirementsapplicable to affiliates, such shares may be freely tradable unless we contractually restrict theirresale.The availability for sale, or sale, of the shares of common stock eligible for future sale couldadversely affect the market price of our common stock.OFFICESWe maintain our corporate offices at 3030 LBJ Freeway, Suite 1320, Dallas, Texas 75234, and paymonthly base rental of $5,644. Our lease runs from February 1, 2004 through February 28, 2011 at acost of approximately $454,629. As of November 30, 2007 the company’s continuing obligation underthe base lease is approximately $228,854.**ITEM 2. DESCRIPTION OF PROPERTY**GENERAL. Following is information concerning production from our oil and gas wells, productive wellcounts and both producing and undeveloped acreage. Our oil and gas properties are located withinthe northern part of the east Texas salt basin. The earliest exploration in this area dates back tothe early 1920s and 1930s, when frontier oil producers were exploring areas adjacent to the famous“East Texas field” located near the town of Kilgore, Texas. We have leasehold rights in three oiland gas fields located in Hopkins, Franklin, and Wood Counties, Texas. During the fiscal year endedNovember 30, 2005 we acquired an interest in two Barnett Shale gas wells in Wise County, Texas. Wealso have a minor overriding interest in six Barnett Shale gas wells. We previously acquiredseveral wells and acreages in Oklahoma that are described following the Texas properties below.Effective April 1, 2008, we sold our East Texas properties to Gulftex Operating, Inc. (a company inwhich Mr. Burroughs is a 50% shareholder) in exchange for our payables and in repayment of advancesowed to Gulftex in the total sum of $1,066,387.76. As additional consideration, Gulftex assumed ourEast Texas asset retirement obligations.RESERVES REPORTED TO OTHER AGENCIES. We are not required and do not file any estimates of total,proved net oil or gas reserves with reports to any federal authority or agency.PROPERTIES. The following is a breakdown of our properties:           **Oil**  **Gas**   **(BBL)**  **(MCF)** **Proved Reserves November 30, 2006**  14,953   61,595 Revisions to previous estimates  8,164   35,321 Purchases  —   — Production  (3,446)  (18,731)Sales, transfers and retirements  —   —        **Proved Reserves November 30, 2007**  19,671   78,185        
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     The following information pertains to our properties as of November 30, 2007:                           **Proved**  **Proved**   **Proved**  **Proved**  **Developed**  **Developed**   **Reserves:**  **Reserves:**  **Reserves:**  **Reserves:** **Name of** **Oil**  **Gas**  **Oil**  **Gas** **Field or Well** **(bbls)**  **(mcf)**  **(bbls)**  **(mcf)** Manziel Field  11,795   0   11,795   0 Talco Field  4,293   0   4,293   0 Quitman Field  1,716   0   1,716   0 Newark East  1,861   78,121   1,861   78,121 Harmon SE Field  6   64   6   64 PRODUCTIVE WELLS AND ACREAGE                               **Net**      **Net**  **Total Gross**  **Total Net**   **Total Gross**  **Productive**  **Total Gross**  **Productive**  **Developed**  **Developed** **Geographic Area** **Oil Wells**  **Oil Wells**  **Gass Wells**  **Gass Wells**  **Acres**  **Acres** East Texas Region  9   4.58   —   —   1,172.20   596.85 Wise County  2   .65   —   —   224   73.18 Parker County  —   —   6   .02   —   — Anadarko Basin  3   .05   —   —   480   7.70 Notes:1. Total Gross Oil Wells was calculated by subtracting 5 wells designated as Injection Wells and8 shut-in wells from the 33 wells owned and/or operated by TBX Resources, Inc. as of November30, 2007.2. Net Productive Oil Wells were calculated by multiplying the working interest held by TBXResources, Inc. in each of the 20 Gross Oil Wells and adding the resulting products.3. Total Gross Developed Acres is equal to the total surface acres of the properties in whichTBX Resources, Inc. holds an interest.4. Net Developed Acres is equal to the Total Gross Developed Acres multiplied by the percentageof the total working interest held by TBX Resources, Inc. in the respective properties.5. All acreage in which we hold a working interest as of November 30, 2007 have or had existingwells located thereon; thus all acreage leased by TBX Resources, Inc. may be accuratelyclassified as developed.6. Acreage that has existing wells and may be classified as developed may also have additionaldevelopment potential based on the number of producible zones beneath the surface acreage. Amore comprehensive study of all properties currently leased by us would be required todetermine precise developmental potential.**ITEM 3. LEGAL PROCEEDINGS**There are no material pending legal proceedings, other than ordinary routine litigation incidentalto the business, to which we are a party or of which our property is the subject.**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**No matters were submitted to a vote of the security holders during fiscal year 2007.
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**PART II****ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.**Prices for our common stock are currently quoted in the over-the-counter Pink Sheets maintained bythe National Quotation Bureau (NQB) owned Pink Sheet OTC Market, Inc. and our ticker symbol isTBXC.PK. Prices for our stock were approved for quotation on the over-the-counter on January 27,2001. The following table shows the high and low bid information for our common stock for eachquarter during which prices for our common stock have been quoted.         **QUARTER** **LOW BID** **HIGH BID**Quarter ending February 28, 2007 $2.85  $2.85 Quarter ending May 31, 2007 $2.75  $2.80 Quarter ending August 31, 2007 $1.55  $1.55 Quarter ending November 30, 2007 $1.75  $1.75          **QUARTER** **LOW BID** **HIGH BID**Quarter ending February 28, 2006 $4.20  $4.40 Quarter ending May 31, 2006 $2.60  $3.00 Quarter ending August 31, 2006 $2.10  $2.90 Quarter ending November 30, 2006 $3.50  $3.50 The above information was obtained from the Pink Sheet OTC Market, Inc. web site. Because these areover-the-counter market quotations, these quotations reflect inter-dealer prices, without retailmark-up, markdown or commissions and may not represent actual transactions. We have 805shareholders of record for our common stock as of November 30, 2007.**ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THETWELVE MONTHS ENDED NOVEMBER 30, 2007 AND 2006CAUTIONARY STATEMENTStatements in this report which are not purely historical facts, including statements regarding thecompany’s anticipations, beliefs, expectations, hopes, intentions or strategies for the future, maybe forward-looking statements within the meaning of Section 21E of the Securities Act of 1934, asamended. All forward-looking statements in this report are based upon information available to uson the date of the report. Any forward-looking statements involve risks and uncertainties thatcould cause actual results or events to differ materially from events or results described in theforward-looking statements. Readers are cautioned not to place undue reliance on theseforward-looking statements.RECENT DEVELOPMENTS**Going Concern and Liquidity Problems**Our auditors have included an explanatory paragraph in their audit opinion with respect to ourconsolidated financial statements at November 30, 2007. The paragraph states that our recurringlosses from operations and resulting continued dependence on access to external financing raisesubstantial doubts about our ability to continue as a going concern. Furthermore, the factorsleading to and the existence of the explanatory paragraph may adversely affect our relationshipwith customers and suppliers and have an adverse effect on our ability to obtain financing.We do not have sufficient working capital to sustain our operations. We have been unable togenerate sufficient revenues to sustain our operations. We will have to obtain funds to meet ourcash requirements through business alliances, such as strategic or financial transactions withthird parties, the sale of securities or other financing arrangements, or we may berequired to curtail our operations, seek a merger partner, or seek protection under federalbankruptcy laws. Any of the foregoing may be on terms that are unfavorable to us or disadvantageousto existing stockholders. In addition, no assurance may be given that we will be successful inraising additional funds or entering into business alliances.
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Sale of Assets to Related PartyOn June 4, 2008, we executed a sales agreement (effective April 1, 2008) with Gulftex Operating,Inc. (Gulftex), a company in which Mr. Burroughs is a 50% shareholder. Under the agreement, wetransferred all of our East Texas oil and gas properties with a net book value of approximately$95,000 to Gulftex. In consideration for the transfer of the properties, Gulftex is forgiving ourtrade payables and advances that totaled approximately $1.1 million. In addition, Gulftex willassume our East Texas asset retirement obligations with a book value of approximately $156,000. Werecorded a gain of approximately $1.1 million on the sale.Merger AgreementOn September 8, 2006, TBX Resources, Inc., entered into a merger agreement (the “Agreement”) withEarthwise Energy, Inc., a Nevada corporation, and TBX Acquisition, Inc., a Texas corporation and awholly owned subsidiary of TBX. Earthwise purportedly is an oil and gas company, located in Dallas,Texas, which represented it had certain oil and gas lease assets and managed several oil and gasjoint venture partnerships. The original agreement was subject to an automatic expiration if thebusiness combination did not occur effective December 31, 2007. When the parties did not reachagreement by the expiration date the parties agreed to continue to attempt to complete the businesscombination. We have terminated all negotiations with Earthwise and are no longer anticipating anybusiness combination with them. There is no penalty or other assessment due to either party as aresult of the termination of negotiations.Six Wells Joint VentureOn November 30, 2005, we entered into an agreement by which we committed to purchase, by issuanceof 800,000 shares of our common stock, a 50% partnership interest in the Six Wells Joint Venture, aTexas Joint Venture Partnership. The purchase was contingent upon the approval of Earthwise Energy,Inc., and Energy Partners International, a Texas Joint Venture (“Energy Partners”), the initialmembers of the Six Wells Joint Venture. The approval did not occur in 2006 and the agreement, byits terms, expired.Employment AgreementsThe company executed an amended Employment Agreement effective August 4, 2005 with our presidentMr. Burroughs for three years. Under the terms of the agreement, Mr. Burroughs was entitled toreceive an annual compensation of $150,000, and other items enumerated in the agreement, plusbonuses of up to 10% for material changes to the company; for example, when the company completes amajor acquisition, funding or financing. Mr. Burroughs has agreed with our Board of Directors togive up the 10% bonus provision. The agreement provides that Mr. Burroughs has the contractualright to require TBX to issue, upon his request, up to 250,000 common share options subject tocertain conditions. The conditions are that the options will not issue unless Mr. Burroughs makes ademand for their issuance and the number of shares so demanded have vested (the agreement providesthat 50,000 potential options vest at the beginning of each employment year for the five year termof the agreement and are cumulative subject to Mr. Burroughs serving as an employee of the companyfor a three year period.) The amendment also changed how the options are to be priced. The optionsare to be priced at a maximum exercise price of one-half the bid price for TBX common stock as ofAugust 4, 2005 or $0.70 per share (one-half $1.40 the closing bid price on August 4, 2005.) In theevent the closing bid price of TBX’s common stock is below $0.70 on the date of a call by Mr.Burroughs, the exercise price would be reduced to the lower actual bid price. In April 2007, inexchange for TBX dropping the three year service requirement, Mr. Burroughs agreed to forgo hiseligibility to call for stock options for fiscal years 2005 and 2006. Mr. Burroughs did not callany of his potential stock options as of November 30, 2007.The company executed an amended Employment Agreement effective April 1, 2006 with our VicePresident of Investor Relations, Mr. O’Donnell, having a term of one (1) year, which automaticallyrenews unless otherwise terminated as provided in said agreement. Under the terms of the agreement,Mr. O’Donnell is entitled to receive 100,000 shares of TBX common stock upon execution and Boardapproval of the agreement. In addition, we agreed to issue Mr. O’Donnell options to acquire 25,000shares of common stock per quarter beginning April 1, 2006 for a period of up to three years at anexercise price of $0.15 per share. The option exercise period is one year from its date.
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OtherThe company had a services agreement with Gulftex Operating, Inc., a company in which Mr. Burroughsis a 50% shareholder. Under the agreement, we performed lease and project generation services andprovide administrative assistance on a venture by venture basis for a fee. The company earnedapproximately $609,339 in such fees, representing approximately 67% of total 2006 revenue. Theservices agreement with Gulftex was terminated by mutual agreement on August 31, 2006.On June 1, 2007 we entered in a services agreement with Gulftex Operating, Inc. Under the agreementthe Company is charging Gulftex for a portion of administrative services and rent. For the sixmonths ended November 30, 2007 the Company was paid $48,097 for these services.Based on the data in our 2007 reserve report from an independent engineering firm, we did notrecord an impairment loss for the year ended November 30, 2007. We recorded an impairment loss inthe $147,262 for the year ended November 30, 2006.RESULTS OF OPERATIONSWe incurred a net loss of $775,389 for the fiscal year ended November 30, 2007 as compared to a netloss of $1,128,863 for fiscal year ended November 30, 2006. The decrease in our loss of $353,474 or31.3% is discussed below.REVENUE — Total revenue decreased $606,090, 66.9%, from $906,362 for the twelve months endedNovember 30, 2006 to $300,272 for the twelve months ended November 30, 2007.During the twelve months ended November 30, 2007, we generated approximately $308,448 in revenuefrom oil and gas sales as compared to $297,023 for the twelve months ended November 30, 2006. Theincrease from fiscal year 2006 is $11,425 or 3.8 %.The average price per MBTU increased $.48 andthe MBTU sold increased 2,164 from fiscal year 2006. The average price per barrel increased $2.27per barrel and the quantity sold decreased by 356 barrels from fiscal year 2006.Following are the changes in oil and gas sales, barrels and volumes of natural gas sold and theprice received for those sales.                           Gas  MBTU  Price/  Oil  Bbls  Price/   Sales  Sold  MBTU  Sales  Sold  Bbl **November 30, 2007** $117,071   18,833  $6.22  $191,377   3,587   53.35                     **November 30, 2006** $95,604   16,669  $5.74  $201,419   3,943   51.08                     12 Month Change                        **2007 vs 2006**                        Amount $21,467   2,164  $0.48  $(10,042)  (356) $2.27                    Percentage  22.45%  12.98%  8.36%  -4.99%  -9.03%  4.44%As the above table shows, gas revenue increased 22.45% while oil revenue decreased approximately4.99% from fiscal year 2006.Joint venture contract fee revenue for the twelve months ended November 30, 2006 was $609,339. Theservices agreement with Gulftex was terminated by mutual agreement on August 31, 2006; accordingly,there are no comparableamounts for 2007. Other joint venture income decreased $18,197, 3.0%, from $10,021 for the twelvemonths ended November 30, 2006 to ($8,176) for the fiscal year ended November 30, 2007. Other jointventure income is considered immaterial and was netted against oil and gas revenue in the currentfiscal year.
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EXPENSES — Total expenses decreased $953,314, 46.8%, from $2,035,225 for the twelve months endedNovember 30, 2006 to $1,081,911 for the twelve months ended November 30, 2007.Lease operating expenses and taxes decreased $52,267, 15.0% from $349,605 for the twelve monthsended November 30, 2006 to $297,338 for the twelve months ended November 30, 2007. The decrease isprimarily the result of reduced workover expenses for our East Texas properties.General and administrative expenses decreased $657,868, 47.2%, from $1,393,272 for the twelvemonths ended November 30, 2006 to $735,404 for the twelve months ended November 30, 2007. Thedecrease is due to lower legal, accounting and consulting fees of $277,464, stock basedcompensation expense of $272,000, costs allocated to Gulftex Operating of $48,097 and a decrease of$60,307 in other general and administrative expense categories.There was no loss due to the impairment of oil and gas properties for fiscal year 2007. The loss onimpairment of oil and gas properties was $147,262 for the twelve months ended November 30, 2006.The impairment charge for the fiscal year ended November 30, 2006 primarily relates to the EastTexas properties. The impairment charges from year to year are not related. The impairment chargeis calculated based on reserve reports obtained from an independent engineering firm.Depreciation, depletion, amortization and accretion decreased $95,917, 66.1%, from $145,086 for thetwelve months ended November 30, 2006 to $49,169 for the twelve months ended November 30, 2007. Thedecrease is primarily due to the lower values for oil and gas properties based on the fiscal year2006 impairment charges and the reduction in accretion charges of $23,026. Future charges todepreciation, depletion, amortization and accretion may be substantially higher or lower as aresult of increased production or changes in reserve prices and/or quantities and changes to assetretirement obligations.OTHER INCOME AND EXPENSE — The Company sold its working interest in a well located in Caddo County,Oklahoma on March 1, 2007 for $6,250 and wrote off the fully depleted property value of $49,147.There were no items of other income and expense for the twelve months ended November 30, 2006.PROVISION FOR INCOME TAXES — No tax benefits were recorded for the twelve months ended November 30,2007 and 2006 due to the losses we have experienced and a valuation allowance for 100% of thedeferred tax assets.Results of operations and net income (loss) before income taxes are presented in the followingtable:                       **Quarterly Financial Information (unaudited)**  Net Income (Loss)   Total  Operating  Net  Per Share   Revenues  Income (Loss) 1  Income (Loss)  Basic  Diluted **2007**                    lst Quarter $67,357  $(207,099) $(207,099) $(0.05) $(0.05)2nd Quarter  75,809   (293,366)  (287,116)  (0.07)  (0.07)3rd Quarter  42,359   (180,046)  (180,046)  (0.05)  (0.05)4th Quarter  114,747   (101,128)  (101,128)  (0.03)  (0.03)                                 Total $300,272  $(781,639) $(775,389) $(0.200) $(0.200)                                 **2006**                    lst Quarter $225,230  $(246,876) $(246,876) $(0.07) $(0.07)2nd Quarter  345,296   (113,740)  (113,740)  (0.03)  (0.03)3rd Quarter  217,413   (164,526)  (164,526)  (0.04)  (0.04)4th Quarter  118,423   (603,721)  (603,721)  (0.16)  (0.16)                                 Total $906,362  $(1,128,863) $(1,128,863) $(0.30) $(0.30)             1 Operating income is oil and gas sales less oil and gas production costs, impairmentlosses, depreciation, depletion and amortization, and general and administrative expenses.
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**TBX RESOURCES, INC.**