14. SUBSEQUENT EVENTS
The Company has recently entered into three material contracts. On September 2, 2011 TBX Resources,
Inc. (“TBX”) entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas
limited liability company, an unrelated third party. The Investment Agreement provides that
LoneStar will acquire up to 2,750,000 shares of TBX’s 2011 Series A 8% Preferred Stock (the“Stock”)
for the sum of $5,500,000 contingent upon TBX using the proceeds of the Stock to acquire a majority
51% membership interest in Frontier Income and Growth, LLC (“Frontier”), a salt water
transportation and disposal company. The Stock has the following attributes in its designation
filed with the Texas Secretary of State:
||TBX will pay an annual dividend of eight percent (8%) on the principal value ($2.00) of
||Beginning twelve (12) months from the date of issuance, each share of preferred stock
is convertible at the request of either the stockholder or TBX into two (2) shares of
common stock of TBX and two (2) warrants that will allow the holder to acquire one
additional share of TBX common stock for each warrant at the purchase price of $3.50 per
share. The warrants may be exercised in whole or in part at any time within three (3) years
from the issue date of the warrant.
As of the date hereof LoneStar has tendered the sum of $250,000 to purchase 125,000 shares of the
Stock. As of the date hereof, the preferred shares have not been issued.
On September 1, 2011 TBX entered into a Subscription Agreement with Frontier to acquire a majority
51% membership interest in Frontier for the sum of $5,046,000.
TBX president, Tim Burroughs has currently an interest in 25% of the profits of Frontier through
his one half ownership of Frontier Asset Management, LLC (“FAM”) which has a contractual agreement
with Frontier for its management services. Once the investors in Frontier have been repaid 125% of
their initial investment by Frontier, FAM’S share of the profit will increase to 50%. TBX, in a
letter agreement executed on September 2, 2011, has agreed to acquire FAM’s contractual interest in
the profits of Frontier for the issuance of 4,070,000 common shares to FAM. Given TBX’s current
share price of $0.07 per share, as of August 31, 2011, the transaction is valued at an estimated
Upon complete performance of each of the three contracts, TBX will own 51% of the voting interests
and be entitled to receive 63.25% of the profits of Frontier.