Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Twelve Months Ended
Statements in this report which are not purely historical facts, including statements regarding the company's anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Act of 1934, as amended. All forward-looking statements in this report are based upon information available to us on the date of the report. Any forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from events or results described in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
Recent Financial Developments
Results of Operations
For the year ended
Revenue- Revenues by subsidiaries are as follows:
Year Ended December 31, December 31, 2013 2012 Chico Coffman Tank Trucks, Inc. ("CTT")
$ 30,208,968 $ 16,375,629Frontier Oilfield Services, Inc. ("FOSI") - 1,909 Total revenue $ 30,208,968 $ 16,377,538
The increase in net revenue for the year is attributable to our acquisitions of
Expenses- The components of our costs and expenses for the years ended
Year Ended December 31, 2013 CTT FOSI Total Costs and expenses: Direct costs
$ 22,576,043$ - $ 22,576,043Indirect costs 4,711,645 - 4,711,645 General and administrative - 6,297,035 6,297,035 Depreciation and amortization 2,809,736 20,947 2,830,683 Total costs and expenses $ 30,097,424 $ 6,317,982 $ 36,415,406Year Ended December 31, 2012 CTT FOSI Total Costs and expenses: Direct costs $ 12,262,990 $ 1,701 $ 12,264,691Indirect costs 3,054,335 - 3,054,335 General and administrative - 4,010,383 4,010,383 Depreciation and amortization 1,191,883 8,253 1,200,136 Total costs and expenses $ 16,509,208 $ 4,020,337 $ 20,529,545
The increase in direct and indirect costs for the year is attributable to our acquisition of
The increase in general and administrative expenses for the year is attributable to stock compensation costs of
The increase in depreciation and amortization expense is attributable to purchase price allocation due to our acquisition of CTT.
Other (Income) Expenses- The components of our costs and expenses for the years ended
Years Ended December 31, December 31, 2013 2012 Interest expense
$ 1,840,982 $ 871,970(Gain) Loss on disposal of property and equipment 15,967 134,767 Equity in loss of unconsolidated affiliated company - 169,794 Gain on deferred compensation payable write-off (2,300,000 ) - Impairment loss on net profits interest in affiliate - 284,900 Total other (income) expenses $ (443,051 ) $ 1,461,431
The increase in interest expense is attributable to the Capital One and ICON note. Due to our non-compliance with the debt covenants, we paid default interest rate for the Capital One and ICON notes.
We have not recorded any federal income taxes for the years ended
Net loss - The components of our net loss by subsidiary are as follows:
Years Ended December 31, December 31, 2013 2012 Chico Coffman Tank Trucks, Inc. ("CTT")
$ (74,351 ) $ (363,195 ) Frontier Income and Growth, LLC. and its subsidiaries, Trinity Disposal & Trucking, LLCand Trinity Disposal Wells, LLC. ("FIG") (2,899,458 ) (1,131,692 ) Frontier Oilfield Services, Inc. ("FOSI") (5,761,245 ) (5,285,641 ) Total net loss $ (8,735,054 ) $ (6,780,528 )
Discontinued operations - On
Liquidity and Capital Resources
Cash Flows and Liquidity
In the past we have primarily acquired producing oil and gas properties with opportunities for future development and contracted well operations to contractors. Currently, our primary focus is to secure additional capital through business alliances with third parties or other debt or equity financing arrangements to stabilize and improve the financial condition of the Company and lower our cost of borrowing. Any such additional funding will be done on an "as needed" basis and will only be done in those instances in which we believe such additional financings will accomplish these goals. However, actual results may differ from management's plan and the amount may be material.
Our ability to secure additional capital through business alliances with third parties or other debt/equity financing arrangements to acquire companies and/or assets which will allow the Company to further operate in the water disposal segment of the oilfield services industry is strictly contingent upon our ability to locate adequate financing or equity to pay for these additional companies and/or assets. There can be no assurance that we will be able to obtain the opportunity to buy companies and/or assets that are suitable for our investment or we may be able to obtain financing or equity to pay for the costs of these additional companies and/or assets at terms that are acceptable to us. Additionally, if economic conditions justify the same, we may hire additional employees although we do not currently have any definite plans to make additional hires.
The following table summarizes our sources and uses of cash for the years ended
December 31, 2013and 2012: 13 For the Years Ended December 31, 2013 December 31, 2012 Net cash used in operating activities of continuing operations $ (778,502 ) $ (1,580,752 )Net cash provided by operating activities of discontinued operations 721,133 724,479 Net cash used in operating activities (57,369 ) (856,273 ) Net cash used in investing activities of continuing operations (898,615 ) (1,759,266 ) Net cash provided by (used in) investing activities of discontinued operations 453,632 (128,493 ) Net cash used in investing activities (444,983 ) (1,887,759 ) Net cash provided by financing activities of continuing operations 540,281 4,302,669 Net cash used in financing activities of discontinued operations (46,377 ) (1,503,119 ) Net cash provided by financing activities 493,904 2,799,550 Net increase (decrease) in cash $ (8,448 ) $ 55,518
Net cash used in operating activities was
Net cash used in investing activities was
Net cash provided by financing activities was
The oil and gas industry is subject to various trends including the availability of capital for drilling new wells, prices received for crude oil and natural gas, sources of crude oil outside our area of operations, interest rates, and the overall health of the economy. We are not aware of any specific trends that are unusual to our company, as compared to the rest of the oil and gas industry.