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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;b&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;NOTE 2.&lt;/font&gt;&lt;/b&gt;&lt;b&gt;&lt;font style="FONT-SIZE: 3pt; FONT-WEIGHT: bold;" size="1"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&lt;/font&gt;&lt;/b&gt; &lt;b&gt;&lt;font style="FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION&lt;/font&gt;&lt;/b&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (&amp;#8220;GAAP&amp;#8221;) for interim financial information.&amp;#160; These financial statements include the accounts of NYTEX Energy and entities in which it holds a controlling interest.&amp;#160; All significant intercompany accounts and transactions have been eliminated in consolidation.&amp;#160; Investments in non-controlled entities over which we have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method.&amp;#160; In applying the equity method of accounting, the investments are initially recognized at cost, and subsequently adjusted for our proportionate share of earnings and losses and distributions.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The interim financial data as of June&amp;#160;30, 2013 and for the three and six months ended June&amp;#160;30, 2013 and 2012 are unaudited; in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to a fair statement of the results for the interim periods.&amp;#160; The consolidated results of operations for the three and six months ended June&amp;#160;30, 2013 and 2012 are not necessarily indicative of the results to be expected for the full year.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules&amp;#160;and regulations of the Securities and Exchange Commission (&amp;#8220;SEC&amp;#8221;).&amp;#160; Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto as filed in our Annual Report on Form&amp;#160;10-K for the year ended December&amp;#160;31, 2012.&amp;#160; Certain prior-period amounts have been reclassified to conform to the current-year presentation.&amp;#160;&amp;#160;&amp;#160; Land services revenues consist of fees generated from analyzing land and mineral title reports, leasehold title analysis and reports, land title runsheets, sourcing, negotiating and acquiring leases, document preparation and performing title curative functions.&amp;#160; Such revenues had previously been reported as &lt;i&gt;Other&lt;/i&gt; revenues on the consolidated statements of operations.&lt;/font&gt;&lt;/p&gt;
&lt;p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt;"&gt;&amp;#160;&lt;/p&gt;
&lt;p style="TEXT-INDENT: 0.25in; MARGIN: 0in 0in 0pt;"&gt;&lt;i&gt;&lt;font style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;Discontinued Operation&lt;/font&gt;&lt;/i&gt;&lt;/p&gt;
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&lt;p style="TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The consolidated financial statements present the operations of our former staffing service segment, Petro Staffing Group dba KS Energy Search Group (&amp;#8220;KS Search&amp;#8221;), and our former oilfield services segment, Francis Drilling Fluids,&amp;#160;Ltd., (&amp;#8220;FDF&amp;#8221;), as discontinued operations in accordance with ASC 205-20-55 for all periods presented.&lt;/font&gt;&lt;/p&gt;
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