3. RESTATEMENT OF UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2016, have been restated to correct AMAK’s accounting error which reduced our equity in earnings of AMAK by approximately $2.8 million and to record a $3.2 million gain resulting from an increase in our share of the net assets of AMAK based upon the July 2016 equity raise as described in Note 17. In the originally issued unaudited financial statements as of and for the three and nine months ended September 30, 2016, we did not record the correct equity in earnings or correctly record the gain (with a corresponding increase in our investment) in accordance with ASC 323-10-40-1.

The effects of the restatement are as follows:

	September 30, 2016
	(unaudited)
	As Reported		As Restated
	(thousands of dollars)
Consolidated Balance Sheets
Investment in AMAK	$	52,776	$	53,127
Total Assets		283,155		283,506
Deferred Income Taxes		22,817		22,941
Total Liabilities		118,829		118,953
Retained Earnings		109,066		109,293
Total Trecora Resources Stockholders’ Equity		164,037		164,264
Total Equity		164,326		164,553
Total Liabilities and Equity		283,155		283,506

	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	(unaudited)
	As Reported			As Restated			As Reported		As Restated
	(thousands of dollars)
Consolidated Statements of Income
Equity in earnings (losses) of AMAK	$	(2,089	)	$	(2,089	)	$	5,079	$	2,261
Gain on Additional Equity Issuance by AMAK		-			3,168			-		3,168
Total other income (expense)		(2,729	)		439			14,863		15,213
Income before income taxes		1,399			4,567			31,032		31,382
Income tax expense		659			1,768			10,984		11,107
Net income attributable to Trecora Resources		740			2,799			20,048		20,275

Basic earnings per common share (dollars)	$	0.03		$	0.12		$	0.82	$	0.83
Diluted earnings per common share (dollars)	$	0.03		$	0.11		$	0.80	$	0.81

	September 30, 2016
	(unaudited)
	As Reported		As Restated
	(thousands of dollars)
Consolidated Statement of Stockholders’ Equity
Net Income	$	20,048	$	20,275
Retained Earnings		109,066		109,293
Total		164,037		164,264
Total Equity		164,326		164,553

Consolidated Statements of Cash Flows
Operating Activities
Net income	$	20,048		$	20,275
Deferred income taxes		6,728			6,851
Equity in (earnings) loss of AMAK		(5,079	)		(2,261	)
Gain on Additional Equity Issuance by AMAK		-			(3,168	)