UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

R QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: SEPTEMBER 30, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

NATIONAL ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-53755	26-1639141
(State or jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

8965 S Eastern Ave Suite 120E, Las Vegas NV 89123

(Address of principal executive offices) (Zip Code)

877-871-6400

(Registrant’s telephone number, including area code)

National Automation Services, Inc.

(Former name)

The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer ¨	Accelerated filed ¨
Non-accelerated filer   ¨	Smaller reporting company R

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨   No R

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

As of November 13, 2015, the issuer had 61,311,447 shares of common stock outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	2
Item 1: Financial Statements	2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.  Controls and Procedures	29
PART II – OTHER INFORMATION	31
Item 1.  Legal Proceedings	31
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.  Defaults Upon Senior Securities	32
Item 4.  Mine Safety Disclosures	32
Item 5.  Other Information	32
Item 6.  Exhibits	33
SIGNATURES	34

1

PART I – FINANCIAL INFORMATION

Item 1: Financial Statements

NATIONAL ENERGY SERVICES, INC.,

CONDENSED CONSOLIDATED BALANCE SHEETS

	SEPT 30, 2015			DEC 31, 2014
	(unaudited)			(as restated)
ASSETS
CURRENT ASSETS
Cash	$	29,144		$	72,165
Accounts receivable, net		760,973			1,221,671
Other receivable		30,000			60,000
Prepaid expenses		439,435			1,353,033
Total current assets		1,259,552			2,706,869
Property, plant and equipment, net		15,400,161			16,683,881
Intangible assets, net		283,000			283,000
Security deposit		750			750
Deferred financing fees, net		117,983			189,349
TOTAL ASSETS	$	17,061,446		$	19,863,849
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	4,552,012		$	5,294,325
Deferred revenue		201,799			—
Current portion of loans, capital leases and line of credit		3,843,796			4,507,322
Current portion of convertible debt, net of discount of $195,499 and $444,644		785,729			158,737
Debt conversion feature derivative liability		1,578,715			1,189,718
Warrant derivative liability		145,012			—
Current portion of related party notes payable		1,073,193			112,536
Mandatorily redeemable common stock		100,000			100,000
Total current liabilities		12,280,256			11,362,638
LONG TERM LIABILITIES
Long term related party notes payable,  net of discount of $96,688 and $0, net of Current portion		2,350			984,667
Convertible debt, net of discount of $113,599 and $133,205, net of current portion		327,161			406,914
Long term loans, capital leases, net of current portion		8,320,269			8,666,493
Total liabilities		20,930,036			21,420,712
Commitments and contingencies (notes 11 and 12)
STOCKHOLDERS’ DEFICIT
Preferred stock $0.001 par value, 10,000,000 authorized, 0 and 0 shares issued outstanding		—			—
Common stock $0.001 par value, 150,000,000 authorized, 32,039,180 and 4,019,738 shares issued outstanding		32,039			4,020
Additional paid in capital		18,427,029			14,924,999
Stock payable		—			33,278
Accumulated deficit		(22,327,658	)		(16,519,160	)
Total stockholders’ deficit		(3,868,590	)		(1,556,863	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	17,061,446		$	19,863,849

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

NATIONAL ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	THREE MONTHS ENDED SEPT 30, 2015			THREE MONTHS ENDED SEPT 30, 2014			NINE MONTHS ENDED SEPT 30, 2015			NINE MONTHS ENDED SEPT 30, 2014
REVENUE	$	3,615,779		$	5,466,073		$	11,535,486		$	11,887,589
COST OF REVENUE		3,426,524			4,230,825			10,234,261			9,810,323
GROSS (LOSS) PROFIT		189,255			1,235,248			1,301,225			2,077,266
OPERATING EXPENSES
Selling, general and administrative expenses		485,875			641,676			1,438,431			1,349,136
Professional fees and stock based compensation		453,910			149,752			2,813,926			297,287
TOTAL OPERATING EXPENSES		939,785			791,428			4,252,357			1,646,423
OPERATING (LOSS) INCOME		(750,530	)		443,820			(2,951,132	)		430,843
OTHER INCOME, non-operating
Other income, non-operating		(33,009	)		(54,644	)		(33,009	)		(64,973	)
Change in fair value of derivative liabilities		--			--			(1,446,103	)		--
Gain on debt extinguishment		(225,732	)		--			(225,732	)		--
Gain on bargain purchase acquisition of JD		--			--			--			(1,464,515	)
TOTAL OTHER INCOME, non-operating		(258,741	)		(54,644	)		(1,704,844	)		(1,529,488	)
OTHER EXPENSE
Loss on disposal of fixed assets		296,093			--			296,093			--
Change in fair value of derivative liabilities		48,274			--			--			--
Interest expense, net		1,861,931			306,504			4,266,118			720,281
TOTAL OTHER EXPENSE, non-operating		2,206,298			306,504			4,562,211			720,281
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(2,698,087	)		191,960			(5,808,499	)		1,240,050
PROVISION FOR INCOME TAXES		--			--			--			--
NET (LOSS) INCOME	$	(2,698,087	)	$	191,960		$	(5,808,499	)	$	1,240,050
BASIC (LOSS) INCOME PER SHARE	$	(0.18	)	$	0.05		$	(0.69	)	$	0.34
DILUTED (LOSS) INCOME PER SHARE	$	(0.18	)	$	0.04		$	(0.69	)	$	0.28
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING  BASIC		15,314,493			3,931,604			8,412,062			3,620,766
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DILUTED		15,314,493			4,699,258			8,412,062			4,388,420

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

NATIONAL ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	NINE MONTHS ENDED SEPT 30, 2015			NINE MONTHS ENDED SEPT 30, 2014
Operating Activities
Net (loss) income	$	(5,808,499	)	$	1,240,050
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,139,454			886,270
Provision for doubtful accounts		100,000			(224,715	)
Amortization of debt discount on notes payable		1,109,189			920
Stock-based compensation expense		739,639			--
Change in fair value of derivative liabilities		(1,446,103	)		--
Non-cash interest expense on issuance of derivative instruments		2,293,088			--
Stock issued to consultants		430,806			41,400
Forgiveness of accrued officer compensation		--			(95,920	)
Gain on bargain purchase of JD Field Services		--			(1,464,515	)
Gain / loss on disposal of fixed assets		296,093			(15,144	)
Gain on extinguishment of debt		(225,732	)		(10,329	)
Changes in assets
Decrease accounts receivable		360,698			1,426,419
Decrease (increase) other assets		30,000			(70,750	)
Decrease prepaid expenses		1,709,331			301,342
Changes in liabilities
Increase deferred revenue		201,799			--
Decrease accounts payable and accrued liabilities		(742,311	)		(96,938	)
Cash (used in) provided by operating activities		187,452			1,918,090
Investing Activities
Proceeds from disposal of PP&E		198,000			--
Cash retained by subsidiary		--			104,816
Purchase of fixed assets		(144,329	)		(92,107	)
Cash provided by investing activities		53,671			12,709
Financing activities
Proceeds from sale of stock, net of offering cost		490,900			--
Proceeds from line of credit		5,454,475			5,440,630
Proceeds from related party debt		185,990			78,000
Proceeds from convertible notes payable		851,082			--
Proceeds from notes payable		1,130,203			630,000
Payments on note payable		(2,855,697	)		(2,288,246	)
Payments on capital leases		--			(246,840	)
Payments on related party debt		--			(41,000	)
Payments on line of credit		(5,541,097	)		(5,434,310	)
Cash used in financing activities		(284,144	)		(1,861,766	)
Increase (decrease) in cash		(43,021	)		69,033
Cash at beginning of the year		72,165			17,696
Cash at end of the period	$	29,144		$	86,729
SUPPLEMENTAL CASH FLOW
Cash paid for interest	$	683,454		$	493,777
Cash paid for income taxes	$	--		$	--
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING TRANSACTIONS
Stock issued for acquisition of JD	$	--		$	413,000
Capitalized leases	$	--		$	132,000
Financed assets	$	134,132		$	2,642,108
Financed insurance	$	668,233		$	504,555
Stock granted for conversion of debt	$	1,665,431		$	269,197
Stock issued for deferred financing fees	$	--		$	50,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

NATIONAL ENERGY SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1: Organization and basis of presentation

Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of National Energy Services, Inc., a Nevada corporation (“NES” or the “Company”), have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the fiscal year or any future period.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. These financial statements have been presented in accordance with the rules governing a smaller reporting company.

These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A filed with the SEC on September 18, 2015, from which the balance sheet information as of December 31, 2014 was derived, as adjusted for the Company’s finalization of the JD Field Services (“JD”) acquisition.

Management determined that under the guidance of Financial Accounting Standards Board Accounting Standards Codification (“FASB” “ASC”) 805, an adjustment to record additional purchase price allocation was necessary as a part of the acquisition of JD on February 24, 2014. The “measurement” period under ASC 805 allows for retrospective adjustment of the business combination for one year from the acquisition date, or when all necessary information for the adjustment is available. After the measurement period, there is no revision allowed for subsequent information that is unrelated to the facts and circumstances existing at the time of the acquisition, except for error correction. Management recognizes that it had this one year period to apply corrective changes from the bargain purchase to intangible and tangible asset value and, as such it has re-measured the intangible asset value, and recognized a gain on its bargain purchase which has been reflected in the fiscal year ended December 31, 2014, and for the nine months ended September 30, 2014 (See Note 13: Acquisition for further information).

Business Overview

NES is a public holding company with subsidiaries which provide services for the domestic oil and gas industry. The Company’s business plan takes action with expansion through carefully selected acquisitions. The Company’s services are needed by a wide variety of oil and natural gas industry providers in both private and public sectors. The Company’s focus is to increase shareholder value through these carefully selected companies with NES bringing oversight and resources to each, which is intended to allow them to maximize profitability and growth opportunities within their markets, and expanding their customer base. This strategy is intended to allow for rapid advancement in overall assets and revenue streams for the Company.

On February 24, 2014, the Company entered into a purchase and sale agreement with JD. This is the first of several anticipated acquisitions that NES has as a part of its growth strategy. JD provides oilfield services to the oil and gas industry primarily focused around those activities that are related to the drilling, operation(s) and maintenance of the well-site. They are licensed in all states west of the Mississippi River including Alaska to do trucking, but are focused primarily in the Rocky Mountain Region. Oilfield services provided include heavy haul, water haul, and rig moving services as well as equipment, supplies, and specialty long hauling services. JD also provides oil and gas equipment rental services, hot shot, roustabout services and construction site development services. JD also operates a fabrication division that builds special-order oil and gas equipment and trucks for customers.

5

Name Change and Increase of Authorized Share Capital

On July 8, 2015, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to Articles of Incorporation to change its name to “National Energy Services, Inc.” and increase its authorized number of shares of common stock from 75,000,000 to 150,000,000. The Certificate of Amendment became effective on July 15, 2015.

Reverse Stock Split

On September 11, 2014, the Company amended its Certificate of Incorporation to implement a reverse stock split in the ratio of 1 share for every 200 shares of common stock. This amendment was approved and filed on record by the Nevada Secretary of State, effective September 11, 2014.  On December 11, 2014, FINRA approved the reverse stock split for the Company. All the relevant information relating to numbers of shares and per share information contained in these consolidated financial statements has been retrospectively adjusted to reflect the reverse stock split for all periods presented.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions and generally limits the amount of credit exposure to the amount in excess of the Federal Deposit Insurance Corporation coverage limit of $250,000. As of September 30, 2015, the Company did not have cash in any one banking institution that exceeded this limit.

Earnings (loss) per share basic and diluted

Earnings per share is calculated in accordance with the Earnings per Share Topic of the FASB ASC. The weighted-average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share is computed using the weighted average number of shares plus dilutive potential common shares outstanding.

Potentially dilutive common shares consist of employee stock options, warrants, and other convertible securities in the amount of 71,261,660, and are excluded from the diluted earnings per share computation in periods where the Company has incurred net loss. During the nine months ended September 30, 2015, the Company recorded a net loss, resulting in no dilutive common shares.

	SEPT 30, 2015			SEPT 30, 2014
Net loss (income)	$	(5,808,499	)	$	1,240,050
Basic earnings (loss) per share	$	(0.69	)	$	0.34
Diluted earnings (loss) per share	$	(0.69	)	$	0.28
Weighted average common shares outstanding basic		8,412,062			3,620,766
Weighted average common shares outstanding diluted		8,412,062			4,388,420

	SEPT 30, 2015		SEPT 30, 2014
Weighted average common shares outstanding basic		8,412,062		3,620,766
Add: Warrant exercise		--		140,000
Add: Options exercise		--		35,000
Add: Convertible notes		--		592,654
Total weighted average common shares outstanding diluted		8,412,062		4,388,420

Revenue Recognition

As required by the Revenue Recognition Topic of FASB ASC, the Company is required to use predetermined contract methods in determining the current value for revenue.

6

Service Contracts Service revenue is recognized on a completed project basis - the Company invoices the client when it has completed the services, thereby, ensuring the client is legally liable to the Company for payment of the invoice. On service contracts, revenue is not recognized until the services have been performed.

In all cases, revenue is recognized as earned by the Company. Revenues collected in advance of services are considered deferred revenue. As the client becomes liable to the Company for services provided, as defined in the agreement, the client is then invoiced and revenue is accordingly recognized and recorded.  The Company does not recognize or record any revenues for which it does not have a legal basis for invoicing or legally collecting.

Fair Value Accounting

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions (For additional information see Note 11: Fair value).

The three levels of the fair value hierarchy are described below:

Level 1     Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2     Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3     Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

NOTE 2: Recently adopted and recently issued accounting guidance

Adopted

None

Issued

In November 2014, FASB issued ASU No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. This ASU is effective for fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted. If an entity early adopts the amendments in an interim period, any adjustments shall be reflected as of the beginning of the fiscal year that includes that interim period. We have not adopted the above guidance; however in management’s assessment the above will not have an impact on the Company’s financial position, result of operations or cash flow.

In February 2015, FASB issued ASU No. 2015-02, Consolidation. The amendments in this update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. This ASU is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. We have not adopted the above guidance; however in management’s assessment the above will not have an impact on the Company’s financial position, result of operations or cash flow.

7

In April 2015, FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. This ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption, including adoption in an interim period, is permitted. Upon adoption an entity is required to apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. We have not adopted the above guidance; however in management’s assessment the above will not have a material impact on the Company’s financial position, result of operations or cash flow.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

NOTE 3: Liquidity resources and future capital requirements

For the nine months ended September 30, 2015, the Company had a working capital deficit of $11,020,704 and a stockholders’ deficit of $3,868,590, which raises substantial doubt regarding the Company’s ability to continue as a going concern.

Our principal liquidity requirements are to finance current operations, fund capital expenditures, including any future acquisitions, and to service our debt. Since our acquisition of JD, our principal source of liquidity has been cash generated by JD’s operations. Our other sources of liquidity have been funds generated from debt and equity issuances of our securities. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements for at least the next twelve months from date of filing.

With our acquisition of JD, our revenues were at $11,535,486 for the nine months ended September 30, 2015 compared to $11,887,589 during the same period in 2014.

To help recapitalize the Company, we are pursuing a four-step approach that we expect to continue during 2015 that includes the following:

· Applying to up-list to a national securities exchange;

· Seeking out further of acquisition candidates;

· Refinancing our balance sheet;

Our ability to continue in our acquisition strategy and purchase established businesses with a proven track record is vital to the overall growth strategy of the Company. We continue to seek out established businesses with a proven operating track record strong financial performance, positive operating results, established or growing contract backlogs, and/or the potential for positive operating cash flow.

	SEPT 30, 2015			SEPT 30, 2014
Net cash (used in) provided by operating activities	$	187,452		$	1,918,090
Net cash provided by investing activities	$	53,671		$	12,709
Net cash provided by (used in) financing activities	$	(284,144	)	$	(1,861,766	)
Total net (loss) income	$	(5,808,499	)	$	1,240,050

In connection with the preparation of the Company’s financial statements for the nine months ended September 30, 2015, the Company has analyzed its cash needs for the next twelve months. The Company believes that its current cash position and forecasted cash flow from operations is adequate to meet its cash requirements for at least the next twelve months.

8

NOTE 4: Accounts receivable, net

	SEPT 30,			DEC 31,
	2015			2014
Accounts receivable	$	927,120		$	1,287,818
Less: allowance for doubtful accounts		(166,147	)		(66,147	)
Total	$	760,973		$	1,221,671

NOTE 5: Property, plant & equipment, net

	SEPT 30,			DEC 31,
	2015			2014
Buildings	$	78,927		$	78,927
Furniture and fixtures		46,923			46,923
Vehicles		4,400,404			4,479,273
Machinery and equipment		12,304,577			13,234,926
		16,830,831			17,840,049
Less: Accumulated depreciation		(1,430,670	)		(1,156,168	)
Total	$	15,400,161		$	16,683,881

Depreciation expense for the nine months ended September 30, 2015, was $1,068,088 and for the nine months ended September 30, 2014, was $858,588.

NOTE 6: Intangible assets, net

With the purchase of JD on February 24, 2014, the Company, under guidance of FASB ASC 805, determined that an adjustment to record additional purchase price allocation was necessary. The “measurement” period under ASC 805 allows for retrospective adjustment of the business combination for adjustment one year from the acquisition date, or when all necessary information for the adjustment is available. After the measurement period, there is no adjustment allowed for subsequent information that is unrelated to the facts and circumstances existing at the time of the acquisition, except for error correction. Management recognizes that it had this one year period to retrospectively adjust values from the bargain purchase to intangible and tangible asset value and, as such the Company has re-measured the intangible asset value and recognized a gain on its bargain purchase which has been reflected retrospectively as of February 24, 2014. The Company recognized additional intangible assets which contributed to the overall value of JD (See Note 13: Acquisitions for additional details on the re-measurement). The following table represents the intangible assets:

	SEPT 30,		DEC 31,
	2015		2014
Brand name	$	277,000	$	277,000
Domain name / website		6,000		6,000
		283,000		283,000
Less: Accumulated amortization		—		—
Total	$	283,000	$	283,000

The following is the proforma information that discloses the results of operations as though the business combination was completed as of the beginning of the period being reported on.

	NAS SEPT 30, 2014			JD SEPT 30, 2014			Adjustments MAR 01, 2014		SEPT 30, 2014
REVENUE	$	—		$	11,887,589		$	3,323,970	$	15,211,559
Less: allowance for bad debt add recovery					188,460					188,460
NET REVENUE		—			12,076,049			—		15,400,019
COST OF REVENUE		—			9,998,783			2,866,011		12,864,794
GROSS PROFIT		—			2,077,266			—		2,535,225
OPERATING EXPENSES
Selling, general and administrative expenses		180,643			1,142,179			329,287		1,652,109
Professional fees and related expenses		282,251			9,187			2,570		294,008
Consulting fees		5,850			—			—		5,850
Forgiveness of accrued officer compensation		(95,921	)		—			—		(95,921	)
TOTAL OPERATING EXPENSES		372,823			1,154,366			—		1,856,046
OPERATING INCOME (LOSS)	$	(372,823	)	$	922,900		$	—	$	679,179
OTHER EXPENSE (INCOME), non-operating
Other income		33,320			(39,500	)		33,320		27,140
Gain on acquisition, bargain purchase of JD		—			(1,464,515	)		39,208		(1,425,307	)
Gain on extinguishment of debt		(10,329	)		—			—		(10,329	)
Loss on disposal of assets		—			(15,144	)		—		(15,144	)
Interest expense, net		270,317			449,964			131,989		852,270
TOTAL OTHER EXPENSE (INCOME), non-operating		293,308			(1,069,195	)		—		(571,370	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(666,130	)		1,992,095			—		1,250,549
PROVISION FOR INCOME TAXES		—			—			—		—
NET (LOSS) INCOME	$	(666,130	)	$	1,992,095			—	$	1,250,549
BASIC (LOSS) INCOME PER SHARE	$	(0.18	)		—			—	$	0.31
DILUTED (LOSS) INCOME PER SHARE	$	(0.18	)						$	0.26
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC		3,620,766			—			—		3,620,766
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DILUTED		3,620,766			—			—		4,388,420

9

NOTE 7: Loans, capital lease and lines of credit

The following table represents the outstanding principal balance of loans, capital leases and lines of credit (“LOC”) and accrued interest for the Company as of September 30, 2015.

Description	Loan date	Maturity date	Original amount of loan		Interest rate			Balance as of SEPT 30, 2015			Balance as of DEC 31, 2014
Ally	02/24/2014	02/10/2019	$	43,395		4.01	%	$	25,442		$	31,284
Commercial Credit Group	12/19/2014	12/19/2019		1,940,969		10.00	%		1,431,837			1,552,775
Cat Financial	02/24/2014	11/09/2016		186,549		5.95	%		59,417			95,262
Equify	04/08/2014	05/01/2019		1,480,412		7.10	%		1,177,740			1,331,116
Phil Timothy	02/24/2014	03/28/2023		2,650,000		6.00	%		2,146,705			2,274,936
Ford credit	02/24/2014	03/16/2016		23,700		4.34	%		—			10,129
Ford credit	02/24/2014	09/28/2015		28,700		6.54	%		—			10,268
Ford credit	02/24/2014	09/28/2016		44,576		3.74	%		—			2,903
Ford credit	02/24/2014	06/05/2016		88,575		7.89	%		—			37,253
Ford credit	02/24/2014	02/28/2015		56,372		6.49	%		—			9,858
Ford credit	02/24/2014	03/29/2017		73,005		7.89	%		—			37,946
Ford credit	02/24/2014	10/29/2015		36,700		6.54	%		—			3,829
Ford credit	02/24/2014	10/29/2015		34,400		6.54	%		—			3,589
Ford credit	02/24/2014	09/30/2015		94,000		5.74	%		—			16,050
Ford credit	02/24/2014	09/16/2016		45,994		8.29	%		—			23,049
Ford credit	02/24/2014	08/01/2017		43,110		5.04	%		—			33,693
Jimmy B Trucking	08/11/2014	06/11/2015		600,000		10.00	%		—			372,109
Rick Gurr/ Gosling Service	08/11/2014	06/11/2015		210,000		10.00	%		—			130,238
Mack Financial Services	02/24/2014	03/12/2016		326,746		6.00	%		—			98,478
GE Capital	09/01/2014	07/01/2019		213,600		6.96	%		170,234			202,093
GE Capital	09/01/2014	12/21/2018		203,789		6.93	%		170,518			194,574
GE Capital	09/01/2014	08/01/2016		48,000		9.11	%		19,082			42,669
GE Capital	02/24/2014	09/09/2018		189,151		6.42	%		103,719			129,135
GE Capital	02/24/2014	07/01/2018		153,944		7.20	%		79,100			100,047
John Deere Financial	02/24/2014	09/26/2017		262,350		4.00	%		115,783			155,136
Axis Capital	02/20/2015	02/20/2020		600,000		8.62	%		525,580			—
Utica Financial	06/25/2015	06/25/2020		840,406		—			788,453			—
Mack Financial Services	02/24/2014	11/09/2016		347,520		6.00	%		119,197			159,427
MACU	02/24/2014	10/26/2018		41,540		2.99	%		26,941			33,069
Zion’s Bank	02/24/2014	10/15/2026		150,000		4.86	%		118,686			125,108
Zion’s Bank	02/24/2014	10/10/2016		101,091		4.57	%		15,489			31,998
Zion’s Bank	02/24/2014	09/30/2017		7,680,000		4.57	%		3,699,035			4,622,482
Zion’s Bank – LOC	—	—		—		—			500,000			586,621
Gale Rasmussen	07/01/2015	*		94,000		10.0	%		94,000			—
WD Martin	07/01/2015	*		80,000		10.0	%		80,000			—
Alliance funding	07/01/2015	*		43,159		10.0	%		43,159			—
H&E Equipment	02/24/2014	05/01/2017		176,234		12.00	%		—			117,799
National Insurance	06/01/2015	05/31/2016		668,233		6.0	%		338,064			217,128
Capital lease	01/15/2009	—		33,591		—			33,591			33,591
Goss	09/19/2013	09/19/2016		20,000		12.00	%		20,000			20,000
Kinney2	11/01/2013	11/01/2015		50,000		12.00	%		50,000			50,000
O’Connor	04/01/2009	*		71,000		10.00	%		71,000			71,000
Hanley	04/01/2009	*		79,913		10.00	%		79,913			79,913
Spiker	12/31/2010	*		9,500		10.00	%		9,500			9,500
Jesse	12/31/2010	*		9,760		10.00	%		9,760			9,760
Marlow	12/31/2010	*		13,000		10.00	%		13,000			13,000
Goss2	02/28/2014	03/09/2016		50,000		10.00	%		29,120			50,000
Krochak	07/25/2014	01/25/2015		30,000		10.00	%		—			30,000
Krueger	12/09/2014	06/06/2015		15,000		10.00	%		—			15,000
Total debt liabilities									12,164,065			13,173,815
Less: current portion									(3,843,796	)		(4,507,322	)
Total long term liabilities								$	8,320,269		$	8,666,493

^*Payable on demand

10

Line of credit

The Company has a $500,000 unsecured line of credit with Zion’s First National Bank. At September 30, 2015, interest was charged at LIBOR + 3.85% (4.04%).  The line of credit has been renewed through January 2016. The line of credit balance as of September 30, 2015 was $500,000.

Mandatorily redeemable common stock

On June 6, 2014, the Company entered into a settlement and release agreement providing for the grant of an aggregate of 53,837 shares of restricted stock in consideration for the settlement of outstanding debt due under a convertible note April 11, 2011, valued at $269,186. In connection with the agreement, the Company agreed to repurchase 20,000 shares of the shares issued for $100,000 within 30 days following the completion of a planned secondary offering. No secondary offering has been commenced as of the date of this report. The agreement further provides that if the Company does not timely purchase the shares in accordance with the agreement then if the said shares have a value of less than $100,000, the holder is entitled to additional shares to compensate up to the $100,000 in value. As such as of September 30, 2015, the Company recognized a mandatorily redeemable common stock to reflect the fair value of the obligation of the $100,000.

11

NOTE 8: Convertible notes

As of September 30, 2015, the following convertible notes payable are outstanding (see Note 11: Fair Value for information relating to convertible notes):

Description	Balance as of Sept 30, 2015			Balance as of December 31, 2014
Convertible note issued on October 1, 2014, at a 12% interest rate per annum for three (3) years, convertible to shares of common stock at a 30% discount to market price of Company common stock.	$	250,000		$	250,000
Convertible note issued on October 1, 2014, at a 12% interest rate per annum for three (3) years, convertible to shares of common stock at a 30% discount to market price of Company common stock.		223,000			245,000
Convertible note issued on October 20, 2014, at a 12% interest rate per annum for three (3) years, convertible to shares of common stock at a 30% discount to market price of Company common stock.		--			45,000
Convertible note issued on December 16, 2014, at a 12% interest rate per annum for one (1) year, convertible to shares of common stock at $2.00 per share or if the Company’s common stock falls below a certain price, at a 40% discount to market price of Company common stock, subject to further adjustments in certain cases.		250,000			250,000
Convertible note issued on December 16, 2014, at a 10% interest rate per annum for one (1) year, convertible to shares of common stock at 40% discount to market price of Company common stock, subject to further adjustment in certain cases.		28,000			249,500
Convertible note issued on December 16, 2014, at a 8% interest rate per annum for nine (9) months, convertible to shares of common stock at a 42% discount to market price of Company common stock, subject to further adjustment in certain cases.		--			104,000
Convertible note originally issued on January 30, 2015 and amended on June 30, 2015, at a 9% interest rate per annum maturing on January 1, 2016, convertible to shares of common stock at a 20% discount to market price of Company common stock, subject to further adjustment in certain cases.		205,082			--
Convertible note issued on February 12, 2015, at a 12% interest rate per annum for six (6) months, convertible to shares of common stock at a 30% discount to market price of Company common stock, subject to further adjustments in certain cases.		144,471			--
Convertible debenture issued on February 20, 2015, at a 10% interest rate per annum for five (5) years, convertible into shares of common stock using the average of the lowest intraday trading price and the closing price during any 20 day window, surrounding the conversion of the note.		89,000			--
Convertible note issued on March 11, 2015, at a 8% interest rate per annum for one (1) year, convertible to shares of common stock at a 40% discount to market price of Company common stock, subject to further adjustments in certain cases.		25,435			--
Convertible note issued on March 12, 2015, at a 8% interest rate per annum for one (1) year, convertible to shares of common stock at a 40% discount to market price of Company common stock, subject to further adjustments in certain cases.		5,000			--
Convertible note issued on June 3, 2015, at a 6% interest rate per annum for one (1) year, convertible to shares of common stock at a 47% discount to market price of Company common stock, subject to further adjustment in certain cases.		46,000			--
Convertible note issued on July 15, 2015, at a 10% interest rate per annum for nine (9) months, convertible to shares of common stock at a fixed rate of $0.05 per share.		10,000			--
Convertible note issued on August 5, 2015, at a 12% interest rate per annum for one (1) year (deferred for first 3 months), convertible to shares of common stock at the lesser of $0.10 or a 40% discount to market price of Company common stock, subject to further adjustment in some cases.		55,000			--
Convertible note issued on September 2, 2015, at a 10% interest rate per annum for nine (9) months, convertible to shares of common stock at a fixed rate of $0.05 per share, subject to further adjustment in certain cases.		5,000			--
Convertible note issued on September 2, 2015, at a 10% interest rate per annum for nine (9) months, convertible to shares of common stock at a fixed rate of $0.05 per share, subject to further adjustment in certain cases.		5,000			--
Convertible note issued on September 2, 2015, at a 10% interest rate per annum for nine (9) months, convertible to shares of common stock at a fixed rate of $0.05 per share, subject to further adjustment in certain cases.		10,000			--
Convertible note issued on September 2, 2015, at a 10% interest rate per annum for nine (9) months, convertible to shares of common stock at a fixed rate of $0.05 per share, subject to further adjustment in certain cases.		5,000			--
Convertible note issued on September 9, 2015, at a 6% interest rate per annum for one (1) year, convertible to shares of common stock at a 47% discount to market price of Company common stock, subject to further adjustment in certain cases.		36,000			--
Convertible note issued on September 30, 2015, at a 8% interest rate per annum for nine (9) month, convertible to shares of common stock at a 42% discount to market price of Company common stock, subject to further adjustment in certain cases.		30,000			--
Total		1,421,988			1,143,500
Less: Debt discount		(309,098	)		(577,849	)
Total Current portion convertible debt		(785,729	)		(158,737	)
Total Long-term portion of convertible debt	$	327,161		$	406,914

During the nine months ended September 30, 2015, the Company issued the following convertible notes:

On February 12, 2015, the Company issued a convertible promissory note in the principal amount of $180,000 for a purchase price of $125,000 reflecting a $55,000 Original Issue Discount (“OID”). The note matures six-months from the date of issuance and bears interest at the rate of 12% per annum. The note may be converted into shares of common stock at a 30% discount to market price of the Company’s common stock, subject to further adjustment in certain cases.

On February 27, 2015, the Company issued a convertible promissory note in the principal amount of $110,250 for a purchase price of $105,000 reflecting a 5% OID. The note matures one-year from the date of issuance and bears interest at the rate of 8% per annum. The note may be converted into shares of common stock at a 30% discount to market price of Company common stock, subject to further adjustment in certain cases.

12

On March 11, 2015, the Company issued a convertible promissory note in the principal amount of $35,000 in exchange for a convertible promissory note issued to a related party originally issued on July 25, 2014. The note matures one-year from the date of issuance and bears interest at the rate of 8% per annum. The note may be converted into shares of common stock at a 40% discount to market price of Company common stock, subject to further adjustment in certain cases.

On March 12, 2015, the Company issued a convertible promissory note in the principal amount of $55,000 for a purchase price of $50,000, reflecting a 10% OID. The note matures one-year from the date of issuance and bears interest at the rate of 8% per annum. The note may be converted into shares of common stock at a 40% discount to market price of Company common stock, subject to further adjustment in certain cases.

On March 20, 2015, the Company issued a convertible promissory note to a related party in the principal amount of $35,000. The note matures one-year from the date of issuance and bears interest at the rate of 8% per annum. The note may be converted into shares of common stock at a 40% discount to market price of Company common stock, subject to further adjustment in certain cases. As of September 30, 2015 this note has been fully converted.

On June 2, 2015, the Company issued a convertible promissory note in the principal amount of $45,000 to an assignee of a note in like principal amount issued on October 20, 2014. The note matures one-year from the date of issuance and bears interest at the rate of 5% per annum. The note may be converted into shares of common stock at a 40% discount to market price of Company common stock, subject to certain anti-dilution protection. As of June 30, 2015 this note has been fully converted.

On June 3, 2015, the Company issued a convertible promissory note in the principal amount of $46,000 for a purchase price of $40,000. The note matures one year from the date of issuance and bears interest at the rate of 6% per annum. The note may be converted into shares of common stock at a 47% discount to market price of the Company’s common stock subject to further adjustment in certain cases.

On June 30, 2015, the Company issued a convertible promissory note in the principal amount of $205,082 to a then related party. The note replaces a convertible promissory note dated January 31, 2015 in the principal amount of $159,000 that matured on March 31, 2015 and for which there were unpaid fees and interest. The note matures on January 1, 2016 subject to extension of the note at the issuer’s until June 30, 2018 provided that certain additional consideration is paid in an amount not less than 108% of the principal outstanding at the issue date. The note bears an interest rate of 9% per annum and interest is payable quarterly within five business days of the end of each quarter. The note may be converted into shares of common stock at a 20% discount to the market price of the Company’s common stock subject to further adjustment in certain cases.

On July 15, 2015, the Company issued a convertible promissory note in the principal amount of $10,000 to a related party. The note matures six months from the date of issuance and bears interest at the rate of 10% per annum. The note may be converted into shares of common stock at a fixed price of $0.05 per share.

On August 4, 2015, the Company issued a convertible promissory note in the principal sum of up to $250,000 The note contains a 10% OID, and is to be funded in the aggregate amount of $225,000 in tranches at the sole discretion of the holder. The first tranche funded was $50,000, with an OID of $5,000. The note has a maturity date of two years from the funding of each tranche and is convertible at the lesser of $0.10 or at a 40% discount market price of the Company’s common stock, subject to further adjustment in certain cases.

On September 2, 2015, the Company issued convertible promissory notes in the aggregate principal amount of $25,000, of which a note in the principal amount of $5,000 was issued to a related party. The notes mature nine months from the date of issuance and bear interest at the rate of 10% per annum. Notes in the principal amount of $20,000 may be converted into shares of common stock at a fixed rate of $0.05 per share, subject to adjustment in certain cases and a note in the principal amount of $5,000 may be converted into shares of common stock at a fixed rate of $0.05 per share, subject to adjustment in certain cases

13

On September 9, 2015, the Company issued a convertible promissory note in the principal amount of $36,000 reflecting an OID of $5,500. The note matures one year from the date of issuance and bears interest at the rate of 6% per annum. The note may be converted into shares of common stock at a 47% discount to the market price of the Company’s common stock subject to further adjustment in certain cases.

On September 30, 2015, the Company issued a convertible promissory note in the principal amount of $30,000. The note matures nine months from the date of issuance and bears interest at the rate of 8% per annum. The note may be converted into shares of common stock at a 42% discount to market price of Company common stock, subject to further adjustment in certain cases.

NOTE 9: Operating lease agreement

On June 21, 2014, the Company entered into an operating lease agreement for our corporate offices located in Las Vegas, Nevada. The operating lease runs from July 1, 2014 for 12 months to June 30, 2015 with a non-related third party for $750 per month with no annual increase. The Company’s subsidiary JD rents its facility from a related party (see Note 10: Related party transactions).

NOTE 10: Related party transactions

On February 24, 2014, the Company assumed a 6% promissory note in the principal amount of $474,667 issued to a director and a beneficial owner of 5% or more of our common stock, in connection with the acquisition of JD. In May 2015, the director added an additional $78,765. As of September 30, 2015, the Company owes an additional $54,120, as expenses that were paid by the director on behalf of the Company. As of September 30, 2015, $607,552 of principal and $47,130 of interest was outstanding.

On February 24, 2014, the Company assumed a 7.05% promissory note in the principal amount of $500,000 issued to a beneficial owner of 5% or more of our common stock, in connection with the acquisition of JD.   As of September 30, 2015, $468,000 of the principal and $9,597 of interest was outstanding.

On February 27, 2015, the Company amended loans to the Company made by a related party dated April 2, 2014, and April 22, 2014, in the original principal amounts of $50,000 and $28,000, respectively such that the remaining principal was combined into one convertible debenture in the principal amount of $110,000. The debenture matures on January 30, 2020, and bears interest at the rate of 10% per annum. The debenture is convertible into restricted shares using the average of the lowest intraday trading price and the closing price during any 20 day window, surrounding the conversion of the note.

The Company incurred interest expense of $63,167 and $20,714 during the nine-month periods ended September 30, 2015 and 2014, respectively, in connection with these promissory notes and convertible debenture.

The Company’s subsidiary JD also rents its facility; the lease is with a related party for $10,500 per month. For the nine months ended September 30, 2015, rent expense was $94,500. This lease is on a month-to-month basis.

14

NOTE 11: Fair Value

In accordance with authoritative guidance, the table below sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s financial liabilities that were subject to fair value measurements consist of a debt conversion feature that has been recorded as a liability based on Level 3 unobservable inputs. Alternate probabilities would have resulted in increases or decreases in the fair value of the debt conversion feature liability:

	Fair value Measurements at September 30, 2015
	Total		Level 1		Level 2		Level 3
Derivative liability
Debt conversion feature	$	1,578,715		—		—	$	1,578,715
Warrant liability		145,012						145,012
Total financial liabilities	$	1,723,727		—		—	$	1,723,727

	Fair value Measurements at December 31, 2014
	Total		Level 1		Level 2		Level 3
Derivative liability
Debt conversion feature	$	1,189,718		—		—	$	1,189,718
Total financial liabilities	$	1,189,718		—		—	$	1,189,718

The table below presents a summary of changes in the Company’s debt conversion feature liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months and nine months ended September 30, 2015 and September 30, 2014:

	Three Months Ended
	SEPT 30, 2015			SEPT 30, 2014
Debt conversion feature:
Beginning balance	$	(1,060,961	)	$	—
Additions		(829,483	)		—
Adjustments resulting from changes in fair value recognized in earnings		(267,023	)		—
Settlement through conversion of debt		578,750			—
Ending balance	$	(1,578,715	)	$	—

	Nine Months Ended
	SEPT 30, 2015			SEPT 30, 2014
Debt conversion feature:
Beginning balance	$	(1,189,718	)	$	—
Additions		(2,557,188	)		—
Adjustments resulting from changes in fair value recognized in earnings		1,227,354			—
Settlement through conversion of debt		940,837			—
Ending balance	$	(1,578,715	)	$	—

The table below presents a summary of changes in the Company’s warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months and nine months ended September 30, 2015 and September 30, 2014:

	Three Months Ended
	SEPT 30, 2015			SEPT 30, 2014
Warrant liability feature:
Beginning balance	$	—		$	—
Additions		(363,761	)		—
Adjustments resulting from changes in fair value recognized in earnings		218,749			—
Ending balance	$	(145,012	)	$	—

15

	Nine Months Ended
	SEPT 30, 2015			SEPT 30, 2014
Warrant liability feature:
Beginning balance	$	—		$	—
Additions		(363,761	)		—
Adjustments resulting from changes in fair value recognized in earnings		218,749			—
Ending balance	$	(145,012	)	$	—

The following table sets forth the Company’s valuation techniques and significant unobservable inputs used to determine fair value for significant Level 3 liabilities:

	Fair Value
	Assets		Liabilities		Valuation Technique(s)	Significant Unobservable Input	Range
Debt conversion feature liability
September 30, 2015	$	—	$	1,578,715	Binomial option pricing model	Expected term (years)	0.09 – 2.11
						Volatility	303.94%
December 31, 2014	$	—	$	1,189,718	Binomial option pricing model	Expected term (years)	0.71 – 2.58
						Volatility	271.84%
Warrant derivative liability
September 30, 2015	$	—	$	145,012	Binomial option pricing model	Expected term (years)	0.01 – 2.00
						Volatility	738.29%

Debt conversion feature liability

The fair value of the debt conversion feature liability includes the estimated timing of the events as well as the related probabilities of occurrence. The shorter/longer the period estimated to the event, the higher/lower the value of the debt conversion feature liability. The higher/lower the probability of occurrence, the higher/lower the value of the debt conversion feature liability.

Warrant liability

The fair value of the warrant liability includes the estimated timing of the events as well as the related probabilities of occurrence. The shorter/longer the period estimated to the event, the higher/lower the value of the warrant liability. The higher/lower the probability of occurrence, the higher/lower the value of the warrant liability.

NOTE 12: Stockholders’ deficit

Authorized share increase

On July 8, 2015, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to Articles of Incorporation to increase its authorized number of shares of common stock from 75,000,000 to 150,000,000. The Certificate of Amendment became effective on July 15, 2015

Common Stock

On December 31, 2014, the Company amended its employment contract with an executive officer of the Company. Per the agreement the Company granted 110,000 shares at a value of $1.65 per share or $181,500. These shares were issued on January 9, 2015.

On December 31, 2014, the Company granted 160,890 shares as a part of conversion of debt. The shares were valued based on the conversion price of $0.20 or $32,178 total value consideration of both principal and interest. These shares were issued on January 9, 2015.

On February 20, 2015, the Company entered into a consulting agreement. Per the terms of the agreement the Company issued 128,720 shares of the Company’s common stock at a fair value of $0.15 or $19,308.

On March 2, 2015, a holder of a note converted a portion of the note. The Company issued 12,077 shares at a value of $0.82 or $10,000.

On March 16, 2015, a holder of a note converted a portion of the note. The Company issued 13,889 shares at a value of $0.72 or $10,000.

On March 23, 2015, a holder of a note converted principal and interest of a note. The Company issued 15,500 shares at a value of $1.00 or $15,500.

16

On March 27, 2015, a holder of a note converted a portion of the note. The Company issued 14,620 shares at a value of $0.68 or $10,000.

On March 31, 2015, a holder of a note converted remaining interest on a note entered into on July 25, 2014. The Company issued 8,750 shares at a value of $0.20 or $1,750.

On April 9, 2015, the Company entered into four consulting agreements. Per the terms of the agreements the Company is to issue 10,000 shares, per agreement for a total issuance of 40,000 shares of the Company’s common stock at a fair value of $0.85 or $34,000.

On April 15, 2015, a holder of a note converted a portion of the note. The Company issued 33,333 shares at a value of $0.45 or $15,000.

On April 17, 2015, the Company entered into two consulting agreements. Per the terms of the agreements the Company is to issue 25,000 shares, per agreement for a total issuance of 50,000 shares of the Company’s common stock at a value of $1.01 or $50,500.

On April 23, 2015, a holder of a note converted a portion of the note. The Company issued 16,502 shares at a value of $0.606 or $10,000.

On April 27, 2015, the Company entered into a consulting agreement. Per the terms of the agreement the Company is to issue 150,000 shares of the Company’s common stock at a fair value of $0.85 or $127,500.

On May 1, 2015, the Company entered into a consulting agreement. Per the terms of the agreement the Company is to issue 30,000 shares of the Company’s common stock at a fair value of $0.55 or $16,500.

On May 5, 2015, a holder of a note converted a portion of the note. The Company issued 45,045 shares at a value of $0.222 or $10,000.

On May 19, 2015, a holder of a note converted a portion of the note. The Company issued 37,879 shares at a value of $0.132 or $5,000.

On May 21, 2015, a holder of a note converted a portion of the note. The Company issued 75,758 shares at a value of $0.132 or $10,000.

On May 22, 2015, the Company issued to members of the board of directors 1,200,000 shares of the Company’s common stock at a value of $0.45 or $540,000.

On June 1, 2015, a holder of a note converted a portion of the note. The Company issued 50,505 shares at a value of $0.198 or $10,000.

On June 4, 2015, the Company issued to two newly appointed members of the board of directors an aggregate of 200,000 shares, of the Company’s common stock at a value of $0.45 or $90,000, shares were issued on June 16, 2015.

On June 15, 2015, a holder of a note converted a portion of the note. The Company issued 79,366 shares at a value of $0.126 or $10,000.

On June 16, 2015, a holder of a note converted a portion of the note. The Company issued 380,952 shares at a value of $0.105 or $40,000.

On June 19, 2015, a holder of a note converted a portion of the note. The Company issued 47,620 shares at a value of $0.21 or $10,000.

On June 22, 2015, a holder of a note converted a portion of the note. The Company issued 65,873 shares at a value of $0.126 or $8,300.

On June 22, 2015, the Company entered into two consulting agreements. Per the terms of the agreements the Company is to issue one at 25,000 shares and one at 461,539, for the two agreements a total issuance of 486,539 shares of the Company’s common stock at a fair value of $0.28 or $136,231.

17

On June 25, 2015, a holder of a note converted a portion of the note. The Company issued 127,011 shares at a value of $0.1181 or $15,000.

On June 26, 2015, a holder of a note converted a portion of the note. The Company issued 180,181 shares at a value of $0.1181 or $20,000.

On June 29, 2015, a holder of a note converted a portion of the note. The Company issued 219,106 shares at a value of $0.1141 or $25,000.

Between May 27, 2015 and June 29, 2015, the Company entered into stock purchase agreements providing for the issuance of an aggregate of 3,776,153 shares of common stock plus warrants to purchase an aggregate of 3,776,153 shares of common stock for aggregate consideration of $490,900. The warrants are exercisable for two years from issuance at a 40% discount to the average closing price of our common stock in the 30 trading days prior to exercise. On August 20, 2015 the Company issued 3,776,153 shares of common stock from stock payable.

On July 6, 2015, a holder of a note converted a portion of the note. The Company issued 184,729 shares at a value of $0.0812 or $15,000.

On July 6, 2015, a holder of a note claimed a deficit. The Company issued 288,601 shares at a value of $0.066 or $19,048.

On July 6, 2015, a holder of a note claimed a deficit. The Company issued 59,885 shares at a value of $0.066 or $3,952.

On July 9, 2015, a holder of a note converted a portion of the note. The Company issued 333,334 shares at a value of $0.06 or $20,000.

On July 10, 2015, a holder of a note converted a portion of the note. The Company issued 307,468 shares at a value of $0.0549 or $16,880.

On July 11, 2015, a holder of a note converted the entire principal and interest. The Company issued 447,892 shares at a value of $0.13 or $58,226.

On July 17, 2015, the Company entered into an agreement with a service provider providing for the issuance of 150,000 shares of the Company’s common stock in consideration for the settlement of a dispute over a failure to pay $10,000 to the service provider.

On July 20, 2015, a holder of a note converted a portion of the note. The Company issued 367,884 shares at a value of $0.0398 or $15,000.

On July 21, 2015, a holder of a note converted a portion of the note. The Company issued 360,577 shares at a value of $0.0416 or $15,000.

On July 23, 2015, a holder of a note converted a portion of the note. The Company issued 177,401 shares at a value of $0.0354 or $6,280.

On July 23, 2015, a holder of a note claimed a deficit. The Company issued 1,060,606 shares at a value of $0.024 or $25,455.

On July 28, 2015, a holder of a note converted a portion of the note. The Company issued 416,667 shares at a value of $0.024 or $10,000.

On August 4, 2015, a holder of a note claimed a deficit. The Company issued 220,075 shares at a value of $0.024 or $5,282.

On August 5, 2015, a holder of a note converted a portion of the note. The Company issued 584,167 shares at a value of $0.024 or $14,020.

On August 10, 2015, a holder of a note converted a portion of the note. The Company issued 423,566 shares at a value of $0.0244 or $10,337.

18

On August 11, 2015, a holder of a note converted a portion of the note. The Company issued 423,566 shares at a value of $0.0244 or $10,335.

On August 12, 2015, the Company entered into a consulting agreement. Per the terms of the agreement the Company issued 120,000 shares of the Company’s common stock at a fair value of $0.11 or $13,200.

On September 8, 2015, a holder of a note converted a portion of the note. The Company issued 510,204 shares at a value of $0.0392 or $20,000.

On September 8, 2015, a holder of a note converted a portion of the note. The Company issued 1,333,333 shares at a value of $0.0273 or $36,400.

On September 9, 2015, a holder of a note converted a portion of the note. The Company issued 604,907 shares at a value of $0.0428 or $25,890.

On September 9, 2015, a holder of a note converted a portion of the note. The Company issued 340,380 shares at a value of $0.02526 or $8,598.

On September 9, 2015, a holder of a note converted a portion of the note. The Company issued 428,571 shares at a value of $0.07 or $30,000.

On September 10, 2015, the Company issued shares per consulting agreement entered into June 4, 2015. Per the terms of the agreement the Company issued 66,000 shares of the Company’s common stock at a fair value of $0.45 or $29,700.

On September 11, 2015, a holder of a note converted a portion of the note. The Company issued 701,347 shares at a value of $0.0312 or $21,882.

On September 14, 2015, a holder of a note converted a portion of the note. The Company issued 365,853 shares at a value of $0.0410 or $15,000.

On September 14, 2015, a holder of a note converted a portion of interest on note. The Company issued 121,951 shares at a value of $0.041 or $5,000.

On September 16, 2015, a holder of a note converted a portion of the note. The Company issued 827,815 shares at a value of $0.01812 or $15,000.

On September 16, 2015, a holder of a note converted a portion of the note. The Company issued 506,223 shares at a value of $0.02114 or $10,250.

On September 17, 2015, a holder of a note converted a portion of the note. The Company issued 1,100,994 shares at a value of $0.01812 or $19,950.

On September 21, 2015, a holder of a note converted all principal and interest on a note. The Company issued 919,375 shares at a value of $0.04 or $36,775.

On September 22, 2015, a holder of a note converted a portion of the note. The Company issued 1,213,768 shares at a value of $0.0138 or $16,750.

On September 22, 2015, a holder of a note converted a portion of the note. The Company issued 714,227 shares at a value of $0.0161 or $11,000.

On September 23, 2015, a holder of a note converted a portion of the note. The Company issued 731,422 shares at a value of $0.0273 or $17,198.32.

On September 24, 2015, a holder of a note converted a portion of the note. The Company issued 560,000 shares at a value of $0.025 or $14,000.

On September 24, 2015, a holder of a note converted a portion of the note. The Company issued 1,231,885 shares at a value of $0.0138 or $17,000.

19

On September 25, 2015, a holder of a note converted a portion of the note. The Company issued 750,000 shares at a value of $0.02 or $15,000.

On September 25, 2015, a holder of a note converted a portion of the note. The Company issued 471,000 shares at a value of $0.017 or $8,000.

On September 28, 2015, a holder of a note converted a portion of the note. The Company issued 837,500 shares at a value of $0.012 or $10,050.

Warrants

The fair value of each award discussed below is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on volatilities from the Company’s traded common stock. The risk-free rate for the periods within the contractual life of the option is based on the U.S. Treasury bond rate in effect at the time of the grant for bonds with maturity dates at the estimated term of the options.

September 30, 2015
Expected volatility	675.65	%
Weighted-average volatility	675.65	%
Expected dividends	0
Expected term (in years)	4.0
Risk-free rate	0.06	%

	Warrants		Weighted average price of warrants
Granted, at September 30, 2015		184,000	$	0.50
Total granted, at September 30, 2015		184,000	$	0.50

On June 3, 2015, the Company issued a convertible promissory note in the principal amount of $46,000 to a related party bearing interest at the rate of 6% per annum plus warrants to purchase an aggregate of 184,000 shares of common stock.

September 30, 2015
Expected volatility	738.29	%
Weighted-average volatility	736.29	%
Expected dividends	0
Expected term (in years)	2.0
Risk-free rate	0.64	%

	Warrants		Weighted average price of warrants
Granted, at September 30, 2015		700,000	$	0.15
Total granted, at September 30, 2015		700,000	$	0.15

	Warrants		Weighted average price of warrants
Granted, at September 30, 2015		3,776,153	$	0.14
Total granted, at September 30, 2015		3,776,153	$	0.14

Between May 27, 2015 and June 29, 2015, the Company entered into stock purchase agreements providing for the issuance of an aggregate of 3,776,153 shares of common stock plus warrants to purchase an aggregate of 3,776,153 shares of common stock for aggregate consideration of $490,900. The warrants are exercisable for two years from issuance at a 40% discount to the average closing price of the Company’s common stock in the 30 trading days prior to exercise. The Company has accounted for them as derivative instruments due to the variable strike price (see Note 11: Fair Value for additional details).

On July 15, 2015 and September 2, 2015, the Company entered into convertible promissory note agreements in the principal amount of $35,000 bearing interest at the rate of 12% per annum, plus warrants purchasing an aggregate of 700,000 shares of common stock. The warrants are exercisable for two years from issuance at a 40% discount to the average closing price of the Company’s common stock in the 30 trading days prior to exercise. The Company has accounted for them as derivative instruments due to the variable strike price (see Note 11: Fair Value for additional details).

20

September 30, 2015
Expected volatility	709.54	%
Weighted-average volatility	709.54	%
Expected dividends	0
Expected term (in years)	5.0
Risk-free rate	0.06	%

	Warrants		Weighted average price of warrants
Granted, at September 30, 2015		108,850	$	0.11
Total granted, at September 30, 2015		108,850	$	0.11

On August 14, 2015, the Company issued warrants to purchase an aggregate of 108,850 shares of the Company’s common stock. The warrants are exercisable on a cashless exercise basis for five years from the date of issuance. Based on the noted Black-Scholes calculation the Company estimated the weighted average price per warrants noted in the above table (108,850). As of September 30, 2015, the warrants have vested and we have expensed their value in the amount of $11,974.

Options

December 31, 2014
Expected volatility	297.60	%
Weighted-average volatility	297.60	%
Expected dividends	0
Expected term (in years)	1.5
Risk-free rate	0.06	%

Non vested options	Options		Weighted average price of Options
Granted, non-vested at December 31, 2014		35,000	$	1.65
Total granted, non-vested at December 31, 2014		35,000	$	1.65

On December 31, 2014, the Company entered into an amended employment agreement with its Chief Executive Officer providing for the grant of options to purchase 35,000 shares at an exercise price of $0.01 per share. The options have a term of 18 months (based on the terms of the agreement) and begin to vest on the first anniversary of the date of grant. As of September 30, 2015, the amount expensed is $28,860, and the unrecognized compensation cost is $28,860.

NOTE 13: Acquisitions

Acquisition of JD Field Services, Inc.

On February 24, 2014, the Company entered into a purchase and sale agreement with JD, its first acquisition in the oil and gas industry. JD provides oilfield services to the oil and gas industry primarily focused around those activities that are related to the drilling, operation(s) and maintenance of the well-site. They are licensed in all states west of the Mississippi River including Alaska to do trucking, but are focused primarily in the Rocky Mountain Region. Oilfield services provided include heavy haul, water haul, and rig moving services as well as equipment, supplies, and specialty long hauling services. JD also provides oil and gas equipment rental services, hot shot, roustabout services and construction site development services. JD also operates a fabrication division that builds special-order oil and gas equipment and trucks for customers.

As this is the Company’s first acquisition in the oil and gas industry, management did not have the historical knowledge to be able to estimate its intangible or goodwill items properly and therefore it hired a valuation consultant to estimate and value any intangible assets that may have been in existence as of the date of acquisition. The valuation report provided to management detailed information as to the carrying value of certain intangible assets as a part of the purchase of JD in February 2014. Management has accepted the valuation report and has determined in accordance with FASB ASC 805 there is an additional adjustment to record the additional purchase price allocation at February 24, 2014. The “measurement” period under FASB ASC 805 allows for retrospective adjustment of the business combination for one year from the acquisition date, or when all necessary information for the adjustment is available. After the measurement period, there is no revision allowed for subsequent information that is unrelated to the facts and circumstances existing at the time of the acquisition, except for error correction. Based on the measurement period the Company re-calculated the fair value of the business acquisition as follows:

21

	FEB 24, 2014
ASSETS
Cash	$	104,816
Accounts receivable		1,887,074
Prepaid expense		152,892
Fixed Assets		14,138,387
Intangible assets, net		283,000
Deferred financing fees, net		29,402
LIABILITIES
A/P, accrued, loans and LOC		(14,718,056	)
Fair Market Value of Net Identifiable Assets on 2/24/2014	$	1,877,515
Purchase Price
Less: stock for consideration		(413,000	)
Bargain purchase option	$	1,464,515
Less: Bargain purchase option value previously recognized		(1,620,071	)
Re-measurement balance of bargain purchase option as of  February 24, 2014	$	155,556

The Company has retrospectively adjusted the previously reported fair values to reflect these amounts as follows:

	As originally reported at SEPT 30, 2014			Measurement Period Adjustments			Retrospectively Adjusted SEPT 30, 2014
TOTAL OPERATING INCOME	$	430,843		$	—		$	430,843
OTHER (INCOME) / EXPENSE
Interest expense, net		720,281			—			720,281
Gain on extinguishment of debt		(10,329	)		—			(10,329	)
Gain on sale of fixed assets		(15,144	)					(15,144	)
Other (income) expense		(39,500	)					(39,500	)
Gain on bargain purchase of JD		(1,620,071	)		155,556	(1)		(1,464,515	)
TOTAL OTHER (INCOME) / EXPENSE		(964,763	)		155,556			(809,207	)
NET INCOME	$	1,395,606		$	155,556		$	1,240,050
BASIC (LOSS) INCOME PER SHARE	$	0.39		$	—		$	0.34
DILUTED (LOSS) INCOME PER SHARE	$	0.32		$	—		$	0.28
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING  BASIC		3,620,766			—			3,620,766
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING  BASIC		4,388,420			—			4,388,420

(1) Adjustment reflects reduction in gain on bargain purchase under re-measurement as per guidance of FASB ASC 805.

NOTE 14: Subsequent events

The Company has evaluated all subsequent events through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of September 30, 2015, and events which occurred subsequent to September 30, 2015 but were not recognized in the financial statements. Except as discussed below, the Company has determined that there were no subsequent events which required recognition, adjustment to or disclosure in the financial statements.

On October 5, 2015, a holder of a note converted a portion of the note. The Company issued 1,315,790 shares at a value of $0.0114 or $15,000.

On October 6, 2015, a holder of a note converted a portion of the note. The Company issued 1,561,890 shares at a value of $0.0128 or $20,000.

On October 7, 2015, a holder of a note converted a portion of the note. The Company issued 998,721 shares at a value of $0.0105 or $10,487.

On October 7, 2015, a holder of a note converted a portion of the note. The Company issued 1,601,667 shares at a value of $0.009 or $14,415.

On October 9, 2015, a holder of a note converted a portion of the note. The Company issued 1,500,000 shares at a value of $0.009 or $6,750.

22

On October 12, 2015, a holder of a note converted the remaining portion of the note. The Company issued 1,713,309 shares at a value of $0.009 or $15,419.

On October 12, 2015, the Company entered into a consulting agreement. Per the terms of the agreement the Company issued 200,000 shares of the Company’s common stock at a fair value of $0.02 or $4,000.

On October 13, 2015, a holder of a note converted a portion of the note. The Company issued 647,418 shares at a value of $0.009 or $5,827.

On October 13, 2015, a holder of a note converted a portion of the note. The Company issued 1,399,963 shares at a value of $0.0105 or $14,700.

On October 13, 2015, a holder of a note converted a portion of the note. The Company issued 1,616,684 shares at a value of $0.0124 or $20,000.

On October 19, 2015, a holder of a note converted a portion of the note. The Company issued 1,702,084 shares at a value of $0.0105 or $17,872.

On October 21, 2015, a holder of a note converted a portion of the note. The Company issued 1,697,518 shares at a value of $0.0124 or $21,000.

On October 21, 2015, a holder of a note converted a portion of the note. The Company issued 899,688 shares at a value of $0.012 or $10,796.

On October 26, 2015, a holder of a note converted a portion of the note. The Company issued 1,504,031 shares at a value of $0.0105 or $15,792.

On October 28, 2015, a holder of a note converted a portion of the note. The Company issued 1,700,681 shares at a value of $0.006 or $10,000.

On November 3, 2015, a holder of a note converted a portion of the note. The Company issued 1,925,019 shares at a value of $0.006 or $12,128.

On November 5, 2015, a holder of a note converted a portion of the note. The Company issued 2,347,418 shares at a value of $0.004 or $10,000.

On November 6, 2015, a holder of a note converted a portion of the note. The Company issued 3,007,067 shares at a value of $0.007 or $20,000.

On November 9, 2015, a holder of a note converted a portion of the note. The Company issued 1,933,319 shares at a value of $0.005 or $9,609.

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor for Forward-Looking Statements

The following discussion and analysis should be read together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

References to the “Company”, “we”, “our” or “us” include National Energy Services, Inc. and its consolidated subsidiaries, including JD Field Services, Inc. unless the context otherwise requires. References to “NES” are references solely to National Energy Services, Inc.

Executive Overview

National Energy Services, Inc. (“NES”) is a public holding company that intends to serve various market sectors. Currently our market concentration is in the petro-chemical industry. We plan to expand through carefully selected acquisitions. Our goal is to acquire companies with track records of long term, stable, and profitable operations. Each subsidiary operates as its own entity with current management retained. We believe this allows our management to focus on maintaining quality while increasing current levels of revenues and profitability.

On July 8, 2015, National Automation Services, Inc. (the “Company”), filed with the Secretary of State of the State of Nevada a Certificate of Amendment to Articles of Incorporation (the “Certificate of Amendment”) to change its name to “National Energy Services, Inc.” and increase its authorized number of shares of common stock from 75,000,000 to 150,000,000. The Certificate of Amendment becomes effective on July 15, 2015. The name change has been approved by Financial Industry Regulatory Authority (FINRA) and will become effective at the opening of trading on July 15, 2015 under a new ticker symbol “NESV”.

On February 24, 2014, we entered into a purchase and sale agreement with JD Field Services (“JD”), our first acquisition in the petro-chemical industry. JD provides oilfield services to the oil and gas industry primarily focused around those activities that are related to the drilling, operation(s) and maintenance of the well-site. They are licensed in all states west of the Mississippi River including Alaska to do trucking, but are focused primarily in the Rocky Mountain Region. Oilfield services provided include heavy haul, water haul, and rig moving services as well as equipment, supplies, and specialty long hauling services. JD also provides oil and gas equipment rental services, hot shot, roustabout services and construction site development services. JD also operates a fabrication division that builds special-order oil and gas equipment and trucks for customers.

As this is the Company’s first acquisition in the oil and gas industry, management did not have the historical knowledge to be able to estimate its intangible or goodwill items properly and therefore we hired a valuation consultant to estimate and value any intangible assets that may have been in existence as of the date of acquisition. The valuation report provided to management details information as to the carrying value of certain intangible assets as a part of the purchase of JD in February 2014. Management has accepted the valuation report and we have determined in accordance with FASB ASC 805 there is an additional adjustment to record the additional purchase price allocation at February 24, 2014. The “measurement” period under ASC 805 allows for retrospective adjustment of the business combination for one year from the acquisition date, or when all necessary information for the adjustment is available. After the measurement period, there is no revision allowed for subsequent information that is unrelated to the facts and circumstances existing at the time of the acquisition, except for error correction. Management recognizes that it had this one year period to apply corrective changes from the bargain purchase to intangible and tangible asset value, and as such we have re-measured the intangible asset value and the gain on our bargain purchase which has been reflected in the fiscal year ended December 31, 2014 and for the nine months ended September 30, 2014.

We continue to evaluate other companies for acquisition. The evaluation process is conducted by our acquisition board and the companies are evaluated on the following attributes:

· Geographic area

· Synergies with our current core businesses

· Niche marketing

· Areas of expertise

· Price/earnings ratio

· Benefit: Customer base, proprietary products, technology, and talent base.

24

We use the following criteria to evaluate acquisition opportunities:

· Established businesses with a proven track record: We seek established businesses with a proven operating track record strong financial performance, positive operating results, established or growing contract backlogs, and/or the potential for positive operating cash flow. We consider the experience and skill of management and whether other talented personnel exist within the company or the local market.

· Opportunity for growth of our industrial business: We look for businesses with an established base of industrial end users, to provide us an opportunity to increase synergism of our portfolio as well as market diversification.

· Opportunity to purchase and assimilate technologies and infrastructures to further aid our operational, technological, and overhead objectives.

The criteria identified above are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, on the above factors as well as other considerations deemed relevant by our management. Accordingly, we may enter into a business combination that does not meet any or all of these criteria if we believe that it has the potential to create significant stockholder value.

Critical Accounting Policies

Use of Estimates

The methods, estimates, and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe our critical accounting policies are those described below.

Property, Plant and Equipment

As required by the Property, Plant and Equipment Topic FASB ASC, the Company is required to use a predetermined method in calculating depreciation expense. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally ten/fifteen years for heavy machinery, five years for vehicles, two to three years for computer software/hardware and office equipment and three to seven years for furniture, fixtures and office equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives. Upon the sale or retirement of property or equipment, the cost and related accumulated depreciation or amortization is removed from the Company’s balance sheet with the resulting gain or loss reflected in the Company’s results of operations. Maintenance costs are expensed as incurred. Due to the nature of the equipment, major repairs are capitalized as they reflect an adjustment to the overall value of the equipment and its useful life can be extended.

In evaluating the salvage value service equipment we use a standard of, Machinery and Equipment - Worth approximately 10 - 30% of purchase price after 10-15 years depending on the asset. Vehicles - Worth approximately 20% of purchase price after 10-15 years depending on the asset. These salvage values are based on industry averages for the type of machinery and equipment used in oilfield services.

Allowance for Doubtful Accounts

As required by the Receivables Topic of FASB ASC, the Company is required to use a predetermined method in calculating the current value for its bad debt on overall accounts receivable.

We estimate our accounts receivable risks to provide allowances for doubtful accounts accordingly. We believe that our credit risk for accounts receivable is limited because of the way in which we conduct business largely in the areas of contracts. Accounts receivable includes the accrual of work in process for project contracts and field service revenue. We recognize that there is a potential of not being paid in a 12 month period. Our evaluation includes the length of time receivables are past due, adverse situations that may affect a contract’s scope to be paid, and prevailing economic conditions. We assess each and every customer to conclude whether or not remaining balances outstanding need to be placed into allowance and then re-evaluated for write-off. We review all accounts to ensure that all efforts have been exhausted before noting that a customer will not pay for services rendered. The evaluation is inherently subjective and estimates may be revised as more information becomes available.

25

Revenue Recognition

As required by the Revenue Recognition Topic of FASB ASC, we are required to use predetermined contract methods in determining the current value for revenue.

Service Contracts 

Service revenue is recognized on a completed project basis – we invoice the client when it has completed the services, thereby, ensuring the client is legally liable to us for payment of the invoice. On service contracts, revenue is not recognized until the services have been performed.

In all cases, revenue is recognized as earned by us. As the client becomes liable to us for services provided, as defined in the agreement, the client is then invoiced and revenue is accordingly recognized and recorded.  We do not recognize or record any revenues for which we do not have a legal basis for invoicing or legally collecting.

Potential Derivative Instruments

We periodically assess our financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt and common stock equivalents in excess of available authorized common shares.

We have determined that the conversion features of our debt instruments are derivative instruments because can be exercised at the option of the holder for indeterminate number of shares.

Summary of Consolidated Results of Operations

Three Months Ended September 30, 2015 compared to the Three Months Ended September 30, 2014

	September 30,
	(unaudited)
	2015			2014			% Change
Revenue	$	3,615,779		$	5,466,073			(34	)%
Cost of revenue		3,426,524			4,230,825			(19	)%
Total gross profit		189,255			1,235,248			(85	)%
Operating expenses
Selling, general and administrative expenses		485,875			641,676			(24	)%
Professional fees and stock based compensation		453,910			149,752			203	%
Total operating expenses		939,785			791,428			19	%
Operating (loss) income		(750,530	)		443,820			(269	)%
Other (income) expense
Other expense, net		(33,009	)		(39,500	)		(16	)%
Change in fair value of derivative liabilities		48,274			--			100	%
Gain on debt extinguishment		(225,732	)		--			100	%
Loss (gain) on sale of fixed assets		296,093			(15,144	)		(2,055	)%
Interest expense, net		1,861,931			306,504			507	%
Total other (income) expense		1,947,557			251,860			673	%
Net (loss) income	$	(2,698,087	)	$	191,960			(1,506	)%

Revenue

Revenues primarily consisted of oilfield services/oilfield hauling services revenue. Revenue decreased by $(1,850,294) to $3,615,779 or (34)% during the three months ended September 30, 2015 compared to $5,466,073 during the three months ended September 30, 2014. Our revenues are derived exclusively from JD Field Services (“JD”) operations which we acquired on February 24, 2014. Revenues decreased as a result of the downturn in the oil & gas industry. The downturn in operations affected the subsidiaries revenues for the three months of the third quarter.

26

Cost of Revenue

Costs of revenue consist of labor and overhead for services provided by JD. Cost of revenue for the three months ended September 30, 2015 decreased by $(804,301) or (19) % to $3,426,524 during the three months ended September 30, 2015, compared to $4,230,825 the three months ended September 30, 2014. We reduced several key components of our cost of revenue as the industry went through a down turn.

Operating Expenses

Selling, general and administrative expense: Selling, general and administrative expenses (“SG&A”) consist of sales, general and administrative operating expenses. It also consists of payroll expenses for officer personnel. SG&A for the three months ended September 30, 2015 decreased by $155,801 or 24% to $485,875 compared to $641,676 during the three months ended September 30, 2014. The decrease was primarily attributable to bad debt expense.

Professional fees and related expenses: Professional fees and related expenses consist of accounting, legal and related consulting fees associated with our ongoing business strategy efforts. Professional fees and related expenses for the three months ended September 30, 2015 increased by $304,158 or 203% to $453,910 compared to $149,752 during the three months ended September 30, 2014. The increase is primarily due to expenses related to auditing fees, legal fees and consulting fees for investment relations and increases in share based compensation expense.

Other Expense

Interest expense: Interest expense consists of interest on our outstanding debt. For the three months ended September 30, 2015, our interest expense increased by $1,555,427, or 507%, to $1,861,931 compared to $306,504 to the three months ended September 30, 2014. The increase was primarily attributable to the increase in debt from our subsidiary JD, which we acquired on February 24, 2014, our convertible debt, and amortization of our debt discount.

Other expenses: Increases in other expenses are also related to a loss on sale of fixed assets of $296,093 during the three months ended September 30, 2015, a gain on debt extinguishment of $225,732 and a change in fair value of derivative liabilities of $48,274. During the three months ended September 30, 2014 there was a gain on the sale of fixed assets of $15,144, although during the same period there was no gain on debt extinguishment or change in fair value of derivative liabilities. The loss on the sale of fixed assets was attributable to the reduction in value of vehicles and machinery sold. The gain on debt extinguishment was attributable to our write off of prior debt. Change in fair value of derivative liabilities is attributable to the valuation of our debt through derivative accounting in which changes in the derivative liabilities are “re-measured” during the period and marked to market to allocate the fair value of the liabilities. As such gains/loss in expense is allocated every quarter to represent this fair value.

Nine Months Ended September 30, 2015 compared to the Nine Months Ended September 30, 2014

	September 30,
	(unaudited)
	2015			2014			% Change
Revenue	$	11,535,486		$	11,887,589			(3	)%
Cost of revenue		10,234,261			9,810,323			4	%
Total gross profit		1,301,225			2,077,266			(37	)%
Operating expenses
Selling, general and administrative expenses		1,438,431			1,349,136			7	%
Professional fees and stock based compensation		2,813,926			297,287			847	%
Total operating expenses		4,252,357			1,646,423			158	%
Operating income (loss)		(2,951,132	)		430,843			(785	)%
Other (income) expense
Other expense, net		(33,009	)		(39,500	)		(16	)%
Gain on acquisition		--			(1,464,515	)		(100	)%
Gain on debt extinguishment		(225,732	)		(10,329	)		2,085	%
Change in fair value of derivative liabilities		(1,446,103	)		--			100	%
Loss on sale of fixed assets		296,093			(15,144	)		(2,055	)%
Interest expense, net		4,266,118			720,281			492	%
Total other expense (income)		2,857,367			(809,207	)		(453	)%
Net (loss) income	$	(5,808,499	)	$	1,240,050			(568	)%

Revenue

Revenues primarily consisted of oilfield services/oilfield hauling services revenue. Revenue decreased by $352,103 of $11,535,486 or (3)% during the nine months ended September 30, 2015, compared to $11,887,589 during the nine months ended September 30, 2014. Revenues for the Company are derived exclusively from JD Field Services (“JD”) operations which we acquired on February 24, 2014. Revenues decreased as a result of the downturn in the oil & gas industry. The downturn in operations affected the subsidiaries revenues for the nine months of the year.

27

Cost of Revenue

Costs of revenue consist of labor and overhead for services provided by JD. Cost of revenue for the nine months ended September 30, 2015, increased by $423,938 or 4% to $10,234,261 during the nine months ended September 30, 2015, compared to $9,810,323 the nine months ended September 30, 2014, proportional to the revenues derived from operations.

Operating Expenses

Selling, general and administrative expense: Selling, general and administrative expenses (“SG&A”) consist of sales, general and administrative operating expenses. It also consists of payroll expenses for officer personnel. SG&A for the nine months ended September 30, 2015, increased by $89,295 or 7% to $1,438,431 compared to $1,349,136 during the nine months ended September 30, 2014. The increase was primarily attributable to bad debt expense and personnel expenses for the current nine months.

Professional fees and stock based compensation: Professional fees and related expenses consist of accounting, legal and related consulting fees associated with our ongoing business strategy efforts. Professional fees and related expenses for the nine months ended September 30, 2015 increased by $2,516,639 or 847% to $2,813,926 compared to $297,287 during the nine months ended September 30, 2014. The increase is primarily due to expenses related to auditing fees, legal fees and consulting fees for investment relations and increases in share based compensation expense.

Other Expense

Interest expense: Interest expense consists of interest on our outstanding debt, for the nine months ended September 30, 2015, we had an increase in interest expense by $3,545,837, or 492%, to $4,266,118 compared to $720,281 for the nine months ended September 30, 2014. The increase was primarily attributable to amortization of our debt discount.

Other expenses: Increases in other expenses are also related to gain on disposal of debt $(225,732) during the nine months ended September 30, 2015 a loss on disposal of fixed assets of $296,093 during the nine months ended September 30, 2015. During the nine months ended September 30, 2014 there was a gain on the sale of fixed assets of $15,144, and during the same period there was a gain on debt extinguishment. There was no change in fair value of derivative liabilities during the nine months ended September 30, 2014. The loss on the sale of fixed assets was attributable to the reduction in value of vehicles and machinery sold. The gain on debt extinguishment was attributable to our write off of prior debt. Change in fair value of derivative liabilities is attributable to the valuation of our debt through derivative accounting in which changes in the derivative liabilities are “re-measured” during the period and marked to market to allocate the fair value of the liabilities. As such gains/loss in expense is allocated every quarter to represent this fair value.

Liquidity and Capital Resources/ Plan of Operation for the Next Twelve Months

Our principal liquidity requirements are to finance current operations, fund capital expenditures, including any future acquisitions, and to service our debt. Since our acquisition of JD, our principal source of liquidity has been cash generated by JD’s operations. Our other sources of liquidity have been funds generated from debt and equity issuances of our securities. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements for at least the next twelve months.

With our acquisition of JD, our revenues decreased to $11,535,486 for the nine months ended September 30, 2015 from $11,887,589 during the same period in 2014. This 3% decrease over our previous period is attributable to the industry down-turn.

To help recapitalize the Company, we are pursuing a two-step approach that we expect to continue during 2015 that includes the following:

· Seeking out further of acquisition candidates;

· Refinancing our balance sheet;

Our ability to continue in our acquisition strategy and purchase established businesses with a proven track record is vital to the overall growth strategy of the Company. We continue to seek out established businesses with a proven operating track record strong financial performance, positive operating results, established or growing contract backlogs, and/or the potential for positive operating cash flow.

28

The following table summarizes our cash flows during the nine months ended September 30, 2015 and 2014:

	SEPT 30, 2015			SEPT 30, 2014
Net cash provided by operating activities	$	187,452		$	1,918,090
Net cash provided by investing activities	$	53,671		$	12,709
Net cash  (used in) financing activities	$	(284,144	)	$	(1,861,766	)

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the nine months ended September 30, 2015 was approximately $187,452 compared to $1,918,090 during the nine months ended September 30, 2014. The decrease in net cash used in operating activities was primarily due to an increase in payment of consulting expenses and our current net loss, offset by decreases in our prepaid expenses.

Net Cash Provided by Investing Activities

Net cash provided by investing activities during the nine months ended September 30, 2015 was $53,671 compared to $12,709 during the nine months ended September 30, 2014. The increase is due to the sale of fixed assets.

Net Cash Used in Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2015 was $284,144 compared to $(1,861,766) during the nine months ended September 30, 2014. The decrease is attributable to proceeds in sale of stock, issuance of notes in the nine months ended September 30, 2015 offset by repayments of outstanding notes in the nine months ended September 30, 2015.

For the nine months ended September 30, 2015, the Company had a working capital deficit of $(11,020,704) and a stockholder’s deficit of $(3,868,590), which raises substantial doubt regarding the Company’s ability to continue as a going concern. We expect that we will need to increase our liquidity and capital resources in order to maintain the profitability of JD and execute our business strategy of acquiring new businesses. Because the outcome of our expansion activities is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete future acquisitions. In addition, other unanticipated costs may arise. As a result of these and other factors currently unknown to us, we will need to seek additional funds, through public or private equity or debt financings or other sources, such as strategic partnerships and alliances. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our expansion activities or other activities.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

29

As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting.

In our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, which was originally filed on May 20, 2015, our Chief Executive Officer and Chief Financial Officer concluded that our valuation of our subsidiaries intangible assets were valued appropriately. Subsequent to that evaluation, management identified the material weaknesses in internal control over financial reporting, described below.

Material Weaknesses in Internal Control over Financial Reporting

We identified the following material weaknesses that existed at March 31, 2015 in addition to the material weaknesses identified in our Annual Report on Form 10-K for the year ended 2014. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design and maintain effective controls over the accounting for business combinations. In particular we did not perform adequate review of the accounting and measurement of certain intangible assets acquired through the purchase of JD Field Services, resulting in a restatement of previously issued interim financial statements as of March 31, 2015 and for the three-month periods ended March 31, 2015 and 2014.

We did not maintain effective controls over the accounting for convertible debt. In particular, we did not perform adequate review of the accounting and measurement of the debt conversion feature derivative liabilities in connection with issuance of certain convertible debt, resulting in a restatement of previously issued annual financial statements as of and for the year ended December 31, 2014 and the interim financial statements as of March 31, 2015 and for the three-month periods ended March 31, 2015 and 2014.

These material weaknesses did not result in a material misstatement to the Company’s consolidated financial statements for the quarter ended September 30, 2015. However, these material weaknesses, if unremediated, could, in a future reporting period, result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected by the controls.

Plan for Remediation of the Material Weaknesses

This material weakness did result in a material misstatement to our consolidated financial statements for the year ended December 31, 2014 and for the quarter ended March 31, 2015. We have implemented and are continuing to implement a number of measures to address the material weaknesses identified. Specifically, we are designing additional controls to review the inputs and results of our work of specialists and the identification of events and changes in circumstances that may indicate potential impairment of intangible assets including goodwill. In addition, we are designing additional controls over documentation and review of the accounting for convertible debt and the documentation and review of the inputs and results of our work of specialists.

Changes in Internal Controls

We have implemented and are continuing to implement a number of measures to address the material weaknesses identified. Specifically, we are designing additional controls over documentation and review of the inputs and results of our work of specialists and the identification of events and changes in circumstances that may indicate potential impairment of intangible assets including goodwill. These controls are expected to include the implementation of additional review activities by qualified personnel and additional documentation and support of conclusions with regard to accounting for business combinations and goodwill impairment calculations. The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. As we continue to evaluate and take actions to improve our internal controls over financial reporting, we may determine to take additional actions to address control deficiencies or determine to modify certain of the remediation measures described above. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses.

30

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors 

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Except as set forth below, there were no sales of unregistered securities during the quarter ended September 30, 2015 other than those transactions previously reported to the SEC in our periodic filings and current reports on Form 8-K.

Convertible Notes and Warrants

On September 2, 2015, the Company issued convertible promissory notes in the aggregate principal amount of $25,000 bearing interest at the rate of 10% per annum, which a note in the principal amount of $5,000 was issued to Jeffrey Krueger, a holder of 5% or more of our common stock. In connection with the issuance of the notes, we issued warrants to purchase an aggregate of 700,000 shares of our common stock exercisable for two years from issuance at a 40% discount to the average closing price of our common stock in the 30 trading days prior to exercise. The notes mature nine months from the date of issuance and bear interest at the rate of 10% per annum. On or after six months from the date of the notes, notes in the principal amount of $20,000 may be converted into shares of our common stock at a fixed rate of $0.05 per share, subject to adjustment in certain cases and a note in the principal amount of $5,000 may be converted into shares of our common stock at a fixed rate of $0.05 per share. The notes may be prepaid upon ten business days advance notice at a premium of 135%. The notes include certain negative covenants including restrictions on issuance of indebtedness, incurring a lien, amending charter documents, repurchasing capital stock, making a distribution, disposing of significant assets outside the ordinary course, making advances and loans and entering into related party transactions, subject to certain customary exceptions. The notes include customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In addition, it shall constitute an event of default under the notes if we are delinquent in our filings with the SEC, cease to be quoted on the OTCQB, or are subject to a DTC chill. In an event of default, the note may become immediately due and payable at premiums to the outstanding principal and interest. The notes also provide that if shares issuable upon conversion of the note are not timely delivered in accordance with the terms of the note then we shall be subject to certain cash penalties that increase proportionally to the duration of the delinquency.

On September 9, 2015, we issued a convertible promissory note in the principal amount of $36,000 reflecting an original issue discount of $5,500. The note matures one-year from the date of issuance and bears interest at the rate of 6% per annum. On or after six months of the date of the note, the note may be converted into shares of our common stock at a conversion price equal to a 47% discount on the average three lowest closing bid prices in the twenty trading days prior to conversion, increasing to 62% if we are not DWAC eligible at the time of conversion. In addition, the conversion price is subject to certain adjustments including mergers. The note may be prepaid during the first 180 days following issuance at premiums ranging from 115% to 140%. The note includes certain negative covenants including restrictions on distributions, repurchases of capital stock, and dispositions of significant assets outside the ordinary course and making advances and loans subject to certain customary exceptions. The note includes customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In addition, it shall constitute an event of default under the note if we are delinquent in our filings with the SEC, cease to be quoted on the OTCQB, restate our financials or our stock price falls below $0.0026. In an event of default, the note may become immediately due and payable at premiums to the outstanding principal and interest may increase to 18% per annum. The note also provides that if shares issuable upon conversion of the note are not timely delivered in accordance with the terms of the note then we shall be subject to certain cash penalties that increase proportionally to the duration of the delinquency.

On September 30, 2015, we issued a convertible promissory note in the principal amount of $30,000. The note matures nine months from the date of issuance and bears interest at the rate of 8% per annum. On or after six months of the date of the note, the note may be converted into shares of our common stock at a conversion price equal to a 42% discount on the average three lowest closing bid prices in the twenty trading days prior to conversion. In addition, the conversion price is subject to certain adjustments including mergers. The note may be prepaid during the first 180 days following issuance at premiums ranging from 115% to 140%. The note includes certain negative covenants including restrictions on distributions, repurchases of capital stock, the incurrence of debt, dispositions of significant assets outside the ordinary course and making advances and loans subject to certain customary exceptions. The note includes customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In addition, it shall constitute an event of default under the note if we are delinquent in our filings with the SEC, cease to be quoted on the OTCQB, or restate our financials. In an event of default, the note may become immediately due and payable at premiums to the outstanding principal and interest may increase to 22% per annum. The note also provides that if shares issuable upon conversion of the note are not timely delivered in accordance with the terms of the note then we shall be subject to certain cash penalties that increase proportionally to the duration of the delinquency.

The foregoing are summaries of certain terms and agreements discussed herein. These summaries do not purport to be complete and are qualified in their entirety by reference to the full text of agreements and notes, which are filed as exhibits to this Quarterly Report on Form 10-Q for the period ended September 30, 2015.

The securities were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

31

Conversion of Notes

Between August 13, 2015 and September 30, 2015, holders of convertible promissory notes converted an aggregate principal and interest amount of $497,754 into an aggregate of 16,207,326 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.

Consultant Issuances

On August 12, 2015, we entered into a consulting agreement. Per the terms of the agreement we issued 120,000 shares of our common stock.

On August 14, 2015, we issued warrants to purchase an aggregate of 108,850 shares of the Company’s common stock pursuant to an agreement entered into with a registered broker dealer dated July 15, 2013. The warrants are exercisable on a cashless exercise basis for five years from the date of issuance.

On September 11, 2015, we issued shares pursuant to a finders agreement with a registered broker-dealer dated June 4, 2015. Per the terms of the agreement, we issued 66,000 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The following disclosure would have otherwise been filed on Form 8-K under the headings “Item 1.01 Entry into Material Definitive Agreement”, “Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant” and “Item 3.02 Unregistered Sales of Equity Securities”.

Convertible Notes

On June 2, 2015, we issued a convertible promissory note in the principal amount of $45,000 to an assignee of a note in like principal amount issued on October 20, 2014. The note matures one-year from the date of issuance and bears interest at the rate of 5% per annum. The note may be converted into shares of the Company’s common stock at a 40% discount to market price of Company common stock, subject to certain anti-dilution protection during the 40 trading days following delivery of the conversion shares upon a conversion. The note includes customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In an event of default, the note may become immediately due and payable plus a $500 per day penalty. As of September 30, 2015 the note has been fully converted and no additional debt is owed.

Conversion of Notes

Between October 1, 2015 and November 9, 2015, holders of convertible promissory notes converted an aggregate principal and interest amount of $245,396 into an aggregate of 29,072,267 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.

Consultant Issuances

October 12, 2015, we entered into an agreement with a service provider providing for the issuance of 200,000 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.

32

Item 6. Exhibits

Exhibit No.	Description of Exhibit
10.1	Convertible Promissory Note dated June 2, 2015 issued to Blackbridge Capital
10.2	Convertible Promissory Note dated September 2, 2015 issued to Eugene Ingles
10.3	Convertible Promissory Note dated September 2, 2015 issued to Jeffrey Krueger
10.4	Convertible Promissory Note dated September 2, 2015 issued to Alan Stamper
10.5	Convertible Promissory Note dated September 2, 2015 issued to AMJ Global, LLC
10.6	Convertible Promissory Note dated September 9, 2015 issued to Crown Bridge Partners, LLC
10.7	Convertible Promissory Note dated September 30, 2015 issued to Vis Vires
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Company’s Quarterly Report on form 10-Q for the quarter ended June 30, 2015 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statement of Stockholders' Deficit, (iv) the Consolidated Statements of Cash Flow, and (iv) Notes to Consolidated Financial Statements.

33

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NATIONAL ENERGY SERVICES, INC.
	(Registrant)
Date:     November 16, 2015
	By:	/s/ Robert W. Chance
		Name:  Robert W. Chance
		Title: President and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Jeremy W. Briggs
		Name:  Jeremy W. Briggs
		Title: Chief Financial Officer
		(Principal Financial Officer)

34