8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: November 27, 2012

Date of Earliest Event Reported: September 11, 2012

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-53619	94-3439569
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1331 Gemini Street Suite 250 Houston, Texas 77058
(Address of principal executive offices) (Zip Code)
(866) 660-8156
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On September 12, 2012, Vertex Energy, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Report”) to report, among other things, the closing of the Company’s acquisition of the real property assets of B & S Cowart Family L.P., a Texas limited partnership and substantially all of the assets, liabilities and operations of Vertex Holdings, L.P. (“Holdings”), which was in the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants (collectively, the “Acquired Business”).  At that time, the Company stated in the Original Report that it intended to file the required financial statements and pro forma financial information within 71 days from the date that such report was required to be filed. By this Amendment No. 1 to the Original Report, the Company is amending and restating Item 9.01 thereof to include the required financial statements and pro forma financial information.  This Current Report on Form 8-K does not amend or modify the Original Report, except as to Item 9.01.

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Item 9.01.   Financial Statements and Exhibits

(a)           Financial Statements of Businesses Acquired.

(1) The Audited Balance Sheet of the Acquired Business as of December 31, 2011 and 2010, and Audited Statement of Operations for the years ended December 31, 2011 and 2010, and the notes thereto, are filed as Exhibit 99.1 to this Form 8-K/A.

(2) The Unaudited Balance Sheet of the Acquired Business as of June 30, 2012, and the Unaudited Statement of Operations for the six months ended June 30, 2012 and 2011, and the notes thereto, are filed as Exhibit 99.2 to this Form 8-K/A.

(b)           Pro Forma Financial Information.

(1) The Unaudited Pro Forma Combined Balance Sheet of Vertex Energy, Inc. as of June 30, 2012, Unaudited Pro Forma Combined Statement of Operations for the six months ended June 30, 2012, and Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2011, are filed as Exhibit 99.3 to this Form 8-K/A.

(d)           Exhibits

Number	Description of Exhibits
2.1(1)	Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of August 14, 2012
2.2(2)	First Amendment to Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of September 11, 2012
10.1(2)	Credit Agreement between Vertex Energy, Inc., a borrower and Bank of America, N.A. as lender, dated August 31, 2012
10.2(2)	$10,000,000 Revolving Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.3(2)	$8,500,000 Term Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.4(2)	Form of Security Agreement dated August 31, 2012
10.5(2)	Corporate Guaranty in favor of Bank of America, N.A., dated August 31, 2012
99.1*	Audited Balance Sheet of the Acquired Business as of December 31, 2011 and 2010, and Audited Statement of Operations for the years ended December 31, 2011 and 2010, and the notes thereto
99.2*	Unaudited Balance Sheet of the Acquired Business as of June 30, 2012, and the Unaudited Statement of Operations for the six months ended June 30, 2012 and 2011, and the notes thereto
99.3*	Unaudited Pro Forma Combined Balance Sheet as of June 30, 2012, Unaudited Pro Forma Combined Statement of Operations for the six months ended June 30, 2012, and Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2011
99.4(2)	Press release, dated September 12, 2012, issued by Vertex Energy, Inc. (furnished pursuant to Item 7.01) announcing the entry into the Credit Agreement and the closing of the Unit Purchase Agreement

(1)    Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on August 15, 2012, and incorporated herein by reference.

(2)    Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on September 12, 2012, and incorporated herein by reference.

* Filed herewith.

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SIGNATURES

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

	VERTEX ENERGY, INC.
Date: November 27, 2012	By:   /s/  Chris Carlson
	Chris Carlson
	Chief Financial Officer

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EXHIBIT INDEX

Number	Description of Exhibits
2.1(1)	Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of August 14, 2012
2.2(2)	First Amendment to Unit Purchase Agreement by and among Vertex Energy, Inc., Vertex Acquisition Sub, LLC, Vertex Holdings, L.P. and B & S Cowart Family L.P. dated as of September 11, 2012
10.1(2)	Credit Agreement between Vertex Energy, Inc., a borrower and Bank of America, N.A. as lender, dated August 31, 2012
10.2(2)	$10,000,000 Revolving Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.3(2)	$8,500,000 Term Note by Vertex Energy, Inc., in favor of Bank of America, N.A., dated August 31, 2012
10.4(2)	Form of Security Agreement dated August 31, 2012
10.5(2)	Corporate Guaranty in favor of Bank of America, N.A., dated August 31, 2012
99.1*	Audited Balance Sheet of the Acquired Business as of December 31, 2011 and 2010, and Audited Statement of Operations for the years ended December 31, 2011 and 2010, and the notes thereto
99.2*	Unaudited Balance Sheet of the Acquired Business as of June 30, 2012, and the Unaudited Statement of Operations for the six months ended June 30, 2012 and 2011, and the notes thereto
99.3*	Unaudited Pro Forma Combined Balance Sheet as of June 30, 2012, Unaudited Pro Forma Combined Statement of Operations for the six months ended June 30, 2012, and Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2011
99.4(2)	Press release, dated September 12, 2012, issued by Vertex Energy, Inc. (furnished pursuant to Item 7.01) announcing the entry into the Credit Agreement and the closing of the Unit Purchase Agreement

(1)    Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on August 15, 2012, and incorporated herein by reference.

(2)    Filed as an exhibit to the Company’s Report on Form 8-K, filed with the Commission on September 12, 2012, and incorporated herein by reference.

* Filed herewith.

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EX-99.1

Exhibit 99.1

VERTEX HOLDINGS, L.P.

FINANCIAL STATEMENTS

Years Ended December 31, 2011 and 2010

CONTENTS
	Page
Report of Independent Registered Public Accounting Firm	1
Financial Statements:
Consolidated Balance Sheets	2
Consolidated Statements of Income and Partners’ Capital	3
Consolidated Statements of Cash Flows	4
Notes to Consolidated Financial Statements	5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Vertex Holdings, L.P.

We have audited the accompanying consolidated balance sheets of Vertex Holdings, L.P. (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of income and partners’ capital, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vertex Holdings, L.P. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP

Houston, Texas

November 23, 2012

1

VERTEX HOLDINGS, L. P.

CONSOLIDATED BALANCE SHEETS

($ in thousands)

	December 31,		December 31,
	2011		2010
ASSETS
Current assets
Cash and cash equivalents	$	1,460	$	373
Accounts receivable:
Trade		921		646
Related parties		724		408
Inventory		145		162
Prepaid expenses and other current assets		182		220
Total current assets		3,432		1,809
Noncurrent assets
Fixed assets, net		6,324		6,310
Goodwill		1,800		1,800
Total noncurrent assets		8,124		8,110
TOTAL ASSETS	$	11,556	$	9,919
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Current maturities – long-term debt	$	1,022	$	5,294
Accounts payable and accrued expenses		1,168		1,239
Line of credit		-		162
Other current liabilities		86		-
Notes payable – related parties		34		34
Total current liabilities		2,310		6,729
Long-term debt, less current maturities		3,806		393
Total liabilities		6,116		7,122
Commitments and contingencies
Partners’ capital		5,440		2,797
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	11,556	$	9,919

See accompanying notes to the consolidated financial statements.

2

VERTEX HOLDINGS, L. P.

CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS’ CAPITAL

($ in thousands)

	2011			2010
Revenues	$	32,495		$	20,679
Cost of revenues		21,676			15,174
Gross profit		10,819			5,505
Selling, general and administrative expenses		6,392			5,414
Income from operations		4,427			91
Other income (expense)
Other income		22			143
Interest expense		(148	)		(286	)
Total other income (expense)		(126	)		(143	)
Net income (loss) before noncontrolling interests		4,301			(52	)
Net income (loss) attributable to noncontrolling interests		9			(15	)
Net income (loss)		4,292			(37	)
Partners’ capital, beginning of year		2,797			3,031
Less: distributions to partners		(1,649	)		(197	)
Partners’ capital, end of year	$	5,440		$	2,797

See accompanying notes to the consolidated financial statements.

3

VERTEX HOLDINGS, L. P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

	2011			2010
Cash flows operating activities
Net income (loss)	$	4,292		$	(37	)
Adjustments to reconcile net income (loss) to cash
provided by operating activities
Depreciation and amortization		766			760
Gain on disposal of fixed assets		(22	)		(23	)
Changes in assets and liabilities
Accounts receivable – trade		(275	)		626
Accounts receivable – related parties		(316	)		(19	)
Inventory		17			3
Prepaid expenses  and other current assets		38			114
Accounts payable and accrued expenses		(71	)		(445	)
Net cash provided by operating activities		4,429			979
Cash flows from investing activities
Purchase of fixed assets		(781	)		(590	)
Proceeds from sale of fixed assets		22			32
Proceeds from related party note payable		-			965
Net cash provided (used) by investing activities		(759	)		407
Cash flows from financing activities
Line of credit, net		(162	)		(139	)
Proceeds from long-term debt		5,082			-
Payments on long-term debt		(5,940	)		(1,332	)
Proceeds from capital leases		92			-
Payments on capital leases		(6	)		-
Distributions - partners		(1,649	)		(171	)
Distributions – minority interests		-			(26	)
Net cash used in financing activities		(2,583	)		(1,668	)
Net change in cash and cash equivalents		1,087			(282	)
Cash and cash equivalents at beginning of the period		373			655
Cash and cash equivalents at end of period	$	1,460		$	373
SUPPLEMENTAL INFORMATION
Cash paid for interest during the period	$	148		$	286
NON-CASH TRANSACTIONS
Conversion of line of credit into long-term debt	$	-		$	2,390

See accompanying notes to the consolidated financial statements.

4

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS

Vertex Holdings, L.P. – (the “Partnership”) is a Texas limited partnership organized in March 2001.  The Partnership is a petroleum recovery company, focused on recycle/reuse options for petroleum products, crudes, and used lubricants.  The Partnership serves as a buyer and logistical manager of petroleum products used for fuels and feedstock throughout the United States.

Vertex Recovery, L.P. – a subsidiary of the Partnership, collects and recycles used oil and residual materials from large regional and national companies throughout the United States and Canada. Vertex Recovery facilitates its services through a network of independent recyclers and franchise collectors.

Crossroad Carriers, L.P. – a subsidiary of the Partnership, was formed in December 2004.  Crossroad Carriers is a third-party common carrier hauling liquid petroleum products.

Cedar Marine Terminals, L.P. – a subsidiary of the Partnership, maintains a 19-acre bulk liquid storage facility on the Houston Ship Channel.  Currently, the terminal serves as a truck-in, barge-out facility providing through-put terminal operations into the Houston market from surrounding metropolitan areas.

H&H Oil, L.P. – a subsidiary of Vertex Recovery, was acquired in 2007 to enhance the Partnership’s market presence in the liquid petroleum transportation industry.  The Partnership collects and recycles used oil and residual materials from facilities based in Austin, Baytown, and Corpus Christi, Texas.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal of Consolidation.  These financial statements include the Partnerships’ accounts and those of majority-owned and controlled operating partnerships.  All significant intercompany items have been eliminated in consolidation.

Cash and Cash Equivalents.  For purposes of the statement of cash flows, the Partnership considers all short-term investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable.  The Partnership considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required.  If amounts become uncollectible, they will be charged to operations in the period the determination of uncollectability is made.

Inventory.  Inventory consists of used oil and residual materials and are reported at the lower of cost or market.

Property and Equipment.  Property and equipment are stated at cost.  Costs for significant upgrades and repairs are capitalized in the period purchased.  Ongoing maintenance and repairs are expensed in the period incurred.  The cost of property, plant and equipment sold or retired and the related depreciation are removed from the balance sheet in the period of sale or disposition.   Depreciation is computed using the straight-line method over the estimated economic lives of the assets.

5

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill. The Partnership’s goodwill is comprised primarily of amounts related to the 2008 acquisition of H&H Oil, L.P. (“H&H”). Management expects the H&H assets to contribute indefinitely to the cash flows of the Partnership. Goodwill is not amortized, but is tested at least annually for impairment.

For the goodwill impairment test, the fair value of the reporting units are estimated based on market multiples.  This approach employs market multiples based on earnings before interest, depreciation and amortization and earnings for companies that are comparable to the Partnership’s reporting units.  The assumptions used for the impairment test are consistent with those utilized by a market participant performing similar valuations for the Partnership’s reporting units.

Revenue recognition. Revenue is recognized when persuasive evidence of an arrangement exists, goods are delivered, sales price is determinable, and collection is reasonably assured.  Revenue is recognized upon delivery by truck and railcar of feedstock to its re-refining customers and upon product leaving the Company’s terminal facilities via barge.

Income Taxes.  The Partnership is not a taxable entity for federal income tax purposes.  The Partnership’s taxable income or loss, which may vary substantially from the net income or net loss reported in the statement of income and partners’ capital, is includable proportionally in the federal income tax return of each partner.

Comprehensive Income.  Statement of Financial Accounting Standards No. 130, "Accounting for Comprehensive Income," requires that enterprises report comprehensive income.  For the years ended December 31, 2011 and 2010, there are no differences between net income and comprehensive income.

Use of Estimates.  The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events.  These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses.  Such estimates include the collectability of accounts receivable, the valuation of goodwill, legal contingencies, and indemnifications, among others.  Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

Reclassifications.Certain prior year amounts have been reclassified to conform to the current year presentation.  Net income (loss) and partners’ capital were not affected by these reclassifications.

Recently Issued Accounting Pronouncements. The Company periodically evaluates the financial impact and effective date of all recently issued pronouncements of the FASB and other governing accounting and financial reporting bodies.  Management does not feel any pronouncement that has been issued or becomes effective subsequent to December 31, 2011, through the date of this report, is expected to have a material impact on the consolidated financial statements of the Company.

6

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – FIXED ASSETS, net

Property and equipment at December 31, 2011 and 2010 consist of the following classifications:

	2011			2010
Leasehold improvements, processing and   storage facilities	$	3,710,466		$	3,267,052
Equipment		4,099,565			3,899,184
Vehicles		951,003			958,323
Office equipment, furnishings		338,666			338,295
		9,099,700			8,462,854
Less: accumulated depreciation		(2,775,605	)		(2,153,130	)
	$	6,324,095		$	6,309,724

Depreciation expense of approximately $766,000 and $760,000 was charged to operations for the years ended December 31, 2011 and 2010, respectively.

NOTE 4 - REVOLVING CREDIT FACILITY

On July 21, 2009, Charter Bank provided a revolving line of credit to H&H Oil L.P., not to exceed $300,000.  The outstanding balance accrues interest at a variable “lender rate” adjusted quarterly of no less than 8.00% (8.00% at December 31, 2011 and 2010).  The line matured on July 21, 2010 and was renewed through July 21, 2011.  Advances under the line were limited to eighty percent of eligible accounts receivable and fifty percent of eligible inventory, as defined by the agreement.  The line is secured by accounts receivable and inventory, assignment of life insurance policies, and a personal guarantee of the managing partner.  The balance outstanding on the line of credit was approximately $-0- and $162,000 at December 31, 2011 and 2010, respectively.

On June 15, 2010, the Regions Bank revolving line of credit was converted to a seven-year term note payable. The note requires monthly payments of $37,363, with interest at 8.00%, and matures June 2017. The line was secured by accounts receivable and inventory, assignment of life insurance policies, and a personal guarantee of the managing partner. The balance outstanding on the note was approximately $2,207,000 at December 31, 2010.  The Regions Bank loan was refinanced through Bank of America, NA in September 2011.

7

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - LONG-TERM DEBT

Long-term debt at December 31, 2011 and 2010 consisted of the following:

	2011			2010
Note to Regions Bank, due in monthly installments of $17,754, with interest   at 5.25%, secured by Partnership equipment, paid off September 2011.	$	-		$	567,234
Note to Regions Bank, due in monthly installments of $9,247, with interest at   6.20%, secured by Partnership equipment, paid off September 2011.		-			248,939
Note to Regions Bank, due in monthly installments of $9,764, with interest at    6.40%, secured by Partnership equipment, paid off September 2011.		-			236,439
Note to Regions Bank, due in monthly installments of $15,970, with interest   at 4.50%, secured by Partnership equipment, paid off September 2011.		-			436,487
Note to Regions Bank, due in monthly installments of $34,799, with interest   at 5.25%, secured by Partnership equipment, paid off September 2011.		-			1,054,659
Note to Regions Bank, due in monthly installments of $6,489, with interest at   5.25%, secured by Partnership equipment, paid off September 2011.		-			117,500
Note to Regions Bank, due in monthly installments of $10,394, with interest   at 9.06%, secured by Partnership equipment, paid off September 2011.		-			310,647
Note to Charter Bank, due in monthly installments of $10,428, with interest at   9.20%, secured by Partnership equipment, paid off September 2011.		-			466,394
Note to Catherine Reese due in monthly installments of $1,531, with interest   at 5.00%, unsecured, paid off September 2011.		-			26,506
Note to Navistar, due in monthly installments of $3,265, with interest at   6.00%, secured by Partnership equipment, matured January 2012.		1,377			14,887
Note to Regions Bank, due in monthly installments of $37,363, with interest   at 8.00%, secured by Partnership assets, maturing June, 2017.		-			2,207,194
Note to Bank of America due in monthly installments of $83,057,   with interest at 3.25%, secured by Partnership assets, maturing   September, 2014.		4,735,405			-
Note to Ally Bank due in monthly installments of $693, with interest   at 3.25%, secured by Partnership assets, maturing April, 2016		34,656			-
Note to Ally Bank due in monthly installments of $1,786, with interest   at 3.25%, secured by Partnership assets, maturing February, 2015		55,909			-
		4,827,347			5,686,886
Less current maturities		(1,021,550	)		(5,294,125	)
Long-term debt	$	3,805,797		$	392,761

Maturities of the long-term debt are as follows:

Years ending December 31,
2012	$	1,021,550
2013		1,024,266
2014		2,771,735
2015		9,796
Total	$	4,827,347

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VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - RELATED PARTIES TRANSACTIONS

The Partnership holds unsecured notes payable to two limited partners pursuant to revolving loan commitments executed on March 1, 2001.  The balance due on each of these notes is $17,000 at December 31, 2011 and 2010.  The agreement requires interest, payable semi-annually, at a rate between 4.80% and a maximum rate determined by the agreements.

The Partnership provides sales and services to Vertex Energy, Inc. (“VEI”) a publicly traded corporation controlled by the partners.  Transactions include sales of feedstock products to VEI, transportation of VEI feedstock to processors and terminal facilities, transportation of refined products to VEI customers, sublease of terminal facilities and sublease of office facilities. The Partnership believes the terms of these arrangements are consistent with third party arrangements that provide similar sales and services.

Revenue from VEI approximated $22,190,000 or 68% of total revenue for the year ended December 31, 2011; and $13,900,000 or 67% of total revenue for the year ended December 31, 2010. Accounts receivable attributable to VEI were approximately $724,000 and $408,000 at December 31, 2011 and 2010, respectively.

The Partnership subleases office space to VEI under an arrangement expiring June 2013. Rental payments under the office space sublease are $6,629 monthly.  Rental income under the sublease was approximately $80,000 for the years ended December 31, 2011 and 2010.

The Partnership subleases terminal and storage facilities to VEI under agreements expiring June 2012.  Monthly rental payments under the leases total $72,000.  Total monthly rental payments under these subleases totaled $864,000 and $783,000 for the years ended December 31, 2011 and 2010. These subleases are currently on a month to month basis.

The Partnership has an operating and licensing agreement with VEI, that provides VEI with an irrevocable, non-transferable, royalty-free, perpetual right to use the Company’s Thermal Chemical Extraction Process “TCEP” to re-refine certain used oil feedstock and associated operations of this technology on a global basis.  This includes the right to utilize the technology in any future production facilities built by VEI. VEI must approve any research and development costs that are performed by the Partnership and this may affect our ability to maintain technological feasibility of the technology which could impact the value of our patents.

9

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUSMENTS

The Partnership’s investments are reported at fair value.  The Partnership believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.  The fair value measurement accounting literature establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  This hierarchy consists of three broad levels:

Level 1 - Quoted market prices in active markets for identical assets

Level 2 - Observable market-based inputs or unobservable inputs corroborated by market data

Level 3 - Unobservable inputs that are not corroborated by market data:

The carrying amounts of accounts receivable, accounts payable, accrued liabilities and accounts payable to related party amounts approximate fair values due to the immediate or short-term maturities of these financial instruments.  The Partnership does not own any financial instruments for which estimates of fair value disclosures utilize Level 2 and 3 inputs.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

The Partnership leases office facilities under an operating lease expiring in April 2012 and currently continues on a month-to-month basis.  Rental expense under this operating lease was approximately $116,000 and $114,000 for the years ended December 31, 2011 and 2010.

Future minimum non-cancelable rental payments under this lease total approximately $120,000 for the year ending December 31, 2012.

The Partnership has an agreement to lease storage tanks at a Cedar Bayou, Texas storage and transfer facility with a limited partner.  The January 1, 2007 agreement required a minimum monthly fee of $17,700 and continues with each twelve-month term beginning November 1, 2008.  The Partnership may terminate the agreement with ninety days notice.  Rental expense under this operating lease was approximately $180,000 for the years ended December 31, 2011 and 2010.

The Partnership is subject to legal claims and proceedings that arise in the ordinary course of business.  Some of these claims or proceedings against it may have an adverse effect on the financial condition or results of operations of the Partnership.  The Partnership’s management does not expect that the results in any of these potential legal proceedings will have an adverse affect on the Partnership’s financial condition or results of operations.  In accordance with ASC 450, “Contingencies,” the Partnership makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.  The Partnership believes it has adequate provisions for any such matters.  Nevertheless, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of a contingency.

10

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - RETIREMENT PLAN

The Partnership offers, to all eligible employees, the opportunity to participate in its defined contribution employee benefit plan and a profit-sharing plan.  Partnership contributions are discretionary and determined annually by the partners.  The Partnership has not contributed to the plan for the years ended

December 31, 2011 or 2010.

NOTE 10 - CONCENTRATIONS

The Partnership maintains its cash deposits primarily with Bank of America, NA and Regions Bank.  At December 31, 2011 and 2010, Partnership cash balances exceeded FDIC limits.

Credit terms are granted to customers of the Partnership.  The Partnership performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers.  Concentrations of credit risk with respect to trade receivables are limited by the large number of customers comprising the Partnership’s customer base and broad geographic area the Partnership services.

Partnership revenues, profitability and rate of growth are substantially dependent on prevailing prices for petroleum-based products.  Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future.  A substantial or extended decline in such prices could have a material adverse effect on the Partnership’s financial position, results of operations, cash flows and access to capital and on the quantities of petroleum-based product that the Partnership can economically produce.

NOTE 11 – SUBSEQUENT EVENTS

On September 11, 2012, but effective August 31, 2012, Vertex Holdings, L.P. sold substantially all of its assets along with the real-estate properties of B & S Cowart Family L.P. ("B&S LP") for $28,791,000, consisting of $16,500,000 plus a working capital adjustment of approximately $467,000, and 4,545,455 restricted shares of common stock, valued at $7,113,000, and contingent consideration of $4,711,000 and the assumption of liabilities of approximately $2,213,000.

Prior to closing the sale, Vertex Holdings, L.P. contributed substantially all of its assets to an Acquisition Subsidiary. The contributed assets represent substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants, including all of the outstanding equity interests in Vertex Holdings, L.P.’s wholly-owned operating subsidiaries, Cedar Marine Terminals, L.P., Crossroad Carriers, L.P., Vertex Recovery L.P. and H&H Oil, L.P. and B&S LP contributed real estate associated with the operations of H&H Oil, L.P.

11

EX-99.2

Exhibit 99.2

VERTEX HOLDINGS, L. P.

Balance Sheets

	June 30,		December 31,
	2012		2011
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	1,437	$	1,460
Short-term investments		878		–
Accounts receivable:
Trade		2,994		921
Related parties		748		724
Inventory		200		145
Prepaid expenses and other current assets		100		182
Total current assets		6,357		3,432
Noncurrent assets
Fixed assets, net		6,262		6,324
Goodwill		1,800		1,800
Total noncurrent assets		8,062		8,124
TOTAL ASSETS	$	14,419	$	11,556
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Current maturities – long-term debt	$	525	$	1,022
Accounts payable and accrued expenses		2,609		1,168
Other current liabilities		105		86
Notes payable – related parties		-		34
Total current liabilities		3,239		2,310
Long-term debt, less current maturities		3,949		3,806
Total liabilities		7,188		6,116
Commitments and contingencies
Partners’ capital		7,231		5,440
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	14,419	$	11,556

See accompanying notes to the consolidated financial statements.

1

VERTEX HOLDINGS, L. P.

CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS’ CAPITAL

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

($ in thousands)

	2012			2011
Revenues	$	19,217		$	15,401
Cost of revenues		14,133			10,380
Gross profit		5,084			5,021
Selling, general and administrative expenses		2,309			2,615
Income from operations		2,775			2,406
Other income (expense)
Other income		16			33
Interest expense		(82	)		(79	)
Total other income (expense)		(66	)		(46	)
Net income before noncontrolling interests		2,709			2,360
Net income attributable to noncontrolling interests		4			-
Net income		2,705			2,360
Partners’ capital, beginning of year		5,440			2,797
Less: distributions to partners		(914	)		(543	)
Partners’ capital, end of year	$	7,231		$	4,614

See accompanying notes to the consolidated financial statements.

2

VERTEX HOLDINGS, L. P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

($ in thousands)

	2012			2011
Cash flows operating activities
Net income	$	2,705		$	2,360
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization		368			369
Changes in assets and liabilities
Accounts receivable - trade		(2,072	)		(1,997	)
Accounts receivable – related parties		(24	)		(560	)
Inventory		(54	)		14
Prepaid expenses  and other current assets		81			29
Accounts payable and accrued expenses		1,461			1,814
Net cash provided by operating activities		2,465			2,029
Cash flows from investing activities
Purchase of fixed assets		(307	)		(421	)
Purchase if investments		(878	)		-
Net cash used by investing activities		(1,185	)		(421	)
Cash flows from financing activities
Line of credit, net		-			(417	)
Proceeds from long-term debt		-			98
Payments on long-term debt		(355	)		(213	)
Payments on notes payable – related parties		(34	)		-
Distributions - partners		(914	)		(240	)
Net cash used in financing activities		(1,303	)		(772	)
Net change in cash and cash equivalents		(23	)		836
Cash and cash equivalents at beginning of the period		1,460			373
Cash and cash equivalents at end of period	$	1,437		$	1,209
SUPPLEMENTAL INFORMATION
Cash paid for interest during the period	$	75		$	144
NON-CASH TRANSACTIONS
Conversion of line of credit into long-term debt	$	-		$	2,390

See accompanying notes to the consolidated financial statements.

3

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Vertex Holdings, L.P. – (the “Partnership”) is a Texas limited partnership organized in March 2001.  The Partnership is a petroleum recovery company, focused on recycle/reuse options for petroleum products, crudes, and used lubricants.  The Partnership serves as a buyer and logistical manager of petroleum products used for fuels and feedstock throughout the United States.

Vertex Recovery, L.P. – a subsidiary of the Partnership, collects and recycles used oil and residual materials from large regional and national companies throughout the United States and Canada. Vertex Recovery facilitates its services through a network of independent recyclers and franchise collectors.

Crossroad Carriers, L.P. – a subsidiary of the Partnership, was formed in December 2004.  Crossroad Carriers is a third-party common carrier hauling liquid petroleum products.

Cedar Marine Terminals, L.P. – a subsidiary of the Partnership, maintains a 19-acre bulk liquid storage facility on the Houston Ship Channel.  Currently, the terminal serves as a truck-in, barge-out facility providing through-put terminal operations into the Houston market from surrounding metropolitan areas.

H&H Oil, L.P. – a subsidiary of Vertex Recovery, acquired in 2007 to enhance the Partnership’s market presence in the liquid petroleum transportation industry.  The Partnership collects and recycles used oil and residual materials from facilities based in Austin, Baytown, and Corpus Christi, Texas.

The accompanying unaudited interim consolidated financial statements of the Partnership and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. Accordingly, these consolidated financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows as of June 30, 2012 and for all interim periods presented herein have been reflected in these consolidated financial statements and the notes thereto.  Interim results for the six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the fiscal year as a whole. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as included in this Form 8-K/A for the fiscal year ended December 31, 2011.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal of Consolidation.  These financial statements include the Partnerships’ accounts and those of majority-owned and controlled operating partnerships.  All significant intercompany items have been eliminated in consolidation.

Cash and Cash Equivalents.  For purposes of the statement of cash flows, the Partnership considers all short-term investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable.  The Partnership considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required.  If amounts become uncollectible, they will be charged to operations in the period the determination of uncollectability is made.

4

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Inventory.  Inventory consists of used oil and residual materials and are reported at the lower of cost or market.

Property and Equipment.  Property and equipment are stated at cost.  Costs for significant upgrades and repairs are capitalized in the period purchased.  Ongoing maintenance and repairs are expensed in the period incurred.  The cost of property, plant and equipment sold or retired and the related depreciation are removed from the balance sheet in the period of sale or disposition.   Depreciation is computed using the straight-line method over the estimated economic lives of the assets.

Goodwill. The Partnership’s goodwill is comprised primarily of amounts related to the 2008 acquisition of H&H Oil, L.P. (“H&H”). Management expects the H&H assets to contribute indefinitely to the cash flows of the Partnership. Goodwill is not amortized, but is tested at least annually for impairment.

For the goodwill impairment test, the fair value of the reporting units are estimated based on market multiples.  This approach employs market multiples based on earnings before interest, depreciation and amortization and earnings for companies that are comparable to the Partnership’s reporting units.  The assumptions used for the impairment test are consistent with those utilized by a market participant performing similar valuations for the Partnership’s reporting units.

Revenue recognition. Revenue is recognized when persuasive evidence of an arrangement exists, goods are delivered, sales price is determinable, and collection is reasonably assured.  Revenue is recognized upon delivery by truck and railcar of feedstock to its re-refining customers and upon product leaving the Company’s terminal facilities via barge.

Income Taxes.  The Partnership is not a taxable entity for federal income tax purposes.  The Partnership’s taxable income or loss, which may vary substantially from the net income or net loss reported in the statement of income and partners’ capital, is includable proportionally in the federal income tax return of each partner.

Comprehensive Income.  Statement of Financial Accounting Standards No. 130, "Accounting for Comprehensive Income," requires that enterprises report comprehensive income.  For the six months ended June 30, 2012 and 2011, there are no differences between net income and comprehensive income.

Use of Estimates.  The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events.  These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses.  Such estimates include the collectability of accounts receivable, the valuation of goodwill, legal contingencies, and indemnifications, among others.  Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

Reclassifications.Certain prior year amounts have been reclassified to conform to the current year presentation.  Net income (loss) and partners’ capital were not affected by these reclassifications.

Recently Issued Accounting Pronouncements. We have adopted recently issued accounting pronouncements and have determined that they have no material effect on our financial position, results of operations, or cash flow.  We do not expect any recently issued but not yet adopted accounting pronouncements to have a material effect on our financial position, results of operations or cash flow.

5

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 - RELATED PARTIES TRANSACTIONS

The Partnership provides sales and services to Vertex Energy, Inc. (“VEI”) a publicly traded corporation controlled by the partners.  Transactions include sales of feedstock products to VEI, transportation of VEI feedstock to processors and terminal facilities, transportation of refined products to VEI customers, sublease of terminal facilities and sublease of office facilities. The Partnership believes the terms of these arrangements are consistent with third party arrangements that provide similar sales and services.

Revenue from VEI approximated $13,042,000 or 68% of total revenue for the six months ended June 30, 2012; and $6,128,000 or 40% of total revenue for the six months ended June 30, 2011. Accounts receivable attributable to VEI were approximately $748,000 and $968,000 at June 30, 2012 and 2011, respectively.

The Partnership subleases office space to VEI under an arrangement expiring June 2013. Rental payments under the office space sublease are $6,629 monthly.  Rental income under the sublease was approximately $40,000 for the six months ended June 30, 2012 and 2011.

The Partnership subleases terminal and storage facilities to VEI under agreements expiring June, 2012.  Monthly rental payments under the leases total are $72,000.  Total monthly rental payments under these subleases totaled $432,000 and $432,000 for the six months ended June 30, 2012 and 2011. These subleases are currently on a month to month basis.

The Partnership has an operating and licensing agreement with VEI, that provides VEI with an irrevocable, non-transferable, royalty-free, perpetual right to use the Company’s Thermal Chemical Extraction Process “TCEP” to re-refine certain used oil feedstock and associated operations of this technology on a global basis.  This includes the right to utilize the technology in any future production facilities built by VEI. VEI must approve any research and development costs that are performed by the Partnership and this may affect our ability to maintain technological feasibility of the technology which could impact the value of our patents.

NOTE 4 - CONCENTRATIONS

The Partnership maintains its cash deposits primarily with Bank of America, NA and Regions Bank.  At June 30, 2012, Partnership cash balances exceeded FDIC limits.

Credit terms are granted to customers of the Partnership.  The Partnership performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers.  Concentrations of credit risk with respect to trade receivables are limited by the large number of customers comprising the Partnership’s customer base and broad geographic area the Partnership services.

Partnership revenues, profitability and rate of growth are substantially dependent on prevailing prices for petroleum-based products.  Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future.  A substantial or extended decline in such prices could have a material adverse effect on the Partnership’s financial position, results of operations, cash flows and access to capital and on the quantities of petroleum-based product that the Partnership can economically produce.

6

VERTEX HOLDINGS, L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – SUBSEQUENT EVENTS

On September 11, 2012, but effective August 31, 2012, Vertex Holdings, L.P. sold substantially all of its assets along with the real-estate properties of B & S Cowart Family L.P. ("B&S LP") for $28,791,000, consisting of $16,500,000 plus a working capital adjustment of approximately $467,000, and 4,545,455 restricted shares of common stock, valued at $7,113,000, and contingent consideration of $4,711,000 and the assumption of liabilities of approximately $2,213,000.

Prior to closing the sale, Vertex Holdings, L.P. contributed substantially all of its assets to an Acquisition Subsidiary. The contributed assets represent substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants, including all of the outstanding equity interests in Vertex Holdings, L.P.’s wholly-owned operating subsidiaries, Cedar Marine Terminals, L.P., Crossroad Carriers, L.P., Vertex Recovery L.P. and H&H Oil, L.P. and B&S LP contributed real estate associated with the operations of H&H Oil, L.P.

7

EX-99.3

Exhibit 99.3

 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

On August 14, 2012, Vertex Energy, Inc. (the “Company”) entered into a definitive unit purchase agreement (the “Purchase Agreement”) by and among the Company, Vertex Acquisition Sub, LLC, a Nevada limited liability company (“Target”), Vertex Holdings, L.P., a Texas limited partnership (“Holdings”), and B & S Cowart Family L.P., a Texas limited partnership (“B&S LP” and together with Holdings, the “Sellers”).  On September 11, 2012, the Company, Target and the Sellers entered into a First Amendment to Unit Purchase Agreement, which established September 11, 2012 as the closing date, and August 31, 2012 as the effective date of the closing of the transactions contemplated in the Purchase Agreement, and provided for the waiver of certain pre-closing conditions.  The transactions contemplated in the Purchase Agreement closed on September 11, 2012.

Holdings was in the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants (the “Acquired Business”).  B&S LP owned certain real property that was used by Holdings and its subsidiaries in connection with the Acquired Business. Holdings and B&S LP are related parties controlled by Benjamin P. Cowart, the Company’s Chief Executive Officer, President, Director and largest shareholder.  Mr. Cowart directly or indirectly owns a 77% interest in Holdings and a 100% interest in B&S LP.  Additionally, Chris Carlson, the Company’s Chief Financial Officer, owns a 10% interest in Holdings.

In connection with the closing of the transactions contemplated in the Purchase Agreement, (i) Holdings contributed all of its assets used in connection with the Acquired Business, including all of the equity interests in Cedar Marine Terminals, L.P., a Texas limited partnership (“Cedar Marine”), Crossroad Carriers, L.P., a Texas limited partnership (“Crossroad”), Vertex Recovery L.P., a Texas limited partnership (“Recovery”), and H&H Oil, L.P., a Texas limited partnership (“H&H Oil” and together with Cedar Marine, Crossroad and Recovery, the “Transferred Partnerships”), to Target (a special purpose entity formed for purposes of the transactions contemplated in the Purchase Agreement), and (ii) B&S LP contributed certain real property located in Baytown, Texas and Pflugerville, Texas used in connection with the Acquired Business to Target, in each case in exchange for the issuance of equity interests in Target.  Pursuant to the Purchase Agreement, each Seller sold its respective equity interests in Target to the Company in exchange for such Seller’s respective portion of the Purchase Price (described in greater detail below).

On September 11, 2012, but effective August 31, 2012, the Company acquired 100% of the outstanding equity interests of Target consisting of substantially all of the assets of Holdings and real-estate properties of B&S LP in consideration for $28,791,000 consisting of $16,500,000 and a working capital adjustment of $467,000, 4,545,455 restricted shares of common stock valued at $7,113,000 and contingent consideration of $4,711,000 (collectively, the “Purchase Price”). Prior to closing the acquisition, Holdings contributed to Target substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants, including all of the outstanding equity interests in Holdings wholly-owned operating subsidiaries, Cedar Marine, Crossroad, Vertex Recovery and H&H Oil, and B&S LP contributed real estate associated with the operations of H&H Oil. The cash portion of the Purchase Price was paid with funds borrowed under a Term Note and Revolving Note.

The contingent consideration was based upon the earn-out. The earn-out is for each of the three one-year periods following the closing date, at which time Holdings will be eligible to receive earn-out payments of up to $2.23 million, up to $6.7 million in the aggregate, contingent on the combined company achieving EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods.  The Purchase Price is also subject to a post-closing working capital adjustment.  A total of $1.0 million of the cash portion of the Purchase Price will be held in escrow for 18 months from the effective date of the closing to secure the post-closing obligations of the Sellers under the Purchase Agreement.  The Purchase Agreement contains customary representations, warranties, covenants, and indemnity provisions for transactions of similar nature and size.

1

Following the closing of the transactions contemplated in the Purchase Agreement, the Company owns 100% of the outstanding equity interests of Target and indirectly owns 100% of the outstanding equity interests of the Transferred Partnerships.

The following unaudited pro forma combined balance sheets have been derived from the unaudited balance sheet of the Company, an unaudited balance sheet reflecting certain assets and liabilities of the Acquired Business in each case at June 30, 2012, and adjusts such information to give effect to the Purchase Agreement as if it had occurred on January 1, 2012.

The following unaudited pro forma combined statement of operations for the six months ended June 30, 2012 has been derived from the unaudited statement of operations of the Acquired Business and the unaudited statement of operations for the Company in each case giving effect to the Purchase Agreement as though it had occurred on January 1, 2011. The unaudited pro forma combined statement of operations for the year ended December 31, 2011 has been derived from the audited statements of operations for the Company and the Acquired Business, giving effect to the Purchase Agreement as though it has occurred on January 1, 2011.
 

The pro forma adjustments and assumptions are based on estimates, evaluations and other data currently available and, in management’s opinion, provide a reasonable basis for the fair presentation of the estimated effects attributable directly to the acquisition completed as a result of the Purchase Agreement. The pro forma combined financial information is being presented for illustrative purposes only, and this information should not be relied upon for purposes of making any investment or other decisions.

The unaudited pro forma combined financial information may have been different had the transaction been completed as of January 1, 2012 or January 1, 2011. All information contained herein should be read in conjunction with the financial statements and notes thereto of the Acquired Business (filed as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K/A) and the Company, as filed in its Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Commission on March 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the Commission on August 14, 2012 (as amended on August 24, 2012), and the notes included therewith.

2

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of June 30, 2012

	Vertex Holdings, L.P.		Vertex Energy, Inc.		Pro Forma Adjustments (Note 1)				Pro Forma Adjusted
ASSETS
Current assets
Cash	$	1,437,000	$	4,177,443	$	(2,515,487	)	a,b	$	3,098,956
Short term investments		878,000		-		(878,000	)	b		-
Accounts receivable, net		2,994,000		3,778,844		-				6,772,844
Accounts receivable-related parties		748,000		200		(748,000	)	c		200
Inventory		200,000		6,603,579		-				6,803,579
Prepaid expenses		100,000		329,640		-				429,640
Total Current Assets		6,357,000		14,889,706		(4,141,487	)			17,105,219
Noncurrent assets
Fixed assets, net		6,262,000		119,593		4,392,000		d		10,773,593
Licensing agreement, net		-		2,041,994		(2,041,994	)	d		-
Intangible assets		-		-		15,618,000		d		15,618,000
Deferred federal income tax		-		1,951,000		1,700,000		l		3,651,000
Goodwill		1,800,000		-		(842,000	)	d		958,000
Total Non-current Assets		8,062,000		4,112,587		18,826,006				31,000,593
Total
Total assets	$	14,419,000	$	19,002,293		14,684,519			$	48,105,812
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	2,609,000	$	7,232,662	$	-			$	9,841,662
Accounts payable-related parties		-		748,026		(748,026	)	c		-
Current maturities of long-term debt		525,000		-		(525,000	)	a		-
Deposits		-		-		-				-
Other current liabilities		105,000		-		(105,000	)	e		-
Total Current Liabilities		3,239,000		7,980,688		(1,378,026	)			9,841,662
Long term liabilities
Long-term debt		3,949,000		-		4,551,000		a		8,500,000
Contingent consideration		-		-		4,711,000		f		4,711,000
Line of credit		-		-		6,000,000		a		6,000,000
Deferred federal income tax		-		103,000		-				103,000
Total liabilities		7,188,000		8,083,688		13,883,974				29,155,662
Commitments and contingencies
Common Stock		-		10,686		4,545		g		15,231
Preferred Stock Series A		-		3,211		-				3,211
Additional paid-in capital		-		3,485,193		7,113,000		g		10,598,193
Retained earnings		-		7,419,515		914,000		m		8,333,515
Partners’ capital		7,231,000		-		(7,231,000	)	h		-
Stockholders’ equity		7,231,000		10,918,605		800,545				18,950,150
Total liabilities and stockholders’ equity	$	14,419,000	$	19,002,293	$	14,684,519			$	48,105,812

The accompanying notes are an integral part of these unaudited proforma financial statements.

3

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2012

	Vertex Holdings, L.P.			Vertex Energy, Inc.			Pro Forma Adjustments (Note 1)				Pro Forma Adjusted
Revenues	$	19,217,000		$	66,121,132		$	(13,042,494	)	i	$	72,295,638
Revenues – related parties
Total revenues		19,217,000			66,121,132			(13,042,494	)			72,295,638
Cost of revenues		14,133,000			62,485,327			(13,042,494	)	i		63,575,833
Gross profit		5,084,000			3,635,805			-				8,719,805
Selling, general, and administrative expenses (exclusive of merger related expenses)		2,309,000			2,113,974			566,000		j		4,988,974
Income (loss) from operations		2,775,000			1,521,831			(566,000	)			3,730,831
Other Income		16,000			-			-				16,000
Interest income		-			633			-				633
Interest expense		(82,000	)		(44	)		(220,000	)	k		(302,044	)
Income before taxes		2,709,000			1,522,420			(786,000	)			3,445,420
Income tax benefit (expense)		-			(107,172	)		1,700,000		l		1,592,828
Net income before noncontrolling interests		2,709,000			1,415,248			914,000				5,038,248
Noncontrolling interests		4,000			-			(4,000	)	h		-
Net income	$	2,705,000		$	1,415,248		$	918,000				5,038,248
Earnings per common share
Basic				$	0.14						$	0.35
Diluted				$	0.10						$	0.27
Shares used in computing earnings per share
Basic					9,781,851							14,327,306
Diluted					14,204,958							18,750,413

The accompanying notes are an integral part of these unaudited proforma financial statements.

4

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2011

	Vertex Holdings, L.P.			Vertex Energy, Inc.			Pro Forma Adjustments (Note 1)				Pro Forma Adjusted
Revenues	$	32,495,000		$	109,722,279		$	(22,190,274	)	i	$	120,027,005
Revenues – related parties		-			17,978			-				17,978
Total revenues		32,495,000			109,740,257			(22,190,274	)			120,044,983
Cost of revenues		21,676,000			101,666,187			(22,190,274	)	i		101,151,913
												-
Gross profit		10,819,000			8,074,070			-				18,893,070
Research and development expense		-			-			-				-
Selling, general, and administrative expenses		6,392,000			4,099,682			1,145,000		j		11,636,682
												-
Income (loss) from operations		4,427,000			3,974,388			(1,145,000	)			7,256,388
Other income		22,000			-			-				22,000
Interest expense		(148,000	)		(62,686	)		(435,000	)	k		(645,686	)
Income before taxes		4,301,000			3,911,702			(1,580,000	)			6,632,702
Income tax benefit		-			1,841,813			1,700,000		l		3,541,813
Net income before noncontrolling interests		4,301,000			5,753,515			120,000				10,174,515
Noncontrolling interests		9,000			-			(9,000	)	h		-
Net income	$	4,292,000		$	5,753,515		$	129,000				10,174,515
Earnings per common share
Basic				$	0.65						$	0.76
Diluted				$	0.39						$	0.53
Shares used in computing earnings per share
Basic					8,884,681							13,430,136
Diluted					14,775,339							19,320,794

The accompanying notes are an integral part of these unaudited proforma financial statements.

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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Note 1—Pro Forma Basis of Presentation

The Acquisition is reflected in the unaudited pro forma combined financial statements as being accounted for under the acquisition method in accordance with ASC 805. Under the acquisition method, the total estimated purchase price of the acquired company is allocated to the assets acquired and the liabilities assumed based on their fair values. Vertex Energy, Inc. has made significant estimates and assumptions in determining the preliminary allocation of the purchase price in the unaudited pro forma condensed combined financial statements. These estimates are based on key assumptions of the acquisition. Due to the fact that the unaudited pro forma combined financial statements have been prepared based on preliminary estimates, the final amounts recorded may differ materially from the information presented. The allocation of purchase consideration is subject to change based on further review of the fair value of the assets acquired and liabilities assumed. A final determination of fair values will be based on the assets acquired and the liabilities assumed of Target at the consummation of the acquisition.

The unaudited pro forma combined statements of operations for the six months ended June 30, 2012 and the year ended December 31, 2011 assume the business combination between Vertex Energy, Inc. and Target occurred on January 1, 2011. The unaudited pro forma combined balance sheet as of June 30, 2012, assumes the business combination had been completed on January 1, 2012. The unaudited pro forma combined financial statements are based on the historical consolidated financial statements of Vertex Energy, Inc. and Target.

Under ASC 805, acquisition-related transaction costs (such as advisory, legal, valuation or other professional fees) are not included as a component of consideration transferred and have been excluded from the unaudited pro forma combined statements of operations. The Company expects to incur total acquisition-related transaction costs of approximately $1.0 million.

The unaudited pro forma combined financial statements do not include the realization of any cost savings from anticipated operating efficiencies, synergies or other restructuring activities which might result from the acquisition. The unaudited pro forma combined condensed financial statements should be read in conjunction with the separate historical consolidated financial statements and accompanying notes of the Company that are filed with the Securities and Exchange Commission and of Target that are included herein.

The unaudited pro forma combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial condition of the combined company that would have been reported had the acquisition been completed as of the dates presented, and further should not be taken as representative of the future consolidated results of operations or financial condition of the Company.

The pro forma adjustments included in the unaudited pro forma combined financial statements are as follows:

a. To reflect the new debt issuance to fund some of the cash portion of the purchase price and pay off existing debt of Holdings. An interest rate of approximately 3% was assumed on the debt.

b.           To reflect the cash consideration retained by Holdings.

c.           To reflect the elimination of related party receivables and payables.

d. To reflect the elimination of intangible assets and to record the fair value of the identifiable intangible assets and tangible assets acquired.

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e.           To reflect the liabilities remaining with Holdings.

f. To record the estimate of the contingent consideration in connection with the acquisition. For each of the three one-year periods following the closing date, Holdings will be eligible to receive earn-out payments of up to $2.23 million, up to $6.7 million in the aggregate, contingent on the combined company achieving EBITDA targets of $10.75 million, $12.0 million and $13.5 million, respectively, in those periods.  The Purchase Price is also subject to a post-closing working capital adjustment.

g. To reflect the 4,545,455 restricted shares of common stock valued at $7,113,000 based on the closing price on August 14, 2012.

h.           To eliminate partners’ capital and minority interests.

i.           To eliminate intercompany sales and cost of revenues.

j.           To record additional amortization expense for the intangible assets acquired at fair value.

k.           To record additional interest expense associated with the new debt, See Note 3.

l. To reflect the adjustment to the valuation allowance of $1,700,000 based on the Company’s estimate of future operating income. See Note 2, based on the Company’s net operating loss carryforward, the Company is not reflecting any income tax expense.

m. To reflect the adjustments to retained earnings for reversal of amortization, record amortization and interest and income tax benefit for decrease in valuation allowance.

Note 2.  Tax Matters

At June 30, 2012, the Company had significant net operating loss carryforwards.  The extent to which the Company will be able to utilize these carryforwards in future periods will be subject to limitations based on a number of factors, including but not limited to whether the Company is profitable and thus able to utilize these carryforwards. Accordingly, the Company has decreased its valuation allowance based on the historical operating income of Target which has been reflected on the pro forma balance sheet.

Note 3.  Notes Payable

In September 2010, the Company entered into a loan agreement and obtained a line of credit with Bank of America Merrill Lynch. On March 30, 2012, Bank of America renewed the line of credit through March 31, 2014. The balance on the line of credit was $0 at September 30, 2012. The loan agreement is guaranteed by Cedar Marine, a related party of the Company.  The most restrictive covenants of the loan require an interest coverage ratio of at least 1.5 to 1 and a Funded Debt to EBITDA ratio not to exceed 2 to 1. This line of credit was replaced with the new agreement dated September 2012, described below.

In September 2012, the Company entered into a credit agreement with Bank of America. Pursuant to the agreement, Bank of America agreed to loan the Company $8,500,000 in the form of a term loan and the lender agreed to provide the Company with an additional $10,000,000 in the form of a revolving line of credit, which is expected to be used for feedstock purchases and general corporate purposes. The line of credit bears interest at the option of the Company of either the lender's prime commercial lending rate in effect or the Bank of America LIBOR rate plus 2.75%.  Accrued and unpaid interest on the revolving note is due and payable monthly in arrears and all amounts outstanding under the revolving note are due and payable on August 31, 2014.  The balance on the revolving line of credit is $6,000,000 at September 30, 2012.

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Amounts borrowed under the term note bear interest at the option of the Company of either the lender's prime commercial lending rate then in effect or the Bank of America LIBOR rate plus 2.75%. Accrued and unpaid interest on the term note is due and payable monthly in arrears and all amounts outstanding under the term note are due and payable on August 31, 2015. Additionally, payments of principal in the amount of $141,666.67 are due and payable on the term note monthly in arrears on the last day of each month and continuing until the maturity date. The balance of the term loan is $8,500,000 at September 30, 2012.

The financing arrangement discussed above is secured by all of the assets of the Company. The loan contains certain restrictive covenants including a Fixed Charge Coverage Ratio, as defined in the agreement, of at least 1.25 to 1.00, Senior Funded Debt to EBITDA Ratio, as defined in the agreement, not to exceed 2.00 to 1.00 and a Minimum Net Worth, as defined in the agreement, of at least $10,000,000. The Company believes it was in compliance of all aspects of the agreement at September 30, 2012.

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