U. S.UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly report under Section10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Transition report under Section2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Exchange ActOF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
Commission file number 1-9030
ALTEX INDUSTRIES, INC.
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(Exact Namename of Small Business Issuerregistrant as Specifiedspecified in Its Charter)its charter)
Delaware 84-0989164
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(State or Other Jurisdictionother jurisdiction of (I.R.S. Employer
Incorporationincorporation or Organization)organization) Identification No.)
PO Box 1057 Breckenridge CO 80424-1057
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(Address of Principal Executive Offices)
(970) 453-6641
(Issuer's Telephone Number, Including Area Code)
Checkprincipal executive offices)
(303) 265-9312
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer:registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the pastpreceding 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 [X] 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
(Sec.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 [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a small reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]
Number of shares outstanding of issuer's common equityCommon Stock as of April 10, 1996:
13,991,989
Transitional Small Business Disclosure Format:
Yes No XMay 8, 2009:
13,885,734
Page 1 of 67
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1996
(Unaudited)
Assets
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
------
MARCH 31 SEPTEMBER 30
2009 2008
(UNAUDITED) (AUDITED)
Current Assets
CURRENT ASSETS
Cash and cash equivalents $ 1,118,0004,127,000 4,291,000
Accounts receivable 128,0006,000 6,000
Other receivables 22,000
Other 14,0003,000 7,000
----------------------------
Total current assets 1,282,000
Property and equipment, at cost4,136,000 4,304,000
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PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 2,387,00091,000 91,000
Other 68,000
2,455,00038,000 38,000
----------------------------
129,000 129,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (2,128,000)(124,000) (123,000)
----------------------------
Net property and equipment 327,0005,000 6,000
OTHER ASSETS 7,000 7,000
----------------------------
$ 1,609,000
Liabilities and Stockholders' Equity
Current liabilities4,148,000 4,317,000
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 19,000
Accrued production costs 44,000
Accrued reclamation, restoration, and dismantlement expense 18,00025,000 23,000
Other accrued expenses 23,00031,000 37,000
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Total current liabilities 104,000
Stockholders' equity56,000 60,000
----------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized 5,000,000 shares, none issued -- --
Common stock, $.01 par value. Authorized 50,000,000 shares, issued 14,285,98913,953,901 shares 143,000140,000 140,000
Additional paid-in capital 14,188,00013,974,000 13,974,000
Accumulated deficit (12,587,000)(10,011,000) (9,857,000)
Treasury stock,shares, at cost, 294,00068,167 shares at March 31, 1996 (16,000)
Note receivable from stockholder (223,000)
1,505,0002009 (11,000) --
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4,092,000 4,257,000
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$ 1,609,0004,148,000 4,317,000
============================
See accompanying notes to consolidated, condensed financial statements.
Page 2 of 67
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Six months Ended
March 31 March 31
Three Months Ended Six Months Ended
March 31 March 31
1996 1995 1996 19952009 2008 2009 2008
------------------------- ------------------------
Revenue
Oil and gas sales $ 231,000 187,000 419,000 384,000- 6,000 16,000 11,000
Interest income 18,000 19,000 35,000 34,000
Gain on sale of assets -- -- -- 1,000
Other income 6,000 1,000 14,000 3,000
255,000 207,000 468,000 422,00024,000 33,000 46,000 80,000
------------------------- ------------------------
24,000 39,000 62,000 91,000
------------------------- ------------------------
Costs and expenses
Lease operating 81,000 83,000 165,000 163,000- 1,000 1,000 1,000
Production taxes 23,000 19,000 40,000 43,000- 1,000 1,000 1,000
General and administrative 76,000 84,000 157,000 170,000
Exploration -- 5,000 8,000 10,000109,000 103,000 213,000 208,000
Reclamation, restoration, and dismantlement - 7,000 - 7,000
Depreciation, depletion, amortization, and amortization 18,000 25,000 35,000 47,000
198,000valuation allowance - 1,000 1,000 2,000
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109,000 113,000 216,000 405,000 433,000219,000
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Net earnings (loss)loss $ 57,000 (9,000) 63,000 (11,000)
Earnings (loss)(85,000) (74,000) (154,000) (128,000)
========================= ========================
Loss per share $ * * * *(0.006) (0.005) (0.011) (0.009)
========================= ========================
Weighted average shares outstanding 14,011,989 14,621,989 14,118,869 14,721,71213,885,734 14,133,600 13,907,458 14,187,076
========================= ========================
*Less than $.01 per share
See accompanying notes to consolidated, condensed financial statements.
Page 3 of 67
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow
(Unaudited)
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
SIX MONTHS ENDED MARCH 31
2009 2008
------------------------------
Six Months Ended
March 31
1996 1995
Cash flows from operating activitiesCASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)loss $ 63,000 (11,000)(154,000) (128,000)
Adjustments to reconcile net earnings (loss)loss to net cash provided byused in operating activities
Gain on sale of assets -- (1,000)
Depreciation, depletion, amortization, and amortization 35,000 47,000valuation allowance 1,000 2,000
Decrease in accounts receivable 10,000 32,000
Decrease in other receivables 7,000 32,000- (2,000)
Decrease in other current assets 1,000 --
Decrease4,000 56,000
Increase in accounts payable (21,000) (27,000)
Decrease in accrued production costs (11,000) (22,000)
Decrease in accrued reclamation, restoration, and dismantlement (27,000) (14,000)2,000 17,000
Decrease in other accrued expenses (20,000) --(6,000) (4,000)
------------------------------
Net cash provided byused in operating activities 37,000 36,000
Cash flows from investing activities
Expenditures for oil and gas property development, net of proceeds (2,000) 3,000(153,000) (59,000)
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Other additions to property and equipment (1,000) (4,000)- (5,000)
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Net cash used in investing activities (3,000) (1,000)
Cash flows from financing activities- (5,000)
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CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury stock (19,000) (23,000)(11,000) (72,000)
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Net cash used in financing activities (19,000) (23,000)
Net increase in cash and cash equivalents 15,000 12,000
Cash and cash equivalents at beginning of period 1,103,000 1,012,000
Cash and cash equivalents at end of period(11,000) (72,000)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (164,000) (136,000)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,291,000 4,597,000
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,118,000 1,024,0004,127,000 4,461,000
==============================
See accompanying notes to consolidated, condensed financial statements.
Page 4 of 67
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated, Condensed Financial Statements
(Unaudited)
NoteNOTES TO CONSOLIDATED, CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Financial Statements.FINANCIAL STATEMENTS. In the opinion of management, the accompanying
unaudited, consolidated, con densedcondensed financial statements contain all adjustments
necessary to present fairly the financial position of the Company as of March
31, 1996, its2009, and the cash flows and results of operations for the three and six
months ended March 31,
1996 and 1995, and itsthen ended. Such adjustments consisted only of normal recurring items.
The results of opera tionsoperations for the three and six months ended March 31 1996 and 1995. Such adjustments consisted only of normal re curring
items. Certain reclassifications have been made to the financial statements for
the three and six months ended March 31, 1995, to conform with the
classifications used in the financial statements for the three and six months
ended March 31, 1996. The results of operations for the periods ended March 31
are not
necessarily indica tiveindicative of the results for the full year. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The accounting policies followed by the Company are set forth in Note 1
to the Company's consolidated financial statements contained in the Company's
19952008 Annual Report on Form 10-KSB, and it is suggested that these consoli dated,consolidated,
condensed financial statements be read in conjunction therewith.
Item"SAFE HARBOR" STATEMENT UNDER THE
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UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- --------------------------------------------------------------
Statements that are not historical facts contained in this Form 10-Q are
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ from projected results. Factors that could cause actual
results to differ materially include, among others: general economic conditions;
movements in interest rates; the market price of oil and natural gas; the risks
associated with exploration and production in the Rocky Mountain region; the
Company's ability, or the ability of its operating subsidiary, Altex Oil
Corporation ("AOC"), to find, acquire, market, develop, and produce new
properties; operating hazards attendant to the oil and natural gas business;
uncertainties in the estimation of proved reserves and in the projection of
future rates of production and timing of development expenditures; the strength
and financial resources of the Company's competitors; the Company's ability and
AOC's ability to find and retain skilled personnel; climatic conditions;
availability and cost of material and equipment; delays in anticipated start-up
dates; environmental risks; the results of financing efforts; and other
uncertainties detailed elsewhere herein and in the Company's filings with the
Securities and Exchange Commission.
ITEM 2. Management's Discussion and Analysis or Plan of Operation.
DuringMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
FINANCIAL CONDITION
Cash balances declined $164,000 in the six months ended March 31, 1996, other receivables decreased2009, because
the Company received $8,000used $153,000 cash in refundable production taxes and also
received $6,000 related to an advance for an unsuccessful recompletion. Accounts
payable decreased because the Company has been paying invoices more promptly.
Accrued production costs decreased because lease operating expenses have
declined. Accrued reclamation, restoration, and dismantle ment expense decreased
because during Q1FY96 the Company expended $28,000 to plug the remaining
unplugged wellsactivities in the field discussed below. Other accrued expenses decreased
because the Company received invoices for its previously accrued audit and tax
preparation expense, and because the Company paid its president an accrued
$9,000 bonus. Also included in expenditures for oil and gas property development
during the six months ended
March 31, 1995, is a refund of $3,000.
During the six months ended March 31, 1996, the Company retired
approximately 6,400,0002009, and acquired 68,167 shares of its Common Stock which hadfor $11,000 in
the effect of
reducing Common Stock, par value, by $64,000 and additional paid in capital by
$594,000. During the sixthree months ended MarchDecember 31, 1996, the Company acquired
341,000 shares of its Common Stock at a total cost of $19,000.2008. The Company owns a property which contains oil-contaminated soil. At this
time, the Company cannot reasonably predict what reclamation activities may be
required to restore the property, or their costs. However, based on the
Company's preliminary assessment of the contamination and feasible reclamation
alternatives, the Company origi nally estimated that such reclamation and
restoration costs, including the costs of plugging the wells on the prop erty,
could range from $60,000 to $160,000, of which the Company has accrued $60,000.
As of March 31, 1996, the Company had plugged all of the wells on the property
for a total cost of approximately $42,000, which was applied against the
accrual. The Company expects to begin selling equipment from the property and to
commence reclamation and restoration activities during the Summer of 1996.
Currently, Iraq and the United Nations are negotiating an agreement under
which Iraq may be permitted to export limited quantities of oil. The Company
anticipates that oil and gas prices will decline precipitously from current
levels if Iraq returns to the world oil market. At such prices, unless the
Company's production of oil and gas increases as the result of acquisitions of
producing oil and gas properties, successful drilling activities, or successful
recompletions, the Company is likely to experience
negative cash flow from operations in fiscal 1996. Althoughunless and until the Company continually evaluates possible
acquisitions of producing oil and gas properties, the market for such pro
perties has become highly competitive, with properties trading at prices well
above those implied by the Company's acquisition criteria. Therefore, the
Company has not consummated a significant acquisition ofinvests in
interests in producing oil and gas properties since fiscal 1990.
Page 5 of 6
wells or in another venture that produces
cash flow from operations. With the exception of the Company's intentioncapital expenditures related to
acquire producing oil and
gas properties,production acquisitions or drilling or recompletion activities or an investment
in another venture that produces cash flow from operations, none of which are
currently planned, the cash flows that may re sultcould result from such acquisitions,
activities, or investments, and possible
additional reclamation, restoration, and dismantlement expense, the Com panypossibility of a change in the interest
rates the Company realizes on cash balances, the Company knows of no other
trends or any known demands, commitments, events or uncertainties that havewill
result in or that are reasonably likely to have a material impact onresult in the Company's short-termliquidity
increasing or long-term liquidity.decreasing in any material way.
Except for cash generated by the operation of the Company's produc ingproducing oil and
gas properties, asset sales, orand interest income, the Company has no internal or
external sources of liqui dityliquidity other than its working capital. At April 10,
1996,May 8, 2009,
the Company had no material commitments for capital expenditures.
Sales increasedThe Company regularly assesses its exposure to both environmental liability and
reclamation, restoration, and dismantlement expense ("RR&D"). The Company does
not believe that it currently has any material exposure to environmental
liability or to RR&D, net of salvage value, although this cannot be assured.
Page 5 of 7
RESULTS OF OPERATIONS
Interest income decreased from Q2FY95$33,000 in the three months ended March 31, 2008,
to Q2FY96 because both production$24,000 in the three months ended March 31, 2009, and prices of
both oil and gas increased. Sales increased duringfrom $80,000 in the six
months ended March 31, 1996, as compared2008, to $46,000 in the six months ended March 31, 1995,2009,
because of lower interest rates and lower cash balances. At the decline in sales during Q1FY96 was more than offset bycurrent level of
cash balances and at current interest rates, the increase during
Q2FY96. Other income increased from Q2FY95Company's revenue is unlikely
to Q2FY96 because during Q2FY96exceed its expenses. Unless and until the Company recognized incomeinvests a substantial
portion of $4,000 related to a lease operating expense accrual
for which it is no longer liable, and other income increased for the six months
ended March 31, 1996, as compared to the six months ended March 31, 1995,
because during Q1FY96 the com pany recognized income of $9,000 related to
estimated production tax liability for which it is no longer liable.
General and administrative expense declined from Q2FY95 to Q2FY96 and from
the six months ended March 31, 1995, to the six months ended March 31, 1996,
principally because of reduced rent expense resulting from the termination of
the lease on the Companys Denver office space during FY95. During each of
Q1FY95 and Q2FY95 the Company recognized $5,000its cash balances in exploration expense related
to an unsuccessful attempted recompletion. During Q1FY96 the Company recognized
$8,000 in reclamation, restoration, and dismantlement expense related to the
plugging and abandonment of one well in a field in Wyoming. Depreciation,
depletion, and amortization expense declined from Q2FY95 to Q2FY96 and from the
six months ended March 31, 1995, to the six months ended March 31, 1996, because
the Companys basis in its property and equipment declined. Net income increased
from Q2FY95 to Q2FY96 and from the six months ended March 31, 1995, to the six
months ended March 31, 1996, because, for both the three and six month periods,
revenue increased and expenses declined.
The Company's sales and net income are functions of the prices of oil, gas,
and natural gas liquids and of the level of production expense, all of which are
highly variable and largely beyond the Company's control. In addition, because
the quantity of oil and gas produced from existing wells declines over time, the
Company's sales and net income will decrease unless rising prices offset
production declines or the Company increases its net production by investing in
the drilling of new wells, in successful workovers, or in the acquisition of interests in producing oil and gas wells or gas properties.in
one or more other ventures that produce revenue and net income, the Company is
likely to experience net losses. With the exception of unanticipated variations in production levels, possible additional reclamation,
restoration, and dismantlementRR&D,
unanticipated environmental expense, and price declines resulting from Iraqs
return to the world oil markets,possible changes in interest rates, the
Company is not aware of any other known trends
events, or uncertainties that have had or
that arethe Company reasonably expect ed toexpects will have a material favorable or
unfavorable impact on net sales or revenuerevenues or income from continuing
operations.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. Included in net cash used in operating activities in the
six months ended March 31, 2008, is a decrease in other current assets of
$56,000 and an increase in accounts payable of $17,000. Excluding these items,
net cash used in operating activities in the six months ended March 31, 2008,
was $132,000 compared to net cash used in operating activities in the six months
ended March 31, 2009, of $153,000.
Investing Activities. In the six months ended March 31, 2008, the Company
expended $5,000 on information technology.
Financing Activities. In the six months ended March 31, 2008, the Company
acquired 313,623 shares of its Common Stock for $72,000, and in the three months
ended December 31, 2008, the Company acquired 68,167 shares of its Common Stock
for $11,000.
ITEM 4T. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized, and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Principal Executive
Officer and Principal Financial Officer as appropriate, to allow timely
decisions regarding required disclosure. Management necessarily applied its
judgment in assessing the costs and benefits of such controls and procedures
which, by their nature, can provide only reasonable assurance regarding
management's control objectives.
As of the end of the period covered by the report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Principal Executive Officer and Principal
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon the foregoing, the Company's Principal Executive Officer and
Principal Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiary) required to be
included in the Company's Exchange Act reports. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect internal controls subsequent to the date the Company
carried out its evaluation.
Page 6 of 7
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Section 1350 Certifications
SIGNATURES
In accordance withPursuant 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 thereunto duly authorized.
ALTEX INDUSTRIES, INC.
Date: April 17, 1996May 12, 2009 By: /s/ STEVEN H. CARDIN
-----------------------------------------
Steven H. Cardin
Chief Executive Officer and Principal
Financial Officer
Page 67 of 67
EXHIBIT INDEX
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Section 1350 Certifications