UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
For the quarterly period ended December 31, 2011
[   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                   .

Commission file number 1-9030


ALTEX INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)


Delaware 84-0989164
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

 
PO Box 1057  Breckenridge CO  80424-1057
(Address of principal executive offices) (Zip Code)
 
(303) 265-9312
(Registrant's telephone number, including area code)

Indicate by check mark whether the 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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, veryevery Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] 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 Stock as of July 18, 2011:February 9, 2012: 13,619,606

 
Page 1 of 8
 
 
Item 1. Financial Statements
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
  June 30  September 30 
  2011  2010 
  (Unaudited)  (Audited) 
Assets      
Current assets      
    Cash and cash equivalents $3,097,000   3,327,000 
    Accounts receivable  11,000   12,000 
    Other  3,000   4,000 
Total current assets  3,111,000   3,343,000 
         
Property and equipment, at cost        
    Proved oil and gas properties (successful efforts method)  351,000   351,000 
    Other  17,000   17,000 
Total property and equipment, at cost  368,000   368,000 
    Less accumulated depreciation, depletion, and amortization  (116,000)  (98,000)
Net property and equipment  252,000   270,000 
         
Other assets  5,000   5,000 
         
Total assets  3,368,000   3,618,000 
         
Liabilities and Stockholders’ Equity        
Current liabilities        
    Accounts payable  14,000   23,000 
    Other accrued expenses  35,000   35,000 
Total current liabilities  49,000   58,000 
         
Commitments and Contingencies  -   - 
         
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 and outstanding, 13,619,606  136,000   136,000 
    Additional paid-in capital  13,928,000   13,928,000 
    Accumulated deficit  (10,745,000)  (10,504,000)
Total stockholders' equity  3,319,000   3,560,000 
         
Total stockholders' equity and liabilities $3,368,000   3,618,000 
         
See accompanying notes to consolidated, condensed financial statements.
PART I - FINANCIAL INFORMATION
       
Item 1. Financial Statements      
       
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
       
       
  December 31  September 30 
  2011  2011 
  (Unaudited)  (Audited) 
Assets      
Current assets      
    Cash and cash equivalents $2,943,000   2,584,000 
    Accounts receivable  13,000   14,000 
    Other  4,000   504,000 
Total current assets  2,960,000   3,102,000 
         
Property and equipment, at cost        
    Proved oil and gas properties (successful efforts method)  350,000   350,000 
    Other  17,000   17,000 
Total property and equipment, at cost  367,000   367,000 
    Less accumulated depreciation, depletion, and amortization  (128,000)  (122,000)
Net property and equipment  239,000   245,000 
         
Other assets  4,000   4,000 
         
Total assets  3,203,000   3,351,000 
         
Liabilities and Stockholders’ Equity        
Current liabilities        
    Accounts payable  18,000   26,000 
    Other accrued expenses  72,000   106,000 
Total current liabilities  90,000   132,000 
         
Commitments and Contingencies  -   - 
         
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 and outstanding, 13,619,606  136,000   136,000 
    Additional paid-in capital  13,928,000   13,928,000 
    Accumulated deficit  (10,951,000)  (10,845,000)
Total stockholders' equity  3,113,000   3,219,000 
         
Total stockholders' equity and liabilities $3,203,000   3,351,000 
         
See accompanying notes to consolidated, condensed financial statements.
 
Page 2 of 8
 
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
 
  Three Months Ended 
  December 31 
  2011  2010 
Revenue      
    Oil and gas sales $23,000   29,000 
    Interest income  5,000   9,000 
    Other  -   1,000 
Total revenue  28,000   39,000 
         
Costs and expenses        
    Lease operating  1,000   2,000 
    Production taxes  2,000   3,000 
    General and administrative  125,000   111,000 
    Depreciation, depletion, and amortization  6,000   5,000 
Total costs and expenses  134,000   121,000 
         
Net loss $(106,000)  (82,000)
         
Loss per share $(0.008)  (0.006)
         
Weighted average shares outstanding  13,619,606   13,619,606 
  
See accompanying notes to consolidated, condensed financial statements.
 
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES 
Consolidated Statement of Operations 
(Unaudited) 
             
  Three Months Ended  Nine Months Ended 
  June 30  June 30 
  2011  2010  2011  2010 
Revenue            
    Oil and gas sales $26,000   30,000   88,000   81,000 
    Interest income  7,000   10,000   24,000   34,000 
    Other  3,000   3,000   5,000   3,000 
Total revenue  36,000   43,000   117,000   118,000 
                 
Costs and expenses                
    Lease operating  -   1,000   3,000   3,000 
    Production taxes  2,000   3,000   8,000   8,000 
    General and administrative  112,000   106,000   329,000   328,000 
    Depreciation, depletion, and amortization  6,000   -   18,000   2,000 
Total costs and expenses  120,000   110,000   358,000   341,000 
                 
Net loss $(84,000)  (67,000)  (241,000)  (223,000)
                 
Loss per share $(0.006)  (0.005)  (0.018)  (0.016)
                 
Weighted average shares outstanding  13,619,606   13,885,734   13,619,606   13,885,734 
                 
See accompanying notes to consolidated, condensed financial statements.

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flow
(Unaudited)
  Three months ended 
  December 31 
  2011  2010 
Cash flows used in operating activities      
    Net loss $(106,000)  (82,000)
Adjustments to reconcile net loss to net cash used in operating activities 
        Depreciation, depletion, and amortization  6,000   5,000 
        Decrease in accounts receivable  1,000   - 
        Increase (decrease) in accounts payable  (8,000)  4,000 
        Increase (decrease) in other accrued expenses  (34,000)  1,000 
Net cash used in operating activities  (141,000)  (72,000)
         
Cash flows provided by investing activities        
    Deposit on potential investment subsequently terminated  500,000   - 
Total cash flows provided by investing activities  500,000   - 
         
Net increase (decrease) in cash and cash equivalents  359,000   (72,000)
Cash and cash equivalents at beginning of period  2,584,000   3,327,000 
Cash and cash equivalents at end of period $2,943,000   3,255,000 
         
See accompanying notes to consolidated, condensed financial statements.
 
Page 3 of 8
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES 
Consolidated Statement of Cash Flow 
(Unaudited) 
  Nine months ended 
  June 30 
  2011  2010 
Cash flows used in operating activities      
    Net loss $(241,000)  (223,000)
    Adjustments to reconcile net loss to net cash used in operating activities        
        Depreciation, depletion, and amortization  18,000   2,000 
        (Increase) decrease in accounts receivable  1,000   (4,000)
        (Increase) decrease in other current assets  1,000   (1,000)
        Increase (decrease) in accounts payable  (9,000)  1,000 
        Decrease in other accrued expenses  -   (3,000)
Net cash used in operating activities  (230,000)  (228,000)
         
Cash flows used in investing activities        
    Expenditures for oil and gas property acquisitions  -   (291,000)
Total cash flows used in investing activities  -   (291,000)
         
Net decrease in cash and cash equivalents  (230,000)  (519,000)
Cash and cash equivalents at beginning of year  3,327,000   3,964,000 
Cash and cash equivalents at end of year $3,097,000   3,445,000 
         
See accompanying notes to consolidated, condensed financial statements.

Page 4 of 8
 
 
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated, Condensed Financial Statements
(Unaudited)

Note 1 - Financial Statements. In the opinion of management, the accompanying unaudited, consolidated, condensed financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30,December 31, 2011, and the cash flows for the nine months then ended, and the results of operations for the three and nine months then ended. Such adjustments consisted only of normal recurring items. The results of operations for the three months and nine months ended June 30December 31 are not necessarily indicative 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 20102011 Annual Report on Form 10-K, and it is suggested that these consolidated, condensed financial statements be read in conjunction therewith.

“SAFE HARBOR” STATEMENT UNDER THE
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 of Financial Condition and Results of Operation.

Financial Condition

Cash balances declined $230,000increased $359,000 in the ninethree months ended June 30,December 31, 2011, primarily because of a refund to the Company of a $500,000 cash deposit made in connection with a potential investment that was terminated. This was offset by $141,000 in cash used $230,000 cash in operating activities. In the nine months ended June 30, 2010, cash declined $519,000 because the Company used $228,000 cash in operating activities and invested $291,000 in the acquisition of a 4.4% override in the Glo Field in Campbell County, Wyoming. The Company is likely to experience negative cash flow from operations unless and until the Company invests in interests in producing oil and gas wells or in another venture that produces cash flow from operations. With the exception of capital expenditures related to 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 could result from such acquisitions, activities, or investments, and the possibility 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 will result in or that are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way.

Except for cash generated by the operation of the Company's producing oil and gas properties, asset sales, and interest income, the Company has no internal or external sources of liquidity other than its working capital. At July 18, 2011,February 9, 2012, the Company had no material commitments for capital expenditures.

 
Page 5 of 8


The 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.

Results of Operations

General and administrative expense increased from $111,000 in the three months ended December 31, 2010, to $125,000 in the three months ended December 31, 2011, principally because a $24,000 decrease in salary expense was more than offset by a $43,000 increase in acquisition expense. At the current level of cash balances and at current interest rates, the Company’s revenue is unlikely to exceed its expenses. Unless and until the Company invests a substantial portion of its cash balances in interests in producing oil and gas wells or 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 RR&D, unanticipated environmental expense, and possible changes in interest rates, the Company is not aware of any other known trends or uncertainties that have had or that the Company reasonably expects will have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations.

Liquidity and Capital Resources

Operating Activities. Net cash used in operating activities in the nine months ended June 30,December 31, 2011 and 2010, was $230,000$141,000 and $228,000,$72,000, respectively.

Investing Activities. In the nine months ended June 30, 2010, the Company expended $291,000 for the acquisition of a 4.4% override in the Glo Field in Campbell County, Wyoming.

Item 4. 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 8
 

PART II - OTHER INFORMATION

Item 6. Exhibits

31.Rule 13a-14(a)/15d-14(a) Certifications
32.*
Section 1350 Certifications
101.xml*
XBRL Instance Document
101.xsd*
XBRL Taxonomy Extension Schema Document
101.cal*
XBRL Taxonomy Extension Calculation Linkbase Document
101.def*
XBRL Taxonomy Extension Definition Linkbase Document
101.lab*
XBRL Taxonomy Extension Label Linkbase Document
101.pre*
XBRL Taxonomy Extension Presentation Linkbase Document
___________________________
* Furnished. Not Filed. Not incorporated by reference. Not subject to liability.



 
Page 7 of 8
 

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 thereunto duly authorized.

ALTEX INDUSTRIES, INC.

Date:  July 18, 2011February 9, 2012By: /s/ STEVEN H. CARDIN
 
 Steven H. Cardin
 Chief Executive Officer and Principal Financial Officer

Page 8 of 8