UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 5, 2006
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ALTEX INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-9030 84-0989164
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
PO Box 1057 Breckenridge, CO 80424-1057
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 265-9312
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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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act
[ ] Pre-commencement communications pursuant to Rule 13e-4(C) under the
Exchange Act
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"SAFE HARBOR" STATEMENT UNDER THE
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UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
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Statements that are not historical facts contained in this Form 8-K 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;
the market price of oil and natural gas; the risks associated with exploration
and production in the Rocky Mountain region; the ability of Registrant's
wholly-owned 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 competitors; 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 in
Registrant's 2005 Annual Report filed on Form 10-KSB with the Securities and
Exchange Commission.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On December 14, 2005, at an Oil & Gas Asset Clearinghouse auction in Houston,
Texas, AOC agreed to sell all of its non-operated working interests in producing
oil and gas wells in Wyoming to Wellstar Corporation; all of its operated
working interests in producing oil and gas wells to Chaparral Energy, LLC; and
all of its overriding royalty interests in producing oil and gas wells in
Wyoming to Penroc Oil Corporation. On January 5, 2006, AOC received $1,853,000
cash from Wellstar Corporation; $347,000 cash from Chaparral; and $187,000 cash
from Penroc. The transactions are subject to rescission and pricing adjustments
until 61 days after the recordation filing date of the conveyancing documents.
AOC retains very small working and overriding royalty interests in producing oil
and gas wells in the Bluebell-Altamont Field in Utah, an overriding royalty
interest in undrilled locations in the Standard Draw and Echo Springs Fields in
Wyoming, and an interest in an application for leases under the Combined
Hydrocarbon Leasing Act of 1981 in the Tar Sands Triangle Area of Utah.
Registrant intends to reinvest the proceeds of the sale either in interests in
oil and gas properties or otherwise. There can be no assurance as to if and
when any such reinvestment would be made.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
During the quarter ending December 31, 2005 ("Q1FY06"), AOC sold its
non-operated working interests in three producing oil and gas wells for $227,000
cash and, in three separate transactions, agreed to sell substantially all of
its remaining interests in producing oil and gas wells for $2,387,000 cash,
which it received during the quarter ending March 31, 2006 ("Q2FY06"). Below are
a pro forma condensed consolidated balance sheet and pro forma condensed
consolidated Statement of Operations for Registrant and AOC. Pro forma
adjustments related to the pro forma condensed consolidated balance sheet have
been computed assuming the transactions referred to above had been consummated
as of September 30, 2005, and include adjustments which give effect to events
that are directly attributable to the transactions, regardless of whether they
have a continuing impact or are nonrecurring. Pro forma adjustments related to
the pro forma condensed consolidated Statement of Operations have been computed
assuming the transactions were consummated at the beginning of the year ending
September 30, 2005 ("FY05"), and include adjustments which give effect to events
that are directly attributable to the transaction and expected to have a
continuing impact on Registrant. The pro forma condensed consolidated Statement
of Operations discloses loss from continuing operations before nonrecurring
charges or credits directly attributable to the transactions. Material
nonrecurring charges or credits and related tax effects which result directly
from the transactions and which will be included in the income of Registrant
during the year ending September 30, 2006 ("FY06"), have been disclosed
separately, and such charges or credits were not considered in the pro forma
condensed consolidated Statement of Operations.
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ALTEX INDUSTRIES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, ADJUSTMENTS PRO FORMA
2005
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ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 2,281,000 2,614,000 4,895,000
Accounts receivable 149,000 149,000
Other (Note 1) 19,000 (16,000) 3,000
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Total current assets 2,449,000 5,047,000
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PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) (Note 2) 1,076,000 (985,000) 91,000
Other 63,000 63,000
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1,139,000 154,000
Less accumulated depreciation, depletion, amortization, and
valuation allowance (Note 2)
(1,091,000) 945,000 (146,000)
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Net property and equipment 48,000 8,000
OTHER ASSETS 13,000 13,000
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$ 2,510,000 5,068,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 16,000 16,000
Accrued production costs 51,000 51,000
Other accrued expenses (Note 3) 79,000 256,000 335,000
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Total current liabilities 146,000 402,000
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STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized 5,000,000 shares, none
issued -- --
Common stock, $.01 par value. Authorized 50,000,000 shares,
14,877,117 shares issued and outstanding 149,000 149,000
Additional paid-in capital 14,191,000 14,191,000
Accumulated deficit (Note 3) (11,617,000) 2,302,000 (9,315,000)
Notes receivable from stockholders (359,000) (359,000)
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2,364,000 4,666,000
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$ 2,510,000 $ 5,068,000
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See Notes to Pro Forma Condensed Consolidated Financial Statements
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ALTEX INDUSTRIES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Material nonrecurring charges or credits and related tax effects which result
directly from the transactions and which will be included in the income of
Registrant within the 12 months succeeding the transactions are not considered
in the pro forma condensed consolidated Statement of Operations. See Notes 3 and
6 below.
2005 ADJUSTMENTS PRO FORMA
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REVENUE
Oil and gas sales (Note 4) $ 972,000 (972,000) -
Interest (Note 5) 55,000 125,000 180,000
Other income 2,000 2,000
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1,029,000 182,000
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COSTS AND EXPENSES
Lease operating (Note 4) 293,000 (293,000) -
Production taxes (Note 4) 118,000 (118,000) -
General and administrative 453,000 453,000
Depreciation, depletion, and amortization (Note 4) 9,000 (4,000) 5,000
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873,000 458,000
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NET EARNINGS (LOSS) $ 156,000 (276,000)
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EARNINGS (LOSS) PER SHARE OF COMMON STOCK $ 0.01 (0.02)
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WEIGHTED AVERAGE SHARES OUTSTANDING 14,881,949 14,881,949
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See Notes to Pro Forma Condensed Consolidated Financial Statements
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ALTEX INDUSTRIES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NOTE 1 - CASH AND CASH EQUIVALENTS AND OTHER CURRENT ASSETS. Adjustment consists
of $227,000 cash received during Q1FY06 from the sale of non-operated working
interests in three producing oil and gas wells and $2,387,000 cash received
during Q2FY06 from the sale of substantially all remaining interests in
producing oil and gas wells.
NOTE 2 - PROVED OIL AND GAS PROPERTIES AND ACCUMULATED DEPRECIATION, DEPLETION,
AMORTIZATION, AND VALUATION ALLOWANCE. Adjustment consists of removal of
$985,000 from proved oil and gas properties and $945,000 from accumulated
depreciation, depletion, amortization, and valuation allowance.
NOTE 3 - OTHER ACCRUED EXPENSES AND ACCUMULATED DEFICIT. The gain on sale
realized from the sale of AOC's interests in producing oil and gas wells is
estimated to be $2,558,000 (See Note 6). Pursuant to his employment agreement,
Registrant's president is to receive a bonus equal to no less than 10% of
earnings before tax, which implies a bonus payable of $256,000 as a result of
the gain on sale.
NOTE 4 - OIL AND GAS SALES, LEASE OPERATING EXPENSE, PRODUCTION TAXES, AND
DEPLETION. If during the year ending September 30, 2005, AOC had not reinvested
the proceeds of the sale of its interests in producing oil and gas wells into
interests in other producing oil and gas wells, then oil and gas sales, lease
operating expense, production taxes, and depletion would all have been zero.
NOTE 5 - INTEREST INCOME. Actual cash balances at September 30, 2004, were
$2,114,000. Proceeds from the sale of AOC's interest in producing oil and gas
properties are $2,614,000. Assuming average realized interest rates on cash
balances of 4% and average cash balances of $4,500,000, implies pro forma
interest income of $180,000.
NOTE 6 - MATERIAL NONRECURRING CHARGES OR CREDITS AND RELATED TAX EFFECTS.
Registrant estimates gain on sale that will be included in the income of
Registrant during FY06 if no transaction is rescinded and if no pricing
adjustment occurs as follows:
Proceeds from sales $2,614,000
Capitalized selling expenses (16,000)
Capitalized cost of interests sold (985,000)
Accumulated depletion and valuation allowance 945,000
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Gain on sale of assets $2,558,000
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No provision for income taxes has been made because of the anticipated
utilization of deferred tax assets previously not recognized due to the prior
establishment of a valuation allowance.
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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.
ALTEX INDUSTRIES, INC.
Date: January 9, 2006 /s/ STEVEN H. CARDIN
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By: Steven H. Cardin,
Chief Executive Officer
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