UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from to.
Commission file number 1-9030
ALTEX INDUSTRIES, INC.
--------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 84-0989164
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
PO Box 1057 Breckenridge CO 80424-1057
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(Address of Principal Executive Offices)
(303) 265-9312
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 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 February 6,
2008: 14,220,217
Transitional Small Business Disclosure Format. Yes [ ] No [ X ]
Page 1 of 7
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2007
(UNAUDITED)
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 4,521,000
Accounts receivable 5,000
Other 62,000
------------
Total current assets 4,588,000
------------
PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 91,000
Other 35,000
------------
126,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (120,000)
------------
Net property and equipment 6,000
OTHER ASSETS 8,000
------------
$ 4,602,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 8,000
Other accrued expenses 28,000
------------
Total current liabilities 36,000
------------
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 14,287,524 shares 143,000
Additional paid-in capital 14,047,000
Accumulated deficit (9,608,000)
Treasury shares, at cost, 67,307 shares (16,000)
------------
4,566,000
------------
$ 4,602,000
============
See accompanying notes to consolidated, condensed financial statements.
Page 2 of 7
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31
2007 2006
-------------------------
Revenue
Oil and gas sales $ 5,000 7,000
Interest income 47,000 63,000
-------------------------
52,000 70,000
-------------------------
Costs and expenses
Lease operating - 1,000
Production taxes - 1,000
General and administrative 105,000 121,000
Depreciation, depletion, amortization, and valuation allowance 1,000 1,000
-------------------------
106,000 124,000
-------------------------
Net loss $ (54,000) (54,000)
=========================
Loss per share $ (0.004) (0.004)
=========================
Weighted average shares outstanding 14,242,897 14,346,724
=========================
See accompanying notes to consolidated, condensed financial statements.
Page 3 of 7
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31 DECEMBER 31
2007 2006
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (54,000) (54,000)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation, depletion, amortization, and valuation allowance 1,000 1,000
Increase in accounts receivable (1,000) -
(Increase) decrease in other current assets 3,000 (3,000)
Increase (decrease) in accounts payable 1,000 (18,000)
Decrease in current income taxes payable - (49,000)
Decrease in accrued production costs - (9,000)
Increase (decrease) in other accrued expenses (8,000) 15,000
-----------------------------
Net cash used in operating activities (58,000) (117,000)
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Other additions to property and equipment (2,000) -
-----------------------------
Net cash provided by investing activities (2,000) -
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
-----------------------------
Acquisition of treasury stock (16,000) -
-----------------------------
Net cash used in financing activities (16,000) -
-----------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (76,000) (117,000)
-----------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,597,000 5,140,000
-----------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,521,000 5,023,000
=============================
See accompanying notes to consolidated, condensed financial statements.
Page 4 of 7
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 December
31, 2007, and the cash flows and results of operations for the three months then
ended. Such adjustments consisted only of normal recurring items. The results of
operations for the three months ended December 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 2007 Annual Report
on Form 10-KSB, 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-QSB 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.
FINANCIAL CONDITION
Cash balances declined $76,000 in the three months ended December 31, 2007
("Q1FY08"), because the Company used $58,000 cash in operating activities,
expended $2,000 cash on information technology, and acquired 67,307 shares of
its Common Stock for $16,000. At December 31, 2007, the Company reduced proved
oil and gas properties and related accumulated depreciation, depletion,
amortization, and valuation allowance by $4,000 to reflect final abandonment of
wells in which the Company had owned small over-riding royalty interests. Also
at December 31, 2007, the Company removed $36,000 from other property and
equipment and related accumulated depreciation, depletion, amortization, and
valuation allowance to reflect the abandonment of obsolete office equipment.
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 decline from the current level of interest rates, the Company
knows of no trends, events, or uncertainties that have or are reasonably likely
to have a material impact on the Company's short-term or long-term liquidity.
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 February 6,
2008, the Company had no material commitments for capital expenditures.
Page 5 of 7
AOC is completing the restoration of the area that had contained its East
Tisdale Field in placeCityJohnson County, StateWyoming. AOC has removed all
equipment from the field and has recontoured and reseeded virtually all
disturbed areas in the field. Barring unforeseen events, the Company does not
believe that the expense associated with any remaining restoration activities
will be material, although this cannot be assured. After AOC's bonds with the
state and the Bureau of Land Management are released, the Company does not
believe it will have any further liability in connection with the field,
although this cannot be assured. 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
Interest income decreased from $63,000 in the three months ended December 31,
2006 ("Q1FY07"), to $47,000 in Q1FY08 because of lower interest rates and lower
cash balances. General and administrative expense decreased from $121,000 in
Q1FY07 to $105,000 in Q1FY08 principally because of decreased consulting,
insurance, and legal expense.
The Company's revenue currently consists almost entirely of interest earned on
cash balances. 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
trends, events, or uncertainties that have had or that are reasonably expected
to have a material impact on net sales or revenues or income from continuing
operations.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. Included in net cash used in operating activities in
Q1FY07 are a decrease in accounts payable of $18,000 and a decrease in income
taxes payable of $49,000. Excluding these items, net cash used in operating
activities in Q1FY07 was $50,000 compared to net cash used in operating
activities in Q1FY08 of $58,000.
Investing Activities. In Q1FY08 the Company expended $2,000 on information
technology.
Financing Activities. In Q1FY08 the Company acquired 67,307 shares of its Common
Stock for $16,000.
ITEM 3. 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
Page 6 of 7
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.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Purchases of Equity Securities by the Small Business Issuer and Affiliated
Purchasers
(d)
Maximum Number (or
(c) Approximate
Total Number Dollar Value) of
of Shares Shares (or Units)
(a) (b) (or Units) Purchased as that May Yet
Total Number of Average Part of Publicly Be Purchased
Shares (or Units) Price Paid per Announced Plans or Under the Plans
Period Purchased Share (or Unit) Programs or Programs
--------------------------------------------------------------------------------------------------------------
October 1, 2007
through 67,307 $ 0.23 - -
October 31, 2007
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November 1, 2007
through - - - -
November 30, 2007
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December 1, 2007
through - - - -
December 31, 2007
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The Company has no publicly announced plan or program for the purchase of
shares. In October 2007 the Company purchased 67,307 shares other than through a
publicly announced plan or program in open-market transactions.
ITEM 6. EXHIBITS
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Section 1350 Certifications
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALTEX INDUSTRIES, INC.
Date: February 8, 2008 By: /s/ STEVEN H. CARDIN
----------------------------------------------
Steven H. Cardin
Chief Executive Officer
and Principal Financial Officer
Page 7 of 7
EXHIBIT INDEX
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Section 1350 Certifications