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 December 31, 2009
[ ] 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.
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(Exact name of registrant 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) (Zip Code)
(303) 265-9312
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(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, 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 Stock as of February 9, 2010:
13,885,734
Page 1 of 7
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
------
DECEMBER 31 SEPTEMBER 30
2009 2009
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 3,582,000 3,964,000
Accounts receivable 10,000 9,000
Other 3,000 3,000
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Total current assets 3,595,000 3,976,000
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PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 356,000 68,000
Other 17,000 17,000
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373,000 85,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (83,000) (82,000)
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Net property and equipment 290,000 3,000
OTHER ASSETS 5,000 5,000
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$ 3,890,000 3,984,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable $ 16,000 19,000
Other accrued expenses 34,000 36,000
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Total current liabilities 50,000 55,000
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STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized 5,000,000 shares, none issued -- --
Common stock, $.01 par value. Authorized 50,000,000 shares, 13,885,734 shares 139,000 139,000
issued and outstanding
Additional paid-in capital 13,964,000 13,964,000
Accumulated deficit (10,263,000) (10,174,000)
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3,840,000 3,929,000
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$ 3,890,000 3,984,000
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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
2009 2008
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Revenue
Oil and gas sales $ 20,000 16,000
Interest income 12,000 22,000
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32,000 38,000
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Costs and expenses
Lease operating 1,000 1,000
Production taxes 2,000 1,000
General and administrative 117,000 104,000
Depreciation, depletion, amortization, and valuation allowance 1,000 1,000
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121,000 107,000
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Net loss $ (89,000) (69,000)
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Loss per share $ (0.006) (0.005)
=========================
Weighted average shares outstanding 13,885,734 13,928,709
=========================
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 ENDED
DECEMBER 31
2009 2008
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (89,000) (69,000)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation, depletion, amortization, and valuation allowance 1,000 1,000
Increase in accounts receivable (1,000) (4,000)
Decrease in other current assets - 4,000
Increase (decrease) in accounts payable (3,000) 11,000
Decrease in other accrued expenses (2,000) (4,000)
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Net cash used in operating activities (94,000) (61,000)
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CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for oil and gas property acquisitions (288,000) -
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Net cash used in investing activities (288,000) -
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CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury stock - (11,000)
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Net cash used in financing activities - (11,000)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (382,000) (72,000)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,964,000 4,291,000
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,582,000 4,219,000
=======================
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, 2009, 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 2009 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
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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 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 $382,000 in the three months ended December 31, 2009,
because the Company used $94,000 cash in operating activities and invested
$288,000 in the acquisition of a 4.4% override in the Glo Field in Campbell
County, Wyoming. The purchase price was $275,000, but the Company anticipates a
total expenditure of approximately $300,000 to clear minor title defects. 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 February 9,
2010, the Company had no material commitments for capital expenditures.
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.
Page 5 of 7
RESULTS OF OPERATIONS
Interest income decreased from $22,000 in the three months ended December 31,
2008, to $12,000 in the three months ended December 31, 2009, because of lower
interest rates and lower cash balances. General and administrative expense
increased from $104,000 in the three months ended December 31, 2008, to $117,000
in the three months ended December 31, 2009, because the Company expended
approximately $10,000 evaluating possible acquisitions that it did not
consummate. 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. Included in net cash used in operating activities in the
three months ended December 31, 2008, is an increase in accounts payable of
$11,000. Included in net cash used in operating activities in the three months
ended December 31, 2009, is an decrease in accounts payable of $3,000. Excluding
these items, net cash used in operating activities in the three months ended
December 31, 2008, was $72,000 compared to net cash used in operating activities
in the three months ended December 31, 2009, of $91,000.
Investing Activities. In the three months ended December 31, 2009, the Company
expended $288,000 for the acquisition of a 4.4% override in the Glo Field in
Campbell County, Wyoming.
Financing Activities. In the three months ended December 31, 2008, the Company
acquired 68,167 shares of its Common Stock for $11,000.
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 7
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Section 1350 Certifications
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: February 9, 2010 By:/s/ STEVEN H. CARDIN
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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