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, 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)
(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 August 12, 2009:
13,885,734
Page 1 of 7
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
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JUNE 30 SEPTEMBER 30
2009 2008
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 4,043,000 4,291,000
Accounts receivable 4,000 6,000
Other 3,000 7,000
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Total current assets 4,050,000 4,304,000
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PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 91,000 91,000
Other 38,000 38,000
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129,000 129,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (125,000) (123,000)
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Net property and equipment 4,000 6,000
OTHER ASSETS 7,000 7,000
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$ 4,061,000 4,317,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable $ 19,000 23,000
Other accrued expenses 34,000 37,000
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Total current liabilities 53,000 60,000
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STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized 5,000,000 shares, none issued -- --
Common stock, $.01 par value. Authorized 50,000,000 shares, issued 13,953,901 shares 140,000 140,000
Additional paid-in capital 13,974,000 13,974,000
Accumulated deficit (10,095,000) (9,857,000)
Treasury shares, at cost, 68,167 shares at June 30, 2009 (11,000) --
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4,008,000 4,257,000
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$ 4,061,000 4,317,000
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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 Nine Months Ended
June 30 June 30
2009 2008 2009 2008
------------------------- ------------------------
Revenue
Oil and gas sales $ 10,000 11,000 26,000 22,000
Interest income 18,000 20,000 64,000 100,000
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28,000 31,000 90,000 122,000
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Costs and expenses
Lease operating 1,000 9,000 2,000 10,000
Production taxes 1,000 1,000 2,000 2,000
General and administrative 109,000 103,000 322,000 311,000
Reclamation, restoration, and dismantlement - 7,000 - 14,000
Depreciation, depletion, amortization, and valuation allowance 1,000 1,000 2,000 3,000
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112,000 121,000 328,000 340,000
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Net loss $ (84,000) (90,000) (238,000) (218,000)
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Loss per share $ (0.006) (0.006) (0.017) (0.015)
========================= ========================
Weighted average shares outstanding 13,885,734 13,973,901 13,900,216 14,116,523
========================= ========================
See accompanying notes to consolidated, condensed financial statements.
Page 3 of 7
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
NINE MONTHS ENDED
JUNE 30
2009 2008
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (238,000) (218,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation, depletion, amortization, and valuation allowance 2,000 3,000
Decrease in accounts receivable 2,000 -
Decrease in other current assets 4,000 58,000
Increase (decrease) in accounts payable (4,000) 14,000
Decrease in other accrued expenses (3,000) (5,000)
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Net cash used in operating activities (237,000) (148,000)
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CASH FLOWS FROM INVESTING ACTIVITIES
Other additions to property and equipment - (5,000)
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Net cash used in investing activities - (5,000)
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CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury stock (11,000) (72,000)
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Net cash used in financing activities (11,000) (72,000)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (248,000) (225,000)
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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 $4,043,000 4,372,000
=======================
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 June 30,
2009, and the cash flows and 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 and nine months ended June 30 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
2008 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 $248,000 in the nine months ended June 30, 2009, because
the Company used $237,000 cash in operating activities in the nine months ended
June 30, 2009, and acquired 68,167 shares of its Common Stock for $11,000 in the
three months ended December 31, 2008. 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 August 12,
2009, 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 $20,000 in the three months ended June 30, 2008,
to $18,000 in the three months ended June 30, 2009, and from $100,000 in the
nine months ended June 30, 2008, to $64,000 in the nine months ended June 30,
2009, because of lower interest rates and lower cash balances. Lease operating
expense decreased from $9,000 in the three months ended June 30, 2008, to $1,000
in the three months ended June 30, 2009, and from $10,000 in the nine months
ended June 30, 2008, to $2,000 in the nine months ended June 30, 2009, because
of reduced repairs and maintenance expense. The Company made two payments of
$7,000 to the surface owner of its East Tisdale Field to secure a landowner
release, one in the three months ended March 31, 2008, and one in the three
months ended June 30, 2008, and, therefore, recognized $7,000 in reclamation,
restoration, and dismantlement expense (" RR&D") in the three months ended June
30, 2008, and $14,000 in the nine months ended June 30, 2008. 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
nine months ended June 30, 2008, is a decrease in other current assets of
$58,000 and an increase in accounts payable of $14,000. Excluding these items,
net cash used in operating activities in the nine months ended June 30, 2008,
was $220,000 compared to net cash used in operating activities in the nine
months ended June 30, 2009, of $237,000.
Investing Activities. In the nine months ended June 30, 2008, the Company
expended $5,000 on information technology.
Financing Activities. In the nine months ended June 30, 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
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: August 12, 2009 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