U. S. 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, 1995
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
(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)
--------------------------------------------------------------
(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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of issuer's common equity as of January 15, 1996:
14,026,989
Transitional Small Business Disclosure Format:
Yes No X
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Page 1 of 6
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1995
(Unaudited)
Assets
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<S> <C>
Current Assets
Cash and cash equivalents $ 1,067,000
Accounts receivable 131,000
Other receivables 18,000
Other 14,000
Total current assets 1,230,000
Property and equipment, at cost
Proved oil and gas properties (successful efforts method) 2,385,000
Other 68,000
2,453,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (2,110,000)
Net property and equipment 343,000
$ 1,573,000
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 31,000
Accrued production costs 56,000
Accrued reclamation, restoration, and dismantlement 17,000
Other accrued expenses 19,000
Total current liabilities 123,000
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 14,026,989 shares 140,000
Additional paid-in capital 14,177,000
Accumulated deficit (12,644,000)
Note receivable from stockholder (223,000)
1,450,000
$ 1,573,000
</TABLE>
See accompanying notes to consolidated, condensed financial statements.
Page 2 of 6
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
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<S> <C> <C>
Three Months Ended
December 31
1995 1994
Revenue
Oil and gas sales $ 188,000 197,000
Interest 17,000 15,000
Gain on sale of assets -- 1,000
Other 8,000 2,000
213,000 215,000
Costs and expenses
Lease operating 84,000 80,000
Production taxes 17,000 24,000
Exploration -- 5,000
General and administrative 81,000 86,000
Reclamation, restoration, and dismantlement 8,000 --
Depreciation, depletion, and amortization 17,000 22,000
207,000 217,000
Net earnings (loss) $ 6,000 (2,000)
Earnings (loss) per share $ * *
Weighted average shares outstanding 14,224,587 14,819,267
</TABLE>
*Less than $.01 per share
See accompanying notes to consolidated, condensed financial statements.
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow
(Unaudited)
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<S> <C> <C>
Three months Ended
December 31
1995 1994
Cash flows from operating activities
Net earnings (loss) $ 6,000 (2,000)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities
Gain on sale of assets -- (1,000)
Depreciation, depletion, and amortization 17,000 22,000
Decrease in accounts receivable 7,000 38,000
Decrease in other receivables 11,000 23,000
Decrease in other current assets 1,000 --
Increase (decrease) in accounts payable (9,000) 5,000
Increase (decrease) in accrued production costs 1,000 (28,000)
Decrease in accrued reclamation, restoration, and dismantlement (28,000) (6,000)
Decrease in other accrued expenses (24,000) (5,000)
Net cash provided by (used in) operating activities (18,000) 46,000
Cash flows from investing activities
Additions to other property and equipment (1,000) (3,000)
Net cash used in investing activities (1,000) (3,000)
Cash flows from financing activities
Acquisition of Common Stock (17,000) (23,000)
Net cash used in financing activities (17,000) (23,000)
Net increase (decrease) in cash and cash equivalents (36,000) 20,000
Cash and cash equivalents at beginning of period 1,103,000 1,012,000
Cash and cash equivalents at end of period $ 1,067,000 1,032,000
</TABLE>
See accompanying notes to consolidated, condensed financial statements.
Page 4 of 6
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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, con densed financial statements contain all adjustments
necessary to present fairly the financial position of the Company as of December
31, 1995, its cash flows for the quarters ended December 31, 1995 and 1994
("Q1FY96" and "Q1FY95"), and its results of operations for Q1FY96 and Q1FY95.
Such adjustments consisted only of normal re curring items. Certain
reclassifications have been made to the financial statements for Q1FY95 to
conform with the classifications used in the financial statements for Q1FY96.
The results of operations for the periods 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 1995
Annual Report on Form 10-KSB, and it is suggested that these consolidated,
condensed financial statements be read in conjunction therewith.
Item 2. Management's Discussion and Analysis or Plan of Operation.
During Q1FY96 cash decreased because the Company used $18,000 cash in operating
activities and expended $17,000 cash on the acquisition of shares of its Common
Stock. Cash provided by operating activities decreased as compared to Q1FY95
because during Q1FY96 the Company expended funds that reduced accounts payable,
accrued reclamation, restoration, and dismantlement expense, and other accrued
expenses. During Q1FY96 other receivables decreased because the Company received
$8,000 in refundable production taxes and $6,000 in prepaid expense related to
an unsuccessful recompletion. Accrued reclamation, restoration, and
dismantlement expense decreased during Q1FY96 because the Company expended
$28,000 to plug the remaining unplugged wells in the field discussed below.
Other accrued expenses decreased during the quarter because the Company received
invoices for its previously accrued audit and tax preparation expense, and
because during Q1FY96 the Company paid its president an accrued $9,000 bonus.
Also during Q1FY96 the Company retired approximately 6,400,000 shares of its
Common Stock, which had the effect of reducing Common Stock, par value, by
$64,000 and additional paid in capital by $594,000. During Q1FY96 the Company
acquired 306,000 shares of its Common Stock at a total cost of $17,000.
The Company owns property which contains oil-contaminated soil. At this time,
the Company cannot reasonably predict what reclamation activities may be
required to restore the property, or their costs. However, based on the
Company's preliminary assessment of the contamination and feasible reclamation
alternatives, the Company esti mates such reclamation and restoration costs
could range from $60,000 to $160,000, of which the Company has accrued $60,000.
As of December 31, 1995, the Company had plugged all of the wells on the
property for a total cost of approximately $43,000. The Company expects to begin
selling equipment from the property and to commence reclamation and restoration
activities during the Summer of 1996. There were no other material changes in
the Company's financial condition during Q1FY96.
At current oil and gas prices, unless the Company's production of oil and gas
increases as the result of acquisitions of producing oil and gas properties,
successful drilling activities, or successful recompletions, the Company is
likely to experience negative cash flow from operations in fiscal 1996. Although
the Company continually evaluates possible acquisitions of producing oil and gas
properties, the market for such properties has become highly competitive, with
properties trading at prices well above those implied by the Company's
acquisition criteria. Therefore, the Company has not consummated a significant
acquisition of interests in producing oil and gas properties since fiscal 1990.
Page 5 of 6
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With the exception of the Company's intention to acquire producing oil and gas
properties, cash flows that may result from such acquisitions, and possible
additional reclamation, restoration, and dismantlement expense, the Company
knows of no trends, events, or uncertainties that have or are reasonably likely
to have a material impact on the Com pany'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, or interest income, the Company has no internal or
external sources of liquidity other than its working capital. At January 15,
1996 the Company had no material commitments for capital expenditures.
Other income increased from Q1FY95 to Q1FY96 because the Company recognized
income of $9,000 related to an estimated production tax liability for which it
is no longer liable. Production taxes declined from Q1FY95 to Q1FY96 because of
reduced sales. During Q1FY95 the Company recognized $5,000 in exploration
expense related to an attempted recompletion. During Q1FY96 the Company
recognized $8,000 in reclamation, restoration, and dismantlement expense related
to the plugging and abandonment of one well in a field in Wyoming. Depreciation,
depletion, and amortization expense declined from Q1FY95 to Q1FY96 because the
Company's basis in its property and equipment declined. Net income increased
from Q1FY95 to Q1FY96 because a slight reduction in revenue was more than offset
by a reduction in expense.
The Company's sales and net income are functions of the prices of oil, gas, and
natural gas liquids and of the level of production expense, all of which are
highly variable and largely beyond the Company's control. In addition, because
the quantity of oil and gas produced from existing wells declines over time, the
Company's sales and net income will decrease unless rising prices offset
production declines or the Company increases its net production by investing in
the drilling of new wells, in successful workovers, or in the acquisition of
interests in producing oil or gas properties. With the exception of
unanticipated variations in production levels and possible additional
reclamation, restoration, and dismantlement expense, 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 sales or revenue or income from continuing
operations.
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: January 23, 1996 By: /s/ STEVEN H. CARDIN
Steven H. Cardin
Chief Executive Officer and
Principal Financial Officer
Page 6 of 6
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 1067000
<SECURITIES> 0
<RECEIVABLES> 149000
<ALLOWANCES> 0
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<PP&E> 2453000
<DEPRECIATION> 2110000
<TOTAL-ASSETS> 1573000
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0
0
<OTHER-SE> 1310000
<TOTAL-LIABILITY-AND-EQUITY> 1573000
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