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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 March 31, 2000
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.
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(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.)
POB 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, 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 Stock as of April 10, 2000:
15,561,491
Transitional Small Business Disclosure Format:
Yes No X
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Page 1 of 6
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,672,000
Accounts receivable 101,000
Other receivables 12,000
Other 2,000
Total current assets 1,787,000
PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 2,139,000
Other 76,000
2,215,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (2,129,000)
Net property and equipment 86,000
OTHER ASSETS 33,000
$ 1,906,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 18,000
Accrued production costs 28,000
Accrued reclamation, restoration, and dismantlement 1,000
Other accrued expenses 29,000
Total current liabilities 76,000
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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 15,717,491 shares 157,000
Additional paid-in capital 14,279,000
Treasury stock, at cost, 156,000 shares at March 31, 2000 (9,000)
Accumulated deficit (12,238,000)
Notes receivable from stockholders (359,000)
1,830,000
$ 1,906,000
</TABLE>
See accompanying notes to consolidated, condensed financial statements.
Page 2 of 6
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
2000 1999 2000 1999
REVENUE
Oil and gas sales $ 196,000 107,000 374,000 194,000
Interest income 27,000 23,000 52,000 49,000
Other income 1,000 1,000 3,000 3,000
224,000 131,000 429,000 246,000
COSTS AND EXPENSES
Lease operating 58,000 67,000 131,000 133,000
Production taxes 21,000 12,000 42,000 24,000
General and administrative 89,000 93,000 179,000 188,000
Reclamation, restoration, and dismantlement 15,000 -- 15,000 1,000
Depreciation, depletion, amortization, and valuation allowance 5,000 4,000 10,000 49,000
188,000 176,000 377,000 395,000
NET EARNINGS (LOSS) $ 36,000 (45,000) 52,000 (149,000)
EARNINGS (LOSS) PER SHARE $ * * * (0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING 15,561,491 15,735,491 15,624,721 15,738,376
</TABLE>
*Less than $.01 per share
See accompanying notes to consolidated, condensed financial statements.
Page 3 of 6
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
<TABLE>
<S> <C> <C>
SIX MONTHS ENDED
MARCH 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 52,000 (149,000)
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation, depletion, amortization, and valuation allowance 10,000 49,000
Decrease (increase) in accounts receivable (30,000) 24,000
Increase in other receivables 1,000 7,000
Decrease in other current assets -- --
Increase (decrease) in accounts payable 2,000 (2,000)
Increase in accrued production costs -- 8,000
Decrease in accrued reclamation, restoration, and dismantlement (3,000) (16,000)
Decrease in other accrued expenses (6,000) (6,000)
Net cash provided by (used in) operating activities 26,000 (85,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for oil and gas property development -- (2,000)
Other additions to property and equipment (5,000) --
Net cash used in investing activities (5,000) (2,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of treasury stock (9,000) (3,000)
Net cash used in financing activities (9,000) (3,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,000 (90,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,660,000 1,734,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,672,000 1,644,000
</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, condensed financial statements contain all adjustments
necessary to present fairly the financial position of the Company as of March
31, 2000, and the cash flows and results of operations for the three and six
months then ended. Such adjustments consisted only of normal recurring items.
Certain reclassifications have been made to the financial statements for the
three and six months ended March 31, 1999, to conform with the classifications
used in the financial statements for three and six months ended March 31, 2000.
The results of operations for the periods ended March 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 1999
Annual Report on Form 10-KSB, and it is suggested that these consolidated,
condensed financial statements be read in conjunction therewith.
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"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;
the market prices of oil and natural gas; the risks associated with exploration
and production in the Rocky Mountain region; the Company's ability to find,
acquire, and develop new properties and its ability to produce and market its
oil and gas reserves; 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 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. Information included in this document includes
forward-looking statements that can be identified by the use of forward- looking
terminology such as "may," "will," "expect," "anticipate," "believe,"
"estimate," or "continue," or the negative thereof or other variations thereon
or comparable terminology. The statements and disclaimers in this Quarterly
Report on Form 10-QSB constitute cautionary statements identifying important
factors, including risks and uncertainties, with respect to such forward-looking
statements that could cause actual results to differ materially from those
reflected in such forward-looking statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FINANCIAL CONDITION
Cash and cash equivalents increased during the six months ended March 31, 2000,
because of net cash provided by operating activities. Accounts receivable
increased because of increased sales. The Company is completing the restoration
of the area that had contained its East Tisdale Field in Johnson County,
Wyoming. The Company recognized $20,000 in reclamation, restoration, and
dismantlement expense ("RR&D") related to the Field in 1998 and expended $16,000
and $3,000 on RR&D activities in the Field during the three months ended
December 31, 1998 and 1999, respectively. The Company 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 in the Field will
be material, although this cannot be assured. After its bonds with the State of
Wyoming 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 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.
At April 10, 2000, nominal world oil prices were unusually high. At such oil
price levels, all other things being equal, cash flow from operations is likely
to be higher than it would have been at lower price levels. However, 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 the near future. With the exception of capital expenditures
related to production acquisitions or drilling or recompletion activities, none
of which are currently planned, the cash flows that could result from such
acquisitions or activities, and the current high level of oil prices, 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, or interest income, the Company has no
internal or external sources of liquidity other than its working capital. At
April 10, 2000, the Company had no material commitments for capital
expenditures.
RESULTS OF OPERATIONS
Page 5 of 6
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Sales increased from $107,000 for the three months ended March 31, 1999
("Q2FY99"), to $196,000 for the three months ended March 31, 2000 ("Q2FY00"),
because of the combined effects of an 18% decrease in BOE sold and a 131%
increase in average realized price per BOE. Sales increased from $194,000 for
the six months ended March 31, 1999, to $374,000 for the six months ended March
31, 2000, because of the combined effects of a 23% decrease in BOE sold and a
154% increase in average realized price per BOE. Lease operating expense
decreased from $67,000 for Q2FY99 to $58,000 for Q2FY00 and from $133,000 for
the six months ended March 31, 1999, to $131,000 for the six months ended March
31, 2000, because of decreased repair and maintenance expense. Production taxes
increased for the three and six months ended March 31, 2000, as compared to the
three and six months ended March 31, 1999, because of increased sales. During
Q2FY00 the Company incurred $15,000 in expense associated with the plugging and
abandonment of three wells. Included in depreciation, depletion, amortization,
and valuation allowance at March 31, 1999, is a valuation allowance of $40,000.
Net earnings increased from a loss of $45,000 for Q2FY99 to earnings of $36,000
for Q2FY00 and from a loss of $149,000 for the six months ended March 31, 1999,
to earnings of $52,000 for the six months ended March 31, 2000, because of
increased sales.
LIQUIDITY
Operating Activities. Cash provided by (used in) operating activities increased
from negative $85,000 for the six months ended March 31, 1999, to positive
$26,000 for the six months ended March 31, 2000, because of increased earnings.
Investing Activities. During the six months ended March 31, 1999, the Company
expended $2,000 for oil and gas property development, and during the six months
ended March 31, 2000, the Company expended $5,000 for other additions to
property and equipment.
Financing Activities. The Company expended $3,000 and $9,000 to repurchase
35,000 and 156,000 of its shares during the six months ended March 31, 1999 and
2000, respectively.
The Company's revenues and earnings 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 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 decline 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. At April 10, 2000, nominal world
oil prices were unusually high, and both the Company and the oil futures markets
expect price levels to decline. Unless prices remain at the current high levels,
the Company is unlikely to experience material positive earnings unless it
dramatically increases production levels. With the exception of unanticipated
variations in production levels, unanticipated RR&D, unanticipated environmental
expense, and current high oil price levels, 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 the net sales or revenues or income from
continuing operations
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27. Financial Data Schedule - Submitted only in electronic format, pursuant
to Item 601(c) of Regulation S-B.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter.
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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: April 12, 2000 By: /s/ STEVEN H. CARDIN
Steven H. Cardin
Chief Executive Officer
and Principal Financial Officer
Page 6 of 6
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Exhibit Index
27 Financial Data Schedule - Submitted only in electronic format, pursuant to
Item 601(c) of Regulation S-B
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
OF ALTEX INDUSTRIES, INC. FOR THE QUARTER ENDED 03/31/2000, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,672,000
<SECURITIES> 0
<RECEIVABLES> 113,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,787,000
<PP&E> 2,215,000
<DEPRECIATION> 2,129,000
<TOTAL-ASSETS> 1,906,000
<CURRENT-LIABILITIES> 76,000
<BONDS> 0
0
0
<COMMON> 157,000
<OTHER-SE> 1,673,000
<TOTAL-LIABILITY-AND-EQUITY> 1,906,000
<SALES> 196,000
<TOTAL-REVENUES> 224,000
<CGS> 0
<TOTAL-COSTS> 188,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,000
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
