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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 December 31, 1999
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)
(970) 453-6641
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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 February 3, 2000:
15,561,491
Transitional Small Business Disclosure Format:
Yes No X
Page 1 of 7
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLODATED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,664,000
Accounts receivable 79,000
Other receivables 14,000
Other 2,000
Total current assets 1,759,000
PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties (successful efforts method) 2,139,000
Other 74,000
2,213,000
Less accumulated depreciation, depletion, amortization, and valuation allowance (2,124,000)
Net property and equipment 89,000
OTHER ASSETS 33,000
$ 1,881,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,000
Accrued production costs 32,000
Accrued reclamation, restoration, and dismantlement 1,000
Other accrued expenses 26,000
Total current liabilities 87,000
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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 December 31, 1999 (9,000)
Accumulated deficit (12,274,000)
Note receivable from stockholder (359,000)
1,794,000
$ 1,881,000
</TABLE>
See accompanying notes to consolidated, condensed financial statements.
Page 2 of 7
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
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THREE MONTHS ENDED
DECEMBER 31
1999 1998
REVENUE
Oil and gas sales $ 178,000 87,000
Interest income 25,000 26,000
Other income 2,000 2,000
205,000 115,000
COSTS AND EXPENSES
Lease operating 73,000 66,000
Production taxes 21,000 12,000
General and administrative 90,000 95,000
Reclamation, restoration, and dismantlement -- 1,000
Depreciation, depletion, amortization, and valuation allowance 5,000 45,000
189,000 219,000
NET EARNINGS (LOSS) $ 16,000 (104,000)
EARNINGS (LOSS) PER SHARE $ * (0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING 15,687,263 15,741,198
</TABLE>
*Less than $.01 per share
See accompanying notes to consolidated, condensed financial statements.
Page 3 of 7
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ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
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THREE MONTHS ENDED
DECEMBER 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 16,000 (104,000)
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation, depletion, amortization, and valuation allowance 5,000 45,000
Decrease (increase) in accounts receivable (8,000) 5,000
Increase in other receivables (1,000) (1,000)
Decrease in other current assets -- --
Increase in accounts payable 12,000 10,000
Increase in accrued production costs 4,000 11,000
Decrease in accrued reclamation, restoration, and dismantlement (3,000) (16,000)
Decrease in other accrued expenses (9,000) (9,000)
Net cash provided by (used in) operating activities 16,000 (59,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for oil and gas property development -- (1,000)
Other additions to property and equipment (3,000) --
Net cash used in investing activities (3,000) (1,000)
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 4,000 (63,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,660,000 1,734,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,664,000 1,671,000
</TABLE>
See accompanying notes to consolidated, condensed financial statements.
Page 4 of 7
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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 December
31, 1999, and the cash flows and results of operations for the three months then
ended ("Q1FY00"). Such adjustments consisted only of normal recurring items.
Certain reclassifications have been made to the financial statements for the
three months ended December 31, 1998 ("Q1FY99"), to conform with the
classifications used in the financial statements for Q1FY00. 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 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FINANCIAL CONDITION
Cash balances increased in Q1FY00 because of net cash provided by operating
activities, and 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 Q1FY99 and Q1FY00, 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 February 3, 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
February 3, 2000, the Company had no material commitments for capital
expenditures.
Page 5 of 7
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RESULTS OF OPERATIONS
Oil sales increased 116% from $49,000 in Q1FY99 to $106,000 in Q1FY00, and gas
sales increased 89% from $38,000 in Q1FY99 to $72,000 in Q1FY00. Oil sales
increased because a 17% decrease in oil sold was offset by a 160% increase in
realized oil prices. Gas sales increased because a 37% decrease in gas sold was
offset by a 199% increase in realized gas prices. Production taxes increased
because of increased sales. Depreciation, depletion, amortization, and valuation
allowance ("DDA&V") in Q1FY99 consisted of $5,000 in depreciation and depletion
expense and impairment expense of $40,000. Net earnings (loss) increased from a
loss of $104,000 in Q1FY99 to earnings of $16,000 in Q1FY00 because of increased
sales and decreased expenses.
LIQUIDITY
Operating Activities. Cash provided by (used in) operating activities increased
from $59,000 used in operating activities in Q1FY99 to $16,000 provided by
operating activities in Q1FY00 because of increased net earnings.
Investing Activities. In Q1FY99 the Company expended $1,000 for oil and gas
property development, and in Q1FY00 the Company expended $3,000 for other
additions to property and equipment.
Financing Activities. The Company expended $3,000 and $9,000 to acquire 35,000
and 156,000 shares of treasury stock in Q1FY99 and Q1FY00, 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 work overs, or in the acquisition of
interests in producing oil or gas properties. At February 3, 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: February 8, 2000 By: /s/ STEVEN H. CARDIN
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Steven H. Cardin
Chief Executive Officer and
Principal Financial Officer
Page 6 of 7
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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 7 of 7
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<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 12/31/99, 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> DEC-31-1999
<CASH> 1,664,000
<SECURITIES> 0
<RECEIVABLES> 93,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,759,000
<PP&E> 2,213,000
<DEPRECIATION> 2,124,000
<TOTAL-ASSETS> 1,881,000
<CURRENT-LIABILITIES> 87,000
<BONDS> 0
0
0
<COMMON> 157,000
<OTHER-SE> 1,637,000
<TOTAL-LIABILITY-AND-EQUITY> 1,881,000
<SALES> 178,000
<TOTAL-REVENUES> 205,000
<CGS> 0
<TOTAL-COSTS> 189,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 16,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,000
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
