ALTEX INDUSTRIES INC - Quarter Report: 2015 December (Form 10-Q)

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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, 2015

[   ]

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

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 (§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 [ X ] 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 [  ] No [ X ]

Number of shares outstanding of issuer's Common Stock as of February 12, 2016: 12,923,232

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
		December 31				September 30
		2015				2015
		(Unaudited)				(Audited)
Assets
Current assets
Cash and cash equivalents		$	2,578,000			$	2,605,000
Accounts receivable			4,000				7,000
Other			11,000				16,000
Total current assets			2,593,000				2,628,000
Property and equipment, at cost
Proved oil and gas properties (successful efforts method)			334,000				334,000
Other			17,000				17,000
Total property and equipment, at cost			351,000				351,000
Less accumulated depreciation, depletion, and amortization			(208,000	)			(202,000	)
Net property and equipment			143,000				149,000
Other assets			1,000				1,000
Total assets			2,737,000				2,778,000
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable			12,000				18,000
Other accrued expenses			899,000				844,000
Total current liabilities			911,000				862,000
Commitments and Contingencies			-				-
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 and outstanding, 12,923,232			129,000				129,000
Additional paid-in capital			13,851,000				13,851,000
Accumulated deficit			(12,154,000	)			(12,064,000	)
Total stockholders' equity			1,826,000				1,916,000
Total stockholders' equity and liabilities		$	2,737,000			$	2,778,000
See accompanying notes to consolidated, condensed, uaudited financial statements.

 

 

 

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
		Three Months Ended
		December 31
		2015				2014
Revenue
Oil and gas sales		$	5,000			$	20,000
Other income			-				3,000
Total revenue			5,000				23,000
Costs and expenses
Lease operating			-				1,000
Production taxes			-				2,000
General and administrative			93,000				92,000
Depreciation, depletion, and amortization			6,000				5,000
Total costs and expenses			99,000				100,000
Other income (expense)
Interest income			4,000				4,000
Net loss		$	(90,000	)		$	(73,000	)
Loss per share		$	(0.01	)		$	(0.01	)
Weighted average shares outstanding			12,923,232				12,975,321
See accompanying notes to consolidated, condensed, unaudited financial statements.

 

 

 

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow
(Unaudited)
		Three months ended
		December 31
		2015				2014
Cash flows used in operating activities
Net loss		$	(90,000	)		$	(73,000	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation, depletion, and amortization			6,000				5,000
Decrease (increase) in accounts receivable			3,000				(4,000	)
Decrease in other current assets			5,000				5,000
Decrease in accounts payable			(6,000	)			-
Increase in other accrued expenses			55,000				52,000
Net cash used in operating activities			(27,000	)			(15,000	)
Cash flows provided by investing activities			-				-
Net decrease in cash and cash equivalents			(27,000	)			(15,000	)
Cash and cash equivalents at beginning of period			2,605,000				2,699,000
Cash and cash equivalents at end of period		$	2,578,000			$	2,684,000
See accompanying notes to consolidated, condensed, unaudited financial statements.

 

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated, Condensed, Unaudited 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, 2015, 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 2015 Annual Report on Form 10‑K, and it is suggested that these consolidated, condensed financial statements be read in conjunction therewith.

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 decreased $27,000 in the three months ended December 31, 2015 ("Q1FY16"). At December 31, 2015, $896,000 of other accrued expenses is accrued but unpaid salary (and related accrued payroll tax liability) due the Company's president pursuant to his employment agreement that the Company's president has elected to defer. 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. However, during Q1FY16, the Company expended approximately $1,000 to develop and test market a new venture, which has produced no revenue and the success of which cannot be assured.

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 12, 2016, the Company had no material commitments for capital expenditures.

The Company regularly assesses its exposure to 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.

Results of Operations

Oil and gas sales decreased from $20,000 during the three months ended December 31, 2014 ("Q1FY15"), to $5,000 during Q1FY16 because of the significant decline in world prices. 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. The Company used $27,000 and $15,000 cash in operating activities in Q1FY16 and Q1FY15, respectively.

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.

PART II - OTHER INFORMATION

Item 6. Exhibits

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.