-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LYRW6Bl4twdMTcj4rOE5ziiifl0PTT2VL8l+D0Of36qzR093uyT31Vzsf6+rkufb hH7WFDD1X/wvqu+D7aOVTA== 0000775057-99-000003.txt : 19990506 0000775057-99-000003.hdr.sgml : 19990506 ACCESSION NUMBER: 0000775057-99-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALTEX INDUSTRIES INC CENTRAL INDEX KEY: 0000775057 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840989164 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 002-99807 FILM NUMBER: 99611642 BUSINESS ADDRESS: STREET 1: PO BOX 1057 STREET 2: 217 S RIDGE STREET CITY: BRECKENRIDGE STATE: CO ZIP: 80424-1057 BUSINESS PHONE: 9704536641 MAIL ADDRESS: STREET 1: P O BOX 1057 217 S RIDGE STREET STREET 2: P O BOX 1057 217 S RIDGE STREET CITY: BRECKENRIDGE STATE: CO ZIP: 80424-1067 10QSB 1 FORM 10QSB FOR ALTEX INDUSTRIES, INC. - 03/31/99 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, 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. ----------------------------------------------------------------------- (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.) POB 1057 Breckenridge CO 80424-1057 ----------------------------------------------------- (Address of Principal Executive Offices) (970) 453-6641 ----------------------------------------------------- (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 30, 1999: 15,735,491 Transitional Small Business Disclosure Format: Yes No X Page 1 of 7 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ALTEX INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 1999 (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,644,000 Accounts receivable 67,000 Other receivables 12,000 Other 2,000 Total current assets 1,725,000 PROPERTY AND EQUIPMENT, AT COST Proved oil and gas properties (successful efforts method) 2,139,000 Other 71,000 2,210,000 Less accumulated depreciation, depletion, amortization, and valuation allowance (2,103,000) Net property and equipment 107,000 OTHER ASSETS 34,000 $ 1,866,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 12,000 Accrued production costs 35,000 Accrued reclamation, restoration, and dismantlement 4,000 Other accrued expenses 27,000 Total current liabilities 78,000 --------------- 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 15,770,491 shares 158,000 Additional paid-in capital 14,282,000 Treasury stock, at cost, 35,000 shares at March 31, 1999 (3,000) Accumulated deficit (12,290,000) Note receivable from stockholder (359,000) 1,788,000 $ 1,866,000
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 SIX MONTHS ENDED MARCH 31 MARCH 31 1999 1998 1999 1998 REVENUE Oil and gas sales $ 107,000 191,000 194,000 383,000 Interest income 23,000 27,000 49,000 54,000 Other income 1,000 2,000 3,000 7,000 131,000 220,000 246,000 444,000 COSTS AND EXPENSES Lease operating 67,000 61,000 133,000 120,000 Production taxes 12,000 22,000 24,000 44,000 General and administrative 93,000 97,000 188,000 193,000 Reclamation, restoration, and dismantlement -- -- 1,000 -- Depreciation, depletion, amortization, and valuation allowance 4,000 8,000 49,000 15,000 176,000 188,000 395,000 372,000 NET EARNINGS (LOSS) $ (45,000) 32,000 (149,000) 72,000 EARNINGS (LOSS) PER SHARE $ * * (0.01) * WEIGHTED AVERAGE SHARES OUTSTANDING 15,735,491 15,633,403 15,738,376 15,503,823
*Less than $.01 per share See accompanying notes to consolidated, condensed financial statements. Page 3 of 7 ALTEX INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED) SIX MONTHS ENDED MARCH 31 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ (149,000) 72,000 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion, amortization, and valuation allowance 49,000 15,000 Decrease in accounts receivable 24,000 3,000 Increase in other receivables 7,000 -- Decrease in other current assets -- 2,000 Decrease in accounts payable (2,000) (9,000) Increase (decrease) in accrued production costs 8,000 (7,000) Decrease in accrued reclamation, restoration, and dismantlement (16,000) -- Increase (decrease) in other accrued expenses (6,000) 3,000 Net cash provided by (used in) operating activities (85,000) 79,000 CASH FLOWS FROM INVESTING ACTIVITIES Expenditures for oil and gas property acquisitions -- (4,000) Expenditures for oil and gas property development (2,000) -- Net cash used in investing activities (2,000) (4,000) CASH FLOWS FROM FINANCING ACTIVITIES Acquisition of treasury stock (3,000) (4,000) Net cash used in financing activities (3,000) (4,000) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (90,000) 71,000 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,734,000 1,675,000 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,644,000 1,746,000
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 March 31, 1999, 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, 1998, to conform with the classifications used in the financial statements for three and six months ended March 31, 1999. 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 1998 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 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. - -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. FINANCIAL CONDITION Cash and cash equivalents decreased during the six months ended March 31, 1999, principally because of net cash used in operating activities. Accounts receivable decreased because of reduced sales. Other receivables decreased because, during the three months ended March 31, 1999 ("Q2FY99"), the Company collected refundable production taxes receivable. The Company is completing the restoration of the area that had contained its East Tisdale Field in Johnson County, Wyoming. During the three months ended December 31, 1998 ("Q1FY99"), the Company expended $16,000 of $20,000 it has accrued for reclamation, restoration, and dismantlement expense ("RR&D") related to the Field. The Company has removed all equipment from, 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 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. Page 5 of 7 Unless the Company's production of oil and gas increases as the result of future acquisitions of producing oil and gas properties, successful drilling activities, or successful recompletions, or realized prices per barrel of oil equivalent ("BOE") increase, the Company is likely to continue to experience negative cash flow from operations. 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. With the exception of (1) depressed oil, natural gas, and natural gas liquids prices, (2) the Company's intention to acquire producing oil and gas properties, and (3) cash flows that may result from such acquisitions, 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 30, 1999, the Company had no material commitments for capital expenditures. RESULTS OF OPERATIONS Sales decreased from $191,000 for the three months ended March 31, 1998 ("Q2FY98"), to $107,000 for Q2FY99 because of the combined effects of a 18% decrease in BOE sold and a 34% decrease in average realized price per BOE. Sales decreased from $383,000 for the six months ended March 31, 1998, to $194,000 for the six months ended March 31, 1999, because of the combined effects of a 12% decrease in BOE sold and a 43% decrease in average realized price per BOE. Lease operating expense increased from $61,000 for Q2FY98 to $67,000 for Q2FY99 and from $120,000 for the six months ended March 31, 1998, to $133,000 for the six months ended March 31, 1999, because of increased repair and maintenance expense. Production taxes decreased for the three and six months ended March 31, 1999, as compared to the three and six months ended March 31, 1998, because of decreased sales. Included in depreciation, depletion, amortization, and valuation allowance ("DDA&V") at March 31, 1999, is $9,000 in depreciation and depletion expense and a valuation allowance of $40,000. Net earnings decreased from earnings of $32,000 for Q2FY98 to a loss of $45,000 for Q2FY99 and from earnings of $72,000 for the six months ended March 31, 1998, to a loss of $149,000 for the six months ended March 31, 1999, because of reduced sales and the recognition of the valuation allowance at December 31, 1998. LIQUIDITY Operating Activities. Cash provided by (used in) operating activities declined from positive $79,000 for the six months ended March 31, 1998, to negative $85,000 for the six months ended March 31, 1999, because of reduced earnings. Investing Activities. During the six months ended March 31, 1998, the Company expended $4,000 for oil and gas property acquisitions, and during the six months ended March 31, 1999, the Company expended $2,000 for oil and gas property development. Financing Activities. The Company expended $4,000 and $3,000 to repurchase 62,000 and 35,000 of its shares during the six months ended March 31, 1998 and 1999, 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 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 decline unless rising prices offset production declines or the Company increases its 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 changes in the prices of oil, natural gas, and natural gas liquids, unanticipated variations in production levels, unanticipated RR&D, and unanticipated environmental 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 net sales or revenues or income from continuing operations. YEAR 2000 ISSUES The so-called Year 2000 ("Y2K") Problem arose because many existing computer programs use only the last two digits to refer to a year and, therefore, cannot distinguish between a year that begins with "20" and one that begins with "19." If not corrected, many computer applications could fail or create erroneous results when references to the Year 2000 become necessary. RISKS AND STATE OF READINESS The Company has completed its assessment of its state of readiness, and the Company believes it faces three kinds of risks as a result of the Year 2000 Problem: (1) Will hardware and software related to oil and gas production facilities fail as a result of Page 6 of 7 the Y2K Problem? (2) Will back-office hardware or software fail as a result of the Y2K Problem? (3) Will unresolved Y2K Problems of third parties on whom the Company is dependent cause material adverse consequences to the Company? Production Facilities. The Company operates only one producing well. The Company does not believe that any equipment associated with that well is susceptible to the Y2K Problem, but this cannot be assured. If critical production equipment is not Y2K ready, production could cease or hydrocarbon contamination of the production facility could occur. Back-Office Facilities. The Company's back-office operations depend upon the following hardware: three Intel-chip-based microcomputers and associated peripheral devices, one AT&T Partner Plus telephone system, one Hewlett Packard inkjet fax machine, and one Pitney Bowes postage meter. The Company has tested the telephone system, fax machine, and postage meter and is confident that they are Y2K ready. All three computers are Y2K ready. The Company does not believe that any of its peripheral devices are subject to Y2K issues. All of the Company's software is off-the-shelf software provided by world-class vendors. The Company believes that all software critical to its back-office functions is currently Y2K ready. Third Parties. The Company is inquiring of relevant third parties regarding their state of readiness. Virtually all of the Company's revenue consists of oil and gas sales and interest income. All cash flow from oil and gas sales results from remittances to the Company from operators or purchasers of oil and gas production in which the Company has an interest. Should any operator or purchaser of production in which the Company has an interest suffer system failures due to Y2K problems, either in their production or back-office systems, revenue flowing to the Company could be interrupted. Similarly, should any financial institution in which the Company deposits its cash suffer system failures due to Y2K problems, the Company's cash flow from interest income could be interrupted, and the Company's access to its cash could be delayed. Because the Company is not significant to any third party, the Company does not have leverage in dealing with potential problems. COSTS AND CONTINGENCY PLANS The Company does not believe that costs associated with achieving Y2K readiness will exceed $1,000, but this cannot be assured. The Company neither has nor plans to adopt formal contingency plans for unanticipated Y2K problems. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- 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: May 5, 1999 By: /s/ STEVEN H. CARDIN Steven H. Cardin Chief Executive Officer and Principal Financial Officer Page 7 of 7 Exhibit Index 27 Financial Data Schedule - Submitted only in electronic format, pursuant to Item 601(c) of Regulation S-B EX-27 2
5 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 03/31/99, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1999 MAR-31-1999 1,644,000 0 79,000 0 0 1,725,000 2,210,000 2,103,000 1,866,000 78,000 0 0 0 158,000 1,630,000 1,866,000 107,000 131,000 0 176,000 0 0 0 (45,000) 0 (45,000) 0 0 0 (45,000) 0.00 0.00
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