ALTEX INDUSTRIES INC - Form 10-Q SEC filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐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

ALTEX INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		84-0989164
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

700 Colorado Blvd #273 Denver CO 80206

(Address of principal executive offices) (Zip Code)

(303) 265-9312

(Registrant's telephone number, including area code)

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 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 such files). Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ☒
	Emerging growth company ☐

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 May 7, 2021: 12,141,401

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,	September 30,
	2021	2020
Assets
Current assets
Cash and cash equivalents	$ 2,067,000	$ 2,141,000
Accounts receivable	1,000	-
Other	7,000	20,000
Total current assets	2,075,000	2,161,000

Property and equipment, at cost
Proved oil and gas properties (successful efforts method)	333,000	333,000
Less accumulated depreciation, depletion, and amortization	(287,000)	(283,000)
Net property and equipment	46,000	50,000

Right-of-Use Asset	106,000	118,000

Total assets	2,227,000	2,329,000

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	1,000	9,000
Operating lease liability	22,000	21,000
Accrued expenses, related party	1,073,000	1,073,000
Other accrued expenses	5,000	10,000
Total current liabilities	1,101,000	1,113,000

Long-term operating lease liability	84,000	97,000

Total Liabilities	1,185,000	1,210,000

Commitments and Contingencies	-	-

Stockholders’ equity
Preferred stock, $0.01 par value. Authorized 5,000,000 shares, none issued	-	-
Common stock, $0.01 par value. Authorized 50,000,000 shares; 12,141,401 shares issued and outstanding	122,000	122,000
Additional paid-in capital	13,794,000	13,794,000
Accumulated deficit	(12,874,000)	(12,797,000)
Total stockholders' equity	1,042,000	1,119,000

Total liabilities and stockholders' equity	$ 2,227,000	$ 2,329,000

See notes to unaudited condensed consolidated financial statements

	Three Months Ended		Six Months Ended
	March 31,		March 31,
	2021	2020	2021	2020
Revenue
Oil and gas sales	$ 3,000	$ 8,000	$ 11,000	$ 24,000
Total revenue	3,000	8,000	11,000	24,000

Operating expense
Production taxes	1,000	-	1,000	1,000
General and administrative	50,000	47,000	84,000	79,000
Depreciation, depletion, and amortization	2,000	2,000	4,000	4,000
Total operating expense	53,000	49,000	89,000	84,000

Other income
Interest income	-	7,000	-	16,000
Other income	1,000	-	1,000	-
Total other income	1,000	7,000	1,000	16,000

Net loss	$ (49,000)	$ (34,000)	$ (77,000)	$ (44,000)

Basic and diluted loss per share	$ (0.00)	$ (0.00)	$ (0.01)	$ (0.00)

Basic and diluted weighted average shares outstanding	12,141,401	12,185,409	12,141,401	12,185,409

See notes to unaudited condensed consolidated financial statements

	Six months ended
	March 31,
	2021	2020
Cash flows used in operating activities
Net loss	$ (77,000)	$ (44,000)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation, depletion, and amortization	4,000	4,000
Changes in assets and liabilitites
Increase in accounts receivable	(1,000)	-
Decrease in other current assets	13,000	12,000
Decrease in accounts payable	(8,000)	(9,000)
Decrease in other accrued expenses	(5,000)	(3,000)
Net cash used in operating activities	(74,000)	(40,000)

Cash flows from investing activitites	-	-

Cash flows from financing activities	-	-

Net decrease in cash and cash equivalents	(74,000)	(40,000)
Cash and cash equivalents at beginning of period	2,141,000	2,266,000
Cash and cash equivalents at end of period	$ 2,067,000	$ 2,226,000

See notes to unaudited condensed consolidated financial statements

For the six months ended March 31, 2021	Preferred Stock		Common Stock		Additional paid-in capital	Accumulated deficit	Treasury stock	Total stockholders' equity
	Shares	Amount	Shares	Amount
Balance at September 30, 2020			12,141,401	$ 122,000	$ 13,794,000	$(12,797,000)	$ -	$ 1,119,000
Net loss						(77,000)		(77,000)
Balance at March 31, 2021			12,141,401	$ 122,000	$ 13,794,000	$(12,874,000)	$ -	$ 1,042,000



For the three months ended March 31, 2021	Preferred Stock		Common Stock		Additional paid-in capital	Accumulated deficit	Treasury stock	Total stockholders' equity
	Shares	Amount	Shares	Amount
Balance at December 31, 2020			12,141,401	$ 122,000	$ 13,794,000	$(12,825,000)	$ -	$ 1,091,000
Net loss						(49,000)		(49,000)
Balance at March 31, 2021			12,141,401	$ 122,000	$ 13,794,000	$(12,874,000)	$ -	$ 1,042,000

See notes to unaudited condensed consolidated financial statements

ALTEX INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Basis of Presentation. The accompanying Condensed Consolidated Balance Sheet as of September 30, 2020, which was derived from audited financial statements, and the unaudited, interim, condensed, consolidated, financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. 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, 2021, and the cash flows and results of operations for the three and six months then ended. Such adjustments consisted only of normal recurring items. The results of operations for the three and six months 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 2020 Annual Report on Form 10-K, and it is suggested that these condensed, consolidated 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-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 of oil and gas; 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.

COVID-19

COVID-19 has had and is likely to continue to have a material impact on the Company, its operations, its financial condition, and its results of operations. The world-wide reduction in demand for oil resulting from changes in social behavior designed to reduce the likelihood of the transmission of the SARS-CoV-2 virus is likely to contribute to significant continuing price weakness for crude oil. The Company’s president and its directors are in the high-risk group for COVID-19. The illness or death of any of them could materially impact the Company’s ability to continue normal operations. The social distancing measures that have been implemented by the State of Colorado, where the Company’s president, the Company’s administrative assistant, the Company’s bookkeeper, the Company’s accountant, and two of the Company’s directors reside, have had an impact on the Company’s daily administrative operations and are likely to continue to do so. Continuing low oil prices are likely to reduce the Company’s revenue, increase its losses, and reduce its cash balances. Monetary policy responses by the Federal Reserve to the economic

consequences of the COVID-19 pandemic have resulted in exceptionally low interest rates, thereby reducing the Company’s interest received on cash balances. There may be other material but unanticipated consequences of the COVID-19 pandemic.

Financial Condition

The Company used $74,000 cash in operating activities in the six months ended March 31, 2021, and used $40,000 cash in operating activities in the six months ended March 31, 2020. At March 31, 2021 and 2020, $1,073,000 of accrued expenses is accrued but unpaid salary (and related accrued payroll tax liability) due to the Company’s president that the Company’s president has elected to defer. The Company’s president may require the Company to pay the unpaid salary and payroll tax liability at any time.

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 the effects of the COVID-19 pandemic, 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, the possibility of a change in the interest rates the Company realizes on cash balances, and changes in the price of oil and natural gas, 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.

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 May 7, 2021, the Company had no material commitments for capital expenditures.

The Company regularly assesses its exposure to environmental liability and asset retirement obligations (ARO). The Company does not believe that it currently has any material exposure to environmental liability or to ARO, although this cannot be assured.

Results of Operations

At current oil and gas prices, the current level of cash balances, and 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. Except for the effects of COVID-19, unanticipated ARO, unanticipated environmental expense, and possible changes in interest rates and oil and gas prices, 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.

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

31.	Rule 13a-14(a)/15d-14(a) Certifications
32.*	Section 1350 Certifications
101.xml	XBRL Instance Document
101.xsd	XBRL Taxonomy Extension Schema Document
101.cal	XBRL Taxonomy Extension Calculation Linkbase Document
101.def	XBRL Taxonomy Extension Definition Linkbase Document
101.lab	XBRL Taxonomy Extension Label Linkbase Document
101.pre	XBRL Taxonomy Extension Presentation Linkbase Document
___________________________
* Furnished. Not Filed. Not incorporated by reference. Not subject to liability.

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.

Date: May 7, 2021

By: /s/ STEVEN H. CARDIN

Steven H. Cardin

Chief Executive Officer and

Principal Financial Officer