##### Table of Contents



UNITED STATES
SECURITIES EXCHANGE COMMISSION  FORM 10-QSB [x]
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDING AUGUST 31, 2004
 [  ]
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period
from  to . Commission File Number 0-30746 TBX RESOURCES, INC.  Texas
    
    75-2592165(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 3030 LBJ Freeway, Suite 1320
Dallas, TX 75234
(Address of principal executive offices) Issuers telephone number (972) 243-2610  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 (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  [   ] State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 30,772,537 on October 14,
2004 Transitional Small Business Disclosure Format (check one) Yes [  ]  No [x]




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TBX Resources, Inc. Index Page #PART I  Financial InformationItem 1. Financial StatementsBalance Sheet
    
    
    F-1Statements of Operations
    
    
    F-2Statements of Cash Flows
    
    
    F-3Statement of Changes In Stockholders Equity
    
    
    F-4Notes to Financial Statements
    
    
    F-5Item 2. Managements Discussion and Analysis of Plan of Operations
    
    
    1Item 3. Controls and Procedures
    
    
    6PART II  Other Information
    
    
    6SIGNATURES
    
    
    7Certification of CEO/CFO Pursuant to Section 302Certification of CEO/CFO Pursuant to Section 906
  i




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PART I- FINANCIAL INFORMATION 
  TBX RESOURCES, INC. 
 BALANCE SHEET
 AUGUST 31, 2004
 ASSETSCurrent AssetsCash and equivalents
    
    $
    1,472Trade accounts receivable
    
    
    25,688Prepaid consulting fees and other
    
    
    100,000Total current assets
    
    
    126,424Equipment and PropertyOffice furniture, fixtures and equipment
    
    
    118,449Oil and gas properties, using successful efforts accountingProved properties and related equipment
    
    
    1,784,7271,903,176Less accumulated depreciation, depletion and amortization
    
    
    780,472Total equipment and property
    
    
    1,122,704Prepaid Consulting and Other
    
    
    156,211Total Assets
    
    $
    1,405,339LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    132,944Loans from affiliates
    
    
    360,272Taxes payable
    
    
    10,356Accrued expenses
    
    
    30,445Deferred income from joint ventures
    
    
    162,462Total current liabilities
    
    
    696,479Commitments and Contingencies
    
    
    Stockholders EquityPreferred stock- $.01 par value; authorized 10,000,000 shares;
no shares outstanding
    
    
    Common stock- $.01 par value; authorized 100,000,000 shares;
30,772,537 shares outstanding at August 31, 2004
    
    
    307,725Additional paid-in capital
    
    
    8,558,897Accumulated deficit
    
    
    (8,157,762
    )Total stockholders equity
    
    
    708,860Total Liabilities and Stockholders Equity
    
    $
    1,405,339
 The accompanying notes are an integral part of these financial statements. F-1




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TBX RESOURCES, INC. 
 STATEMENTS OF OPERATIONS
  For The Three Months Ended
    
    For The Nine Months EndedAug. 31, 2004
    
    Aug. 31, 2003
    
    Aug. 31, 2004
    
    Aug. 31, 2003Revenues:Oil and gas sales
    
    $
    22,567
    
    
    $
    33,444
    
    
    $
    89,351
    
    
    $
    147,539Joint venture management fees
    
    
    277,485
    
    
    
    152,287
    
    
    
    503,988
    
    
    
    152,287Total revenues
    
    
    300,052
    
    
    
    185,731
    
    
    
    593,339
    
    
    
    299,826Expenses:Lease operating and taxes
    
    
    34,879
    
    
    
    32,477
    
    
    
    88,580
    
    
    
    76,549Joint venture expenses
    
    
    94,456
    
    
    
    89,098
    
    
    
    277,508
    
    
    
    89,098General and administrative
    
    
    56,848
    
    
    
    130,993
    
    
    
    243,935
    
    
    
    452,191Loss on sale and abandonment of oil & gas properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    671,197Depreciation, depletion and amortization
    
    
    89,849
    
    
    
    81,543
    
    
    
    214,097
    
    
    
    245,285Total expenses
    
    
    276,032
    
    
    
    334,111
    
    
    
    824,120
    
    
    
    1,534,320Operating Income (Loss)
    
    
    24,020
    
    
    
    (148,380
    )
    
    
    (230,781
    )
    
    
    (1,234,494
    )Other Income (Expense):Interest and other
    
    
    (3,659
    )
    
    
    95
    
    
    
    (11,131
    )
    
    
    488Net Income (Loss) Before Provision for Income Taxes
    
    
    20,361
    
    
    
    (148,285
    )
    
    
    (241,912
    )
    
    
    (1,234,006
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    $
    20,361
    
    
    $
    (148,285
    )
    
    $
    (241,912
    )
    
    $
    (1,234,006
    )Net Income (Loss) Per Common Share, Basic and Diluted
    
    $
    0.00
    
    
    $
    (0.00
    )
    
    $
    (0.01
    )
    
    $
    (0.04
    )Weighted average common shares used in calculations:Basic and diluted
    
    
    30,772,537
    
    
    
    30,120,620
    
    
    
    30,772,537
    
    
    
    30,120,620
 The accompanying notes are an integral part of these financial statements. F-2




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TBX RESOURCES, INC. 
 STATEMENTS OF CASH FLOWS
  For The Nine Months EndedAug. 31, 2004
    
    Aug. 31, 2003Cash Flows From Operating Activities:Net loss
    
    $
    (241,912
    )
    
    $
    (1,234,006
    )Adjustments to reconcile net loss to net cash
flow from operating activities:Loss (gain) on the disposal of oil and gas interests
    
    
    
    
    
    
    671,197Depreciation, depletion and amortization
    
    
    214,097
    
    
    
    245,285Non-cash consulting services
    
    
    71,544
    
    
    
    96,469Changes in operating assets and liabilities:Decrease (increase) in:Trade receivables
    
    
    (7,716
    )
    
    
    (10,640
    )Affiliate receivables
    
    
    
    
    
    
    18,631Other current assets
    
    
    (4,352
    )
    
    
    4,952Increase (decrease) in:Accounts payable
    
    
    13,933
    
    
    
    (3,984
    )Loans from affiliates
    
    
    12,362
    
    
    
    (15,000
    )Taxes payable
    
    
    105
    
    
    
    2,563Accrued expenses
    
    
    30,445
    
    
    
    Deferred income
    
    
    114,508
    
    
    
    86,772Net cash provided by (used) for operating activities
    
    
    203,014
    
    
    
    (137,761
    )Cash Flows From Investing Activities:Cash used in the acquisition and development of properties
    
    
    (208,980
    )
    
    
    (3,556
    )(208,980
    )
    
    
    (3,556
    )Cash Flows From Financing Activities:Cash provided by the issuance of common stock
    
    
    
    
    
    
    107,568
    
    
    
    107,568Net Increase (Decrease) In Cash
    
    
    (5,966
    )
    
    
    (33,749
    )Cash at beginning of period
    
    
    7,438
    
    
    
    34,317Cash at end of period
    
    $
    1,472
    
    
    $
    568The accompanying notes are an integral part of these financial statements.
 F-3




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TBX RESOURCES, INC. 
 STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
  Common Stock
    
    AdditionalPaid-In
    
    Accum-ulated
    
    TotalStockholdersShares
    
    Par Value
    
    Capital
    
    Deficit
    
    EquityBalance November 30, 2003
    
    
    30,772,537
    
    
    $
    307,725
    
    
    $
    8,558,897
    
    
    $
    (7,915,850
    )
    
    $
    950,772Net loss for period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (241,912
    )
    
    
    (241,912
    )Balance August 31, 2004
    
    
    30,772,537
    
    
    $
    307,725
    
    
    $
    8,558,897
    
    
    $
    (8,157,762
    )
    
    $
    708,860
 The accompanying notes are an integral part of these financial
statements. F-4




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TBX RESOURCES, INC. 
 NOTES TO UNAUDITED FINANCIAL STATEMENTS
 AUGUST 31, 2004
 1. BUSINESS ACTIVITIES: TBX Resources, Inc., a Texas Corporation, was organized on March 24, 1995. The
Companys principal business activity is acquiring and developing oil and gas
properties. The Company owns 23 wells and operates another 7 wells located in
East Texas. Of the 23 wells located in East Texas, 5 wells are currently
producing oil and 2 wells have been designated as injection wells. The
remaining 16 wells are either currently shut-in, scheduled to be brought back
into production or are designated as injection wells. Also, the Company has an
interest in 6 proven wells in Oklahoma. The Companys philosophy is to acquire
properties with the purpose of reworking existing wells and/or drilling
development wells to make a profit. In addition, the Company has sponsored
joint venture development partnerships for the purpose of developing oil and
gas properties for profit. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation The accompanying unaudited financial statements have
been prepared in accordance with generally accepted accounting principles in
the United States for interim financial information and with instructions to
Form 10-QSB of Regulation S-B. They do not include all information and notes
required by generally accepted accounting principles for complete financial
statements. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. The Companys quarterly
financial statements should be read in conjunction with the financial
statements of the Company for the year ended November 30, 2003 (including the
notes thereto) set forth in Form 10-KSB. In the opinion of Management, all adjustments (which include normal recurring
adjustments except as disclosed herein) necessary to present a fair statement
of financial position as of August 31, 2004, results of operations, cash flows
and stockholders equity for the nine months ended August 31, 2004 and 2003
have been made. Operating results for the nine months ended August 31, 2004 are
not necessarily indicative of the operating results for the full fiscal year or
any future period. Net Loss Per Common Share- Stock options are excluded from the calculation of
net loss per common share because they are antidilutive. Recent Accounting Pronouncement In January 2003, the FASB issued
Interpretation No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51. Under the provisions
of Interpretation No. 46, certain variable interest entities, often referred to
as Special Purpose Entities, are required to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do no have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. Interpretation No. 46 is
effective for all entities created or acquired prior to February 1, 2003. The
provisions of Interpretation No. 46 must be applied for the first interim or
annual period beginning after June 15, 2003. The Company believes the adoption
of SFAS Interpretation No. 46 will not have any impact on its financial
position or results of operations. In April 2003, the FASB issued Statement No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS No. 149 amends SFAS No.
133 to provide clarification on the financial accounting and reporting of
derivative instruments and hedging activities and requires that contracts with
similar characteristics be accounted for on a comparable basis. The standard is
effective for contracts entered into or modified after June 30, 2003. The
Company does not have any derivative instruments as defined by SFAS No. 149.
The Companys adoption of SFAS
No. 149 will not have any impact on its financial position or results of
operations. F-5




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In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
is effective for financial instruments entered into or modified after August
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS No. 150 requires the classification
as a liability of any financial instruments with a mandatory redemption
feature, an obligation to repurchase equity shares, or a conditional obligation
based on the issuance of a variable number of its equity shares. The Company
does not have any financial instruments as defined by SFAS No. 150. The Company
believes the adoption of SFAS No. 150 will not have any impact on its financial
position or results of operations. 3. SIGNIFICANT TRANSACTIONS:  a.
    
    During the last quarter of the previous fiscal year, the
Company entered into a management contract with a company in which
Mr. Burroughs is the sole shareholder. Under the agreement, the
Company performs administrative and drilling supervision services on
a well-by-well basis for an agreed upon fee. During the nine months
ended August 31, 2004, the Company generated approximately $503,988
in revenues from joint venture management fees and incurred expenses
of approximately $277,508. In addition, as of August 31, 2004, the
Company recorded deferred income associated with this activity in the
amount of $162,462.b.
    
    During the current quarter, the Company completed reworking two
East Texas wells at a cost of approximately $208,224. Initial monthly
gross production from these wells is projected to be 500 barrels of
oil.c.
    
    During the previous fiscal year, the Company obtained operating
loans from its president, Mr. Tim Burroughs. The loan balance as of
August 31, 2004 is approximately $157,953 (included in loans from
affiliates) and is payable on demand at an interest rate of 10% per
annum. Interest accrued on the loan for the first nine months is
$11,558. The loan is secured by the Companys oil and gas properties.
The Company expects to pay back this loan from operating revenue by
the end of this fiscal year.d.
    
    In October of 2002, the Company formed and is acting as the
general partner for the Grasslands I, Limited Partnership. The
purpose of the partnership is to acquire leases for oil and gas
development in the Barnett Shale play in the Fort Worth Basin of Wise
County, Texas. The Company is to be reimbursed on a turnkey basis for
organization and offering cost, lease acquisition costs and
administrative expenses. Revenue earned to date is $88,477 offset by
expenses of $49,233. As of August 31, 2004 the Partnership advanced
the Company approximately $195,000 which it used to fund operations
and is included in loans from affiliates. The Company expects to
repay the advance from operating revenue by the end of this fiscal
year.e.
    
    During the second quarter of the previous fiscal year, the
Company wrote-off most of its investment in the Talco Field property
in East Texas. The Company wrote-off 75% of the costs of the acreage,
wells and related depreciation, depletion and amortization and
recorded a loss on the property of approximately $484,424. This was a
non-producing property; accordingly there were no income or expense
items associated with this property during the previous fiscal year.
In addition, the Company abandoned its Union City prospect in
Oklahoma. In this regard the Company wrote-off the costs of the
acreage, wells and related depreciation, depletion and amortization
and recorded a loss on abandonment of approximately $191,511. Union
City was a non-producing property; accordingly there were no income
or expense items associated with this property during the previous
fiscal year. F-6




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f.
    
    The Company executed an Employment Agreement for three years
effective December 1, 1999 with
Mr. Tim Burroughs, President. Under the terms of the agreement, Mr.
Burroughs received stock options good for five years from the date of
issuance to purchase up to 500,000 shares of the Companys common stock
a year for five years at a price which shall not be greater than 50% of
the average bid price for the shares during the previous quarter in
which the options are exercised. The options are cumulative thus
allowing Mr. Burroughs to exercise the options through November 30,
2004 for a total of 2,500,000 shares. As of November 30, 2003, Mr.
Burroughs has the option to purchase 2,000,000 shares of the Companys
common stock. The fair value of the options will be recorded as
compensation expense when a reasonable estimate of such costs are
available or the amount Mr. Burroughs has to pay is known. Based on the
formula for calculating the purchase price, material charges to
compensation expense may be recorded in future years. The current
management contract has been extended until a new contract can be
arranged. F-7




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Item 2. Managements Discussion and Analysis and Results of Operation CAUTIONARY STATEMENT Statements in this report which are not purely historical facts, including
statements regarding the Companys anticipations, beliefs, expectations, hopes,
intentions or strategies for the future, may be forward-looking statements
within the meaning of Section 21E of the Securities Act of 1934, as amended.
All forward-looking statements in this report are based upon information
available to us on the date of the report. Any forward-looking statements
involve risks and uncertainties that could cause actual results or events to
differ materially from events or results described in the forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements. RECENT DEVELOPMENTS During the previous fiscal year, the Company abandoned its Talco Field property
in East Texas. The Company wrote-off the costs of the acreage, wells and
related deprecation, depletion and amortization and recorded a loss on
abandonment of approximately $0.6 million. Management is of the opinion that
the estimated cost of $1 million to re-work and develop the property will not
yield an adequate return on its investment given its limited resources. By
abandoning the property, the Company was able to avoid a remedial liability
estimated to be approximately $0.2 million. The property was shut-in;
accordingly there were no income or expense items associated with this property
during the previous fiscal year. The property is currently being leased by a
company in which our president, Tim Burroughs is the sole shareholder. The
Company will own a 25% working interest in the property after it is developed.
Thus, the Company will participate in the potential increased production from
this property without incurring any development costs. Management is of the
opinion the 25% interest in the developed property may yield net after expense
income of approximately $0.4 million in the first full year of production and
declining thereafter. DESCRIPTION OF PROPERTIES GENERAL: The following is information concerning production from our oil
and gas wells, and our productive wells and acreage and undeveloped acreage.
Our oil and gas properties are located within the northern part of the east
Texas salt basin. The earliest exploration in this area dates back to the early
1920s and 1930s, when frontier oil producers were exploring areas adjacent to
the famous East Texas field located near the town of Kilgore, Texas. We have
leasehold rights in three oil and gas fields located in Gregg, Hopkins,
Franklin, Panola, and Wood Counties, Texas. We also acquired several wells and
acreages in Oklahoma, which are described below after the Texas properties. RESERVES REPORTED TO OTHER AGENCIES. We are not required and do not file
any estimates of total, proved net oil or gas reserves with reports to any
federal authority or agency. PROPERTIES. The following is a breakdown of our properties: Gross Producing
    
    Net Producing WellName of Field
    
    Well Count
    
    CountEast Texas Field
    
    
    0
    
    
    
    0Mitchell Creek & Talco Field (1)
    
    
    1
    
    
    
    1Manziel & Quitman Field (1)
    
    
    4
    
    
    
    4
 1




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The following information pertains to our properties as of August 31,
2004: PROVED
    
    PROVED
    
    
    
    
    
    PERCENTAGE OFPROVED
    
    PROVED
    
    DEVELOPED
    
    DEVELOPED
    
    CURRENT
    
    RESERVES IN FIELDRESERVES:
    
    RESERVES:
    
    RESERVES:
    
    RESERVES:
    
    PRODUCTION
    
    TO TOTAL RESERVESNAME OF
    
    OIL
    
    GAS
    
    OIL
    
    GAS
    
    OIL:
    
    HELD BY THEFIELD
    
    (bbls)
    
    (mcf)
    
    (bbls)
    
    (mcf)
    
    (bbls) (1)
    
    COMPANYEast Texas Field
    
    
    6,407
    
    
    
    0
    
    
    
    6,407
    
    
    
    0
    
    
    
    0
    
    
    oil
    
    
    6.2gas
    
    
    0Mitchell Creek &
Talco Field
    
    
    33,681
    
    
    
    0
    
    
    
    33,681
    
    
    
    0
    
    
    
    228
    
    
    oil
    
    
    32.7gas
    
    
    0Manziel &
Quitman Field
    
    
    62,874
    
    
    
    0
    
    
    
    62,874
    
    
    
    0
    
    
    
    481
    
    
    oil
    
    
    61.1gas
    
    
    0
  (1)
    
    The current production figure specified above is for the production
for the month of August 2004. PRODUCTIVE WELLS AND ACREAGE Net
    
    
    
    
    
    
    
    
    
    Total Gross
    
    NetTotal Gross
    
    Productive
    
    Total Gross
    
    Net Productive
    
    Developed
    
    DevelopedGeographic Area
    
    Oil Wells
    
    Oil Wells
    
    Gas Wells
    
    Gas Wells
    
    Acres
    
    AcresEast Texas Region
    
    
    21
    
    
    
    21
    
    
    
    0
    
    
    
    0
    
    
    
    843.2
    
    
    
    838.34
 Notes: 1. Total Gross Oil Wells were calculated by subtracting 2 wells designated as
Injection Wells from the 23 wells owned and/or operated by TBX Resources, Inc
as of August 31, 2004. 2. Net Productive Oil Wells were calculated by multiplying the working interest
held by TBX Resources, Inc. in each of the 21 Gross Oil Wells and adding the
resulting products. 3. Total Gross Developed Acres is equal to the total surface acres of the
properties in which TBX Resources, Inc. holds an Interest. 4. Net Developed Acres is equal to the Total Gross Developed Acres multiplied
by the percentage of the total working interest held by TBX Resources, Inc. in
the respective properties. 5. All acreage in which we hold a working interest as of August 31, 2004 had
existing wells located thereon; thus all acreage leased by TBX Resources, Inc.
may be classified as developed. Geographic Area
    
    Gross Acres
    
    Net AcresEast Texas Region
    
    
    843.2
    
    
    
    838.34
 Note: 1. Acreage that has existing wells and may be classified as developed may also
have additional development potential
based on the number of producible zones beneath the surface acreage. A more
comprehensive study of all properties currently leased by us would be required
to determine precise development potential. 2




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ANADARKO BASIN- WESTERN OKLAHOMA No additional working interests were purchased in the current fiscal year. Four
of the six wells we currently hold an interest in are producing gas. Although
the wells are currently producing natural gas there can be no assurance that
they will continue to do so. In addition to the above described wells we own working interests in two lease
tracts; one located in Ellis County, Oklahoma with a gross acreage interest of
27.5% in 1,505 acres and the second located in Canadian County, Oklahoma,
constituting a gross acreage interest of 20% in 240 acres. The leases were
purchased for the sum of $83,700 and $19,200, respectively. The Company also
has a 3% interest in 640 acres in Beckham County, Oklahoma. CRITICAL ACCOUNTING POLICIES A summary of significant accounting policies is included in Note 2 to the
audited financial statements included on Form 10-KSB for the year ended
November 30, 2003 as filed with the United States Securities and Exchange
Commission. Management believes that the application of these policies on a
consistent basis enables the Company to provide useful and reliable financial
information about our operating results and financial condition. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates. RESULTS OF OPERATIONS The Company incurred an operating loss of $230,781 for the nine months ended
August 31, 2004 as compared to an operating loss of. $1,234,494 for the nine
months ended August 31, 2003. The decrease in the operating loss of $1,003,713,
81.3%, is discussed below. Revenues Revenues generated from oil and gas sales and the joint venture
management fees increased $293,513, 97.9%, from $299,826 for the nine months
ended August 31, 2003 to $593,339 for the nine months ended August 31, 2004. Revenues generated from joint venture management fees increased $351,701,
230.9%, from $152,287 for the nine months ended August 31, 2003 to $503,988 for
the nine months ended August 31, 2004. The work is generated from a company in
which our president. Mr. Burroughs is the sole shareholder. The Companys joint
venture operations began in the current quarter of the previous fiscal year. During the nine months ended August 31, 2003, the Company generated
approximately $147,539 in revenue from oil and gas sales as compared to $89,351
for the nine months ended August 31, 2004. The $58,188, 39.4%, decrease is
primarily due to the payment of prior years oil runs for the correction of an
error by one of the Companys oil purchasers. During the past nine months, oil
sales on the Texas properties were approximately the same as last year. The
Company completed re-working two East Texas wells and anticipates that these
wells will be brought on-line during the fourth quarter of current fiscal year.
The Company anticipates that monthly production from these wells will
approximate 500 barrels of oil. The majority of the Texas wells remain shut-in
awaiting re-work or the designation as injection wells. Revenue from the
Companys Oklahoma properties is minimal as a result of previous sales of the
Companys interest in the properties and production declines. 3




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Expenses Total expenses decreased $710,200, 46.3%, from $1,534,320 for the
nine months ended August 31, 2003 to $824,120 for the nine months ended August
31, 2004. Lease operating and taxes increased $12,031, 15.7%, from $76,549 for the nine
months ended August 31, 2003 to $88,580 for the nine months ended August 31,
2004. The increase is primarily the result of recurring expenses for the Texas
oil wells. Joint venture expenses increased $188,410, 211.5%, from $89,098 for the nine
months ended August 31, 2003 to $277,508 for the nine months ended August 31,
2004. The work is generated from a company in which our president. Mr.
Burroughs is the sole shareholder. The Companys joint venture operations began
in the current quarter of the previous fiscal year. General and administrative expenses decreased approximately $208,256, 46.1%,
from $452,191 for the nine months ended August 31, 2003 to $243,935 for the
nine months ended August 31, 2004. The decrease is primarily due to the
allocation of $207,197 of general and administrative expenses to joint venture
expenses and higher compensation and employee related costs, and general
expenses offset by lower consulting fees, professional fees, public relations
and contract labor expenses. Loss from the expiration of oil and gas leases on the Talco Field property in
East Texas was $671,197 for the nine months ended August 31, 2003. The Company
wrote-off the costs of the acreage, wells and related depreciation, depletion
and amortization and recorded a loss on abandonment of approximately $479,686.
Management is of the opinion that the estimated cost of $1 million to re-work
and develop the property will not yield an adequate return on its investment
given its limited resources. In addition, the Company plugged and abandoned its
Union City prospect that was located in Oklahoma. In this regard the Company
wrote-off the costs of the acreage, wells and related depreciation, depletion
and amortization and recorded a loss on abandonment of approximately $191,511.
There were no comparable losses for the same period this year. Depreciation, depletion and amortization decreased $31,188, 12.7%, from
$245,285 for the nine months ended August 31, 2003 to $214,097 for the nine
months ended August 31, 2004. The decrease is due to the decrease in Company
owned oil and gas properties and a change in the estimate of future lives of
our properties. Future charges to depreciation, depletion, and amortization may
be substantially higher as a result of increased production or changes in
reserve prices and/or quantities. Other Income (Expense)- Other income and (expense) decreased from $488 for the
nine months ended August 31, 2003 to ($11,131) for the nine months ended August
31, 2004. The $11,619 decrease is primarily attributable to interest charged on
the Companys approximately $157,952 operating loan from our president, Mr. Tim
Burroughs. Provision for Income Taxes There are no recorded tax benefits for the nine
months ended August 31, 2004 and for the same period last fiscal year. Net loss The Companys net loss decreased approximately $992,094, 80.4%, from
$1,234,006 for the nine months ended August 31, 2003 to $241,912 for the nine
months ended August 31, 2004. The decrease in the loss is primarily
attributable to the abandonment of the Companys Talco and Union City
properties and to a lesser extent in consulting fees, professional fees, public
relations and contract labor offset by higher compensation and employee related
costs, and general expenses. 4




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LIQUIDITY AND CAPITAL RESOURCES As of August 31, 2004, we have total assets of $1,405,339 of which net oil
and gas properties amount to $1,093,967 or 77.8% of the total assets. The
Companys accumulated losses through August 31, 2004 totaled $8,157,762. At
August 31, 2004, we have $1,472 in cash. Our ratio of current assets to current
liabilities is 0.2:1; we have no long-term debt. As of August 31, 2004, our
shareholders equity was a positive $708,860. We have funded operations from cash generated from the sale of common
stock, the sale of oil and gas properties, joint venture management fees and
loans from affiliates. The Companys cash provided for operating activities
totaled $203,014 for the nine months ended August 31, 2004 while cash used for
operating activities totaled $137,761 during the nine months ended August 31,
2003. The Companys capital investments totaled $208,980 and $3,556 for the
nine months ended August 31, 2004 and 2003, respectively. Cash provided by the
issuance of common stock totaled $107,568 for the nine months ended August 31,
2003. We did not sell any common stock during the nine months ended August 31,
2004. PLAN OF OPERATION FOR THE FUTURE. We want to manage more joint venture limited partnerships. As manager of
these drilling programs, we should receive sufficient fees to earn a profit on
our work. We expect that fees from this activity will be our primary source of
funds in the near future. Also, the Company reworked three East Texas wells. We
estimate that these wells may generate net income of approximately $10,000 per
month; however, there can be no assurance that such level of production will
continue now or in the future, as the well is a new well and current data may
prove to be unreliable. In October of 2002 we formed The Grasslands I, Texas Limited Partnership
in which we are acting as the General Partner for the purpose of acquiring the
Wise County acreage for development drilling. The Company has a 20% interest in
the Partnership and is reimbursed on a turnkey basis for 100% of the
organization and offering costs, lease acquisition costs and administrative
expenses. In addition, we plan to re-work 8 of our East Texas wells in the
coming year which may increase revenue by approximately $300,000 to $360,000 a
year. However, there can be no assurance that our planned and projected level
of production will materialize in the future. We expect that the principal use of funds in the near future will be from
joint venture management fees and oil and gas revenues and developing our oil
and gas properties and/or the acquisition of new properties. Based on the
aforementioned plans management expects to reduce its losses and generate
positive cash flows from operations. However, there can be no assurance that
such plans will materialize. In addition, actual results may vary from
managements plans and the amount may be material. We may purchase new oil and gas properties or additional equipment to
operate same. Any such additional purchases will be done on an as needed
basis and will only be done in those instances in which we believe such
additional expenditures will increase our profitability. Our ability to acquire
additional properties or equipment is strictly contingent upon our ability to
locate adequate financing to pay for these additional properties or equipment.
There can be no assurance that we will be able to obtain the opportunity to buy
properties or equipment that are suitable for our investment or that we may be
able to obtain financing to pay for the costs of these additional properties or
equipment at terms that are acceptable to us. Additionally, if economic
conditions justify the same, we may hire additional employees although we do
not currently have any definite plans to make additional hires. The oil and gas industry is subject to various trends. In particular, at
times crude oil prices increase in the summer, during the heavy travel months,
and are relatively less expensive in the winter. Of course, the prices obtained
for crude oil are dependent upon numerous other factors, including the
availability of other sources of crude oil, interest rates, and the overall
health of the economy. We are not aware of any specific trends that are unusual
to our company, as compared to the rest of the oil and gas industry. 5




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Item 3. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our President/Chief Financial Officer conducted an evaluation of our
disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 (the Exchange Act) Rules 13a-14(c)) within 90 days
of the filing date of this Quarterly Report on Form 10-QSB (the
Evaluation Date). Based on the evaluation, our President/Chief
Financial Officer has concluded that as of the Evaluation Date, our
disclosure controls and procedures are effective to ensure that all
material information required to be filed in this Quarterly Report on
Form 10-QSB has been made known to them in a timely fashion. Changes in Internal Controls There have been no significant changes (including corrective actions
with regard to significant deficiencies or material weaknesses) in our
internal controls or in other factors that could significantly affect
these controls subsequent to the evaluation date set forth above. 
 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 2. CHANGES IN SECURITIES None. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS: None. Item 5. OTHER INFORMATION None. Item 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the period covered by this Form
10-QSB. EXHIBITS: 31.1 Certification of Chief Executive Officer/Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer/Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 6




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SIGNATURES In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed by the undersigned, hereunto duly authorized. TBX RESOURCES, INC. DATE: October 15, 2004 SIGNATURE: /s/ Tim Burroughs 
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