##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: May 31, 2008
 Or
 o
    
    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: 0-30746
 TBX RESOURCES, INC.
 
 Texas
    
    75-2592165(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)3030 LBJ Freeway, Suite 1320
    
    75234(Address of principal executive offices)
    
    (Zip Code)
 (972) 234-2610
 N/A
 o þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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##### 



TBX RESOURCES, INC.
 Index
 Pg. No.PART I  Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheet as of November 30, 2007
and May 31, 2008 (Unaudited)
    
    
    F-1Condensed Consolidated Statements of Operations for the Three
and Six months Ended May 31, 2008 and 2007 (Unaudited)
    
    
    F-2Condensed Consolidated Statements of Cash Flows for the Three
and Six months Ended May 31, 2008 and 2007 (Unaudited)
    
    
    F-3Notes to Condensed Consolidated Financial Statements as of May 31, 2008 (Unaudited)
    
    
    F-4Item 2. Managements Discussion and Analysis
    
    
    3Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    8Item 4. Controls and Procedures
    
    
    8PART II  Other InformationItem 1. Legal Proceedings
    
    
    9Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    9Item 3. Defaults Upon Senior Securities
    
    
    9Item 4. Submission of Matters to a Vote of Security Holders
    
    
    9Item 5. Other Information
    
    
    9Item 6. Exhibits
    
    
    9SIGNATURES
    
    
    10EX-31.1EX-32.1
  2




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 TBX RESOURCES. INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 May 31, 2008
    
    
    November 30,(Unaudited)
    
    
    2007ASSETSCurrent AssetsCash
    
    $
    922
    
    
    $
    23,821Oil and gas revenue receivable
    
    
    54,495
    
    
    
    63,379Inventory
    
    
    6,749
    
    
    
    2,584Total current assets
    
    
    62,166
    
    
    
    89,784Oil and gas properties (successful efforts method), net
    
    
    127,322
    
    
    
    223,638Other
    
    
    6,211
    
    
    
    6,211Total Assets
    
    $
    195,699
    
    
    $
    319,633LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable and accrued expenses
    
    $
    56,783
    
    
    $
    64,543Accounts payable to and advances from affiliate
    
    
    32,792
    
    
    
    869,192Asset retirement obligations  current portion
    
    
    
    
    
    
    29,964Deferred revenue
    
    
    6,749
    
    
    
    2,584Total current liabilities
    
    
    96,324
    
    
    
    966,283Long-term LiabilitiesAsset retirement obligations
    
    
    10,781
    
    
    
    153,370Non-controlling Interest in Consolidated Subsidiary
    
    
    72,000
    
    
    
    72,000Commitments and Contingencies (Note 8)
    
    
    
    
    
    
    Stockholders EquityPreferred stock- $.01 par value; authorized 10,000,000;
no shares outstanding
    
    
    
    
    
    
    Common stock- $.01 par value; authorized 100,000,000 shares; 
4,027,442 shares issued and outstanding at May 31, 2008, 
4,002,442 shares issued and outstanding at November 30, 2007
    
    
    40,274
    
    
    
    40,024Additional paid-in capital
    
    
    10,911,440
    
    
    
    10,827,440Accumulated deficit
    
    
    (10,935,120
    )
    
    
    (11,739,484
    )Total stockholders equity
    
    
    16,594
    
    
    
    (872,020
    )Total Liabilities and Stockholders Equity
    
    $
    195,699
    
    
    $
    319,633
  F-1




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##### Table of Contents



TBX RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedMay 31, 2008
    
    
    May 31, 2007
    
    
    May 31, 2008
    
    
    May 31, 2007Revenues:Oil and gas sales
    
    $
    66,304
    
    
    $
    75,809
    
    
    $
    157,281
    
    
    $
    143,166Total revenues
    
    
    66,304
    
    
    
    75,809
    
    
    
    157,281
    
    
    
    143,166Expenses:Lease operating and taxes
    
    
    45,935
    
    
    
    79,376
    
    
    
    201,170
    
    
    
    122,253General and administrative
    
    
    87,797
    
    
    
    270,511
    
    
    
    222,107
    
    
    
    484,424Depreciation, depletion, amortization
and accretion
    
    
    7,620
    
    
    
    19,288
    
    
    
    21,680
    
    
    
    36,954Total expenses
    
    
    141,352
    
    
    
    369,175
    
    
    
    444,957
    
    
    
    643,631Operating Loss
    
    
    (75,048
    )
    
    
    (293,366
    )
    
    
    (287,676
    )
    
    
    (500,465
    )Other Income (Expense):Gain on sale of oil and gas properties
    
    
    1,092,040
    
    
    
    6,250
    
    
    
    1,092,040
    
    
    
    6,250Income (Loss) Before Provision for Income
Taxes
    
    
    1,016,992
    
    
    
    (287,116
    )
    
    
    804,364
    
    
    
    (494,215
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    $
    1,016,992
    
    
    $
    287,116
    )
    
    $
    804,364
    
    
    $
    (494,215
    )Net Income (Loss) per Common Share, Basic
    
    $
    0.25
    
    
    $
    (0.07
    )
    
    $
    0.20
    
    
    $
    (0.13
    )Net Income (Loss) per Common Share, Diluted
    
    $
    0.25
    
    
    $
    (0.07
    )
    
    $
    0.20
    
    
    $
    (0.13
    )Weighted Average Common Shares Outstanding:Basic
    
    
    4,027,442
    
    
    
    3,924,198
    
    
    
    4,018,016
    
    
    
    3,924,198Diluted
    
    
    4,118,746
    
    
    
    3,924,198
    
    
    
    4,123,070
    
    
    
    3,924,198
  F-2




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TBX RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months EndedMay 31, 2008
    
    
    May 31, 2007Cash Flows From Operating Activities:Net income (loss)
    
    $
    804,364
    
    
    $
    (494,215
    )Adjustments to reconcile net income (loss) to net cash used for
operating activities:Gain on sale of oil and gas properties
    
    
    (1,092,040
    )
    
    
    (6,250
    )Lease operating and taxes
    
    
    174,120
    
    
    
    Depreciation, depletion, amortization and accretion
    
    
    21,680
    
    
    
    36,954Stock based compensation
    
    
    80,500
    
    
    
    154,250Changes in operating assets and liabilities other than
accounts payable to and advances from affiliate:Decrease (increase) in:Oil and gas revenue receivable
    
    
    8,884
    
    
    
    (30,734
    )Inventory
    
    
    (4,165
    )
    
    
    2,300Increase (decrease) in:Trade accounts payable and accrued expenses
    
    
    (7,759
    )
    
    
    28,406Asset retirement obligations  current portion
    
    
    (29,964
    )
    
    
    Deferred revenue
    
    
    4,165
    
    
    
    (2,300
    )Net cash used for operating activities
    
    
    (40,215
    )
    
    
    (311,589
    )Cash Flows From Investing Activities:Development of oil and gas properties
    
    
    (28,461
    )
    
    
    Proceeds from sale of oil and gas properties
    
    
    
    
    
    
    6,250Net cash provided by (used in) investing activities
    
    
    (28,461
    )
    
    
    6,250Cash Flows From Financing Activities:Advances from affiliate
    
    
    42,027
    
    
    
    317,000Exercise of common stock options
    
    
    3,750
    
    
    
    3,750Net cash provided by financing activities
    
    
    45,777
    
    
    
    320,750Net Increase (Decrease) in Cash
    
    
    (22,899
    )
    
    
    15,411Cash at beginning of period
    
    
    23,821
    
    
    
    5,250Cash at end of period
    
    $
    922
    
    
    $
    20,661Supplemental Non-Cash Activity:Sale of oil and gas properties
    
    $
    106,430
    
    
    $
    Payables to and advances from affiliate
    
    $
    (1,052,547
    )
    
    $
    Asset retirement obligations settled
    
    $
    (145,923
    )
    
    $
    
  F-3




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##### Table of Contents



TBX RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008
(Unaudited)
 1. BASIS OF PRESENTATION:
  2. BUSINESS ACTIVITIES:
    3. GOING CONCERN:
  4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 Revenue Recognition
  Principles of Consolidation
  F-4




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Concentration of Credit Risk
  Receivables
  Inventory
  Property and Equipment
  Oil and Gas Properties
    Proved oil and gas properties
    
    $
    809,659Accumulated depreciation, depletion and
amortization
    
    
    (682,337
    )$
    127,322
 Long-lived Assets
  F-5




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Asset Retirement Obligations
   ARO at November 30, 2007
    
    $
    183,334Accretion expense
    
    
    3,334Liabilities incurred
    
    
    Liabilities settled
    
    
    (175,887
    )Changes in estimates
    
    
    ARO at May 31, 2008
    
    $
    10,781
 Equity Instruments Issued for Goods and Services
  Income Taxes
  Earnings Per Share (EPS)
  F-6




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##### Table of Contents



Use of Estimates
  5. RECENT ACCOUNTING PRONOUNCEMENTS:
 Noncontrolling Interests in Consolidated Financial
Statements
  6. RELATED PARTY TRANSACTIONS:
  a.
    
    The operator of the East Texas oil and gas leases, Gulftex is an affiliate of TBX. Mr.
Burroughs is a 50% stockholder and president of the Company. TBX paid Gulftex $3,200 during
the six months ended May 31, 2008 and $4,800 for the six months ended May 31, 2007 for
activities associated with operating certain wells.b.
    
    Gulftex operates certain oil and gas properties on behalf of the Company. At May 31, 2008
the Company has no liability to Gulftex related to the operation of these wells.c.
    
    During the six months ended May 31, 2008, the Company received advances from Gulftex
totaling $42,027. The balance due Gulftex as of May 31, 2008 is $32,792.d.
    
    Effective June 1, 2007, the Company is charging Gulftex rent for a portion of the Companys
office space plus administrative expenses paid by the Company that relates to Gulftexs
operations. The Company billed Gulftex $48,098 for the six months ended May 31, 2008.
 F-7




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##### Table of Contents



e.
    
    On June 4, 2008, the Company executed a sales agreement (effective April 1, 2008) with
Gulftex. Under the agreement, the Company transferred all of its East Texas oil and gas
properties with a net book value of $106,431 to Gulftex. In consideration for the transfer of
the properties, Gulftex is forgiving the Companys trade payables and advances totaling
$1,052,547. In addition, Gulftex is assuming the Companys asset retirement obligations with
a book value of $145,923. The Company recorded a gain of $1,092,040 on the sale. Gulftex did
not charge interest for its advances to the Company. The amount of interest that could have
been charged is immaterial.
 7. STOCK BASED COMPENSATION:
    F-8




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Weighted-AverageShares
    
    
    Exercise PriceOutstanding December 1, 2007
    
    
    100,000
    
    
    $
    0.15Granted
    
    
    50,000
    
    
    $
    0.15Exercised
    
    
    (25,000
    )
    
    $
    0.15Forfeited
    
    
    (25,000
    )
    
    $
    0.15Outstanding May 31, 2008
    
    
    100,000
    
    
    $
    0.15Options exercisable at May 31, 2008
    
    
    100,000
    
    
    $
    0.15Weighted-average fair value of
options granted during this quarter
    
    $
    34,000Weighted-average fair value of
options granted during this year to date
    
    $
    80,500
  Average expected life in years
    
    
    1Average interest rate
    
    
    4.50
    %Average volatility
    
    
    71
    %Dividend yield
    
    
    0
    %
  Weighted Average
    
    
    Weighted AverageGrant Date
    
    
    Grant DateShares
    
    
    Fair Value per Share
    
    
    Fair ValueVested
    
    
    100,000
    
    
    $
    1.74
    
    
    $
    174,000Nonvested
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    100,000
    
    
    $
    1.74
    
    
    $
    174,000
  8. COMMITMENTS AND CONTINGENCIES:
   F-9




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9. INCOME TAXES:
  F-10




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT
  DESCRIPTION OF PROPERTIES
 GENERAL
  PROPERTIES
  Gross
    
    NetProducing
    
    ProducingName of Field or Well
    
    Well Count
    
    Well CountNewark East, Working Interest
    
    
    2
    
    
    
    0.65Newark East, Override Interest
    
    
    8
    
    
    
    0.03Camargo NW Field
    
    
    2
    
    
    
    0.03Harmon SE Field
    
    
    1
    
    
    
    0.01
 PRODUCTIVE WELLS AND ACREAGE:
  Net
    
    
    
    
    
    Net
    
    Total GrossTotal Gross
    
    Productive
    
    Total Gross
    
    Productive
    
    Developed
    
    Total Net DevelopedGeographic Area
    
    Oil Wells
    
    Oil Wells
    
    Gas Wells
    
    Gas Wells
    
    Acres
    
    AcresWise County
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    .65
    
    
    
    224
    
    
    
    73.18Denton County
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    .02
    
    
    
    566
    
    
    
    2.49Anadarko Basin
    
    
    3
    
    
    
    .05
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    7.70
 Notes
  1.
    
    Total Gross Wells are those wells in which the Company holds a working or overriding interest
in as of May 31, 2008.2.
    
    Net Productive Wells was calculated by multiplying the working or overriding interest held by
the Company in each of the 11 Gross Wells and adding the resulting products.3.
    
    Total Gross Developed Acres is equal to the total surface acres of the properties in which
the Company holds a working interest.4.
    
    Net Developed Acres is equal to the Total Gross Developed Acres multiplied by the percentage
of the total working interest held by the Company in the respective properties. 3




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##### Table of Contents



5.
    
    All acreage in which we hold a working interest as of May 31, 2008 have or had existing wells
located thereon; thus all acreage leased by the Company may be accurately classified as
developed.6.
    
    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 developmental potential. ANADARKO BASIN- WESTERN OKLAHOMA
  OIL AND GAS PARTNERSHIP INTERESTS
  CRITICAL ACCOUNTING POLICIES
   OVERVIEW
 Going Concern and Liquidity Problems
    4




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##### Table of Contents



RESULTS OF OPERATIONS
  Revenues-
    Gas
    
    
    MBTU
    
    
    Price/
    
    
    Oil
    
    
    Bbls
    
    
    Price/Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblMay 31, 2008
    
    $
    42,199
    
    
    
    5,345
    
    
    $
    7.90
    
    
    $
    24,105
    
    
    
    304
    
    
    $
    79.29May 31, 2007
    
    $
    24,983
    
    
    
    4,143
    
    
    $
    6.03
    
    
    $
    44,826
    
    
    
    1,036
    
    
    $
    43.273 Month Change2008 vs 2007Amount
    
    $
    17,216
    
    
    
    1,202
    
    
    $
    1.87
    
    
    $
    (20,721
    )
    
    
    (732
    )
    
    $
    36.02Percentage
    
    
    68.91
    %
    
    
    29.01
    %
    
    
    31.01
    %
    
    
    -46.23
    %
    
    
    -70.66
    %
    
    
    83.24
    %
    5




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Gas
    
    
    MBTU
    
    
    Price/
    
    
    Oil
    
    
    Bbls
    
    
    Price/Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblMay 31, 2008
    
    $
    88,934
    
    
    
    11,325
    
    
    $
    7.85
    
    
    $
    70,192
    
    
    
    905
    
    
    $
    77.55May 31, 2007
    
    $
    50,582
    
    
    
    9,125
    
    
    $
    5.54
    
    
    $
    91,500
    
    
    
    2,101
    
    
    $
    43.566 Month Change2008 vs 2007Amount
    
    $
    38,352
    
    
    
    2,200
    
    
    $
    2.31
    
    
    $
    (21,308
    )
    
    
    (1,196
    )
    
    $
    33.99Percentage
    
    
    75.82
    %
    
    
    24.11
    %
    
    
    41.70
    %
    
    
    -23.29
    %
    
    
    -56.93
    %
    
    
    78.03
    %
   Expenses-
 %
    
    
    
    
    
    
    
    
    
    
    %Three Months Ended
    
    
    Increase
    
    
    Six Months Ended
    
    
    IncreaseMay 31, 2008
    
    
    May 31, 2007
    
    
    (Decrease)
    
    
    May 31, 2008
    
    
    May 31, 2007
    
    
    (Decrease)Expenses:Lease operating and taxes
    
    $
    45,935
    
    
    $
    79,376
    
    
    
    -42.13
    %
    
    $
    201,170
    
    
    $
    122,253
    
    
    
    64.55
    %General and administrative
    
    
    87,797
    
    
    
    270,511
    
    
    
    -67.54
    %
    
    
    222,107
    
    
    
    484,424
    
    
    
    -54.15
    %Depreciation, depl, amort., & accretion
    
    
    7,620
    
    
    
    19,288
    
    
    
    -60.49
    %
    
    
    21,680
    
    
    
    36,954
    
    
    
    -41.33
    %Total expenses
    
    $
    141,352
    
    
    $
    369,175
    
    
    
    -61.71
    %
    
    $
    444,957
    
    
    $
    643,631
    
    
    
    -30.87
    %
    6




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LIQUIDITY AND CAPITAL RESOURCES
    PLAN OF OPERATION FOR THE FUTURE
   7




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ITEM 3. QUANTITATIVE AND QUALATIVE DISCLOSURES ABOUT MARKET RISK.
  
 ITEM 4. CONTROLS AND PROCEDURES
     Limitations on the Effectiveness of Controls.
 8




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PART II. OTHER INFORMATION
 
   
   
   
   
   
      9




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SIGNATURE:
    /s/ Tim BurroughsTIM BURROUGHS, PRESIDENT/CHIEF FINANCIAL OFFICER 10