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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, 2010
 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
 o o
  o Large accelerated filer  
    o Accelerated filer
    o Non-accelerated filer
    þ Smaller reporting company(Do not check if a smaller reporting company)
 o þ




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##### 



TBX RESOURCES, INC.
 Index
 Pg. No.PART I  Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of November 30, 2009
and May 31, 2010 (Unaudited)
    
    
    F-1Condensed Consolidated Statements of Operations for the Three
and Six months Ended May 31, 2010 and 2009 (Unaudited)
    
    
    F-2Condensed Consolidated Statements of Cash Flows for the
Six months Ended May 31, 2010 and 2009 (Unaudited)
    
    
    F-3Notes to Condensed Consolidated Financial Statements as of May 31, 2010 (Unaudited)
    
    
    F-4Item 2. Managements Discussion and Analysis
    
    
    3Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    7Item 4T. Controls and Procedures
    
    
    7PART II  Other InformationItem 1. Legal Proceedings
    
    
    8Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    8Item 3. Defaults Upon Senior Securities
    
    
    8Item 5. Other Information
    
    
    8Item 6. Exhibits
    
    
    8SIGNATURES
    
    
    8EX-31.1EX-32.1
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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TBX RESOURCES, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS
 May 31, 2010
    
    
    November 30,(Unaudited)
    
    
    2009ASSETSCurrent AssetsCash
    
    $
    2,293
    
    
    $
    5,327Oil and gas revenue receivable
    
    
    6,824
    
    
    
    112,122Inventory
    
    
    4,650
    
    
    
    4,494Total current assets
    
    
    13,767
    
    
    
    121,943Oil and gas properties (successful efforts method), net
    
    
    44,572
    
    
    
    49,591Other
    
    
    6,211
    
    
    
    6,211Total Assets
    
    $
    64,550
    
    
    $
    177,745LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesTrade accounts payable and accrued expenses
    
    $
    32,670
    
    
    $
    62,693Advances from affiliate
    
    
    388,774
    
    
    
    496,602Deferred revenue
    
    
    4,650
    
    
    
    4,494Total current liabilities
    
    
    426,094
    
    
    
    563,789Long-term LiabilitiesAsset retirement obligations
    
    
    21,531
    
    
    
    21,021Commitments and Contingencies (Note 8)
    
    
    
    
    
    
    Stockholders DeficitPreferred 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, 2010,
4,027,442 shares issued and outstanding at November 30, 2009
    
    
    40,274
    
    
    
    40,274Additional paid-in capital
    
    
    10,929,940
    
    
    
    10,929,940Accumulated deficit
    
    
    (11,353,289
    )
    
    
    (11,377,279
    )Total stockholders deficit
    
    
    (383,075
    )
    
    
    (407,065
    )Total Liabilities and Stockholders Deficit
    
    $
    64,550
    
    
    $
    177,745
  F-1




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedMay 31, 2010
    
    
    May 31, 2009
    
    
    May 31, 2010
    
    
    May 31, 2009Revenues:Oil and gas sales
    
    $
    13,741
    
    
    $
    10,320
    
    
    $
    36,109
    
    
    $
    24,845Total revenues
    
    
    13,741
    
    
    
    10,320
    
    
    
    36,109
    
    
    
    24,845Expenses:Lease operating and taxes
    
    
    11,427
    
    
    
    8,905
    
    
    
    19,577
    
    
    
    20,665General and administrative
    
    
    14,669
    
    
    
    91,271
    
    
    
    81,077
    
    
    
    219,601Depreciation, depletion, amortization and accretion
    
    
    2,537
    
    
    
    2,268
    
    
    
    5,529
    
    
    
    4,662Gain on sale of oil and gas properties
    
    
    
    
    
    
    (1,687
    )
    
    
    
    
    
    
    (1,687
    )Total expenses
    
    
    28,633
    
    
    
    100,757
    
    
    
    106,183
    
    
    
    243,241Operating Loss
    
    
    (14,892
    )
    
    
    (90,437
    )
    
    
    (70,074
    )
    
    
    (218,396
    )Other Income:Partial loss recovery (Note 10)
    
    
    87,122
    
    
    
    
    
    
    
    94,064
    
    
    
    Income (Loss) Before Provision for Income Taxes
    
    
    72,230
    
    
    
    (90,437
    )
    
    
    23,990
    
    
    
    (218,396
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    $
    72,230
    
    
    $
    (90,437
    )
    
    $
    23,990
    
    
    $
    (218,396
    )Net Income (Loss) per Common Share, Basic and Diluted
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.01
    
    
    $
    (0.05
    )Weighted Average Common Shares Outstanding:Basic and Diluted
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,027,442
  F-2




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For the Six Months EndedMay 31, 2010
    
    
    May 31, 2009Cash Flows From Operating Activities:Net income (loss)
    
    $
    23,990
    
    
    $
    (218,396
    )Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:Depreciation, depletion, amortization and accretion
    
    
    5,529
    
    
    
    4,662Stock based compensation
    
    
    
    
    
    
    500Gain on sale of oil and gas properties
    
    
    
    
    
    
    (1,687
    )Changes in operating assets and liabilities other than advances
from affiliate:Decrease (increase) in:Oil and gas revenue receivable
    
    
    105,298
    
    
    
    (24,844
    )Accounts receivable from affiliate
    
    
    
    
    
    
    21,824Inventory
    
    
    (156
    )
    
    
    (5,300
    )Increase (decrease) in:Trade accounts payable and accrued expenses
    
    
    (30,023
    )
    
    
    39,169Deferred revenue
    
    
    156
    
    
    
    5,300Net cash provided by (used for) operating activities
    
    
    104,794
    
    
    
    (178,772
    )Cash Flows From Investing Activities:Proceeds from sale of oil and gas properties
    
    
    
    
    
    
    1,687Net cash provided by investing activities
    
    
    
    
    
    
    1,687Cash Flows From Financing Activities:Advances from affiliate
    
    
    108,360
    
    
    
    177,402Payments to affiliate
    
    
    (216,188
    )
    
    
    Net cash provided by (used for) financing activities
    
    
    (107,828
    )
    
    
    177,402Net Increase (Decrease) in Cash
    
    
    (3,034
    )
    
    
    317Cash at beginning of period
    
    
    5,327
    
    
    
    2,506Cash at end of period
    
    $
    2,293
    
    
    $
    2,823Supplemental Non-Cash Activity:Write-off of fully depreciated property and equipment
    
    $
    
    
    
    $
    229,074
  F-3




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 May 31, 2010
 (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
  Oil and Gas Revenue Receivable
  Inventory
  Property and Equipment
  Oil and Gas Properties
    Proved oil and gas properties
    
    $
    518,538Accumulated depreciation, depletion and
amortization
    
    
    (473,966
    )$
    44,572
 Long-lived Assets
   Asset Retirement Obligations
  F-5




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ARO at November 30, 2009
    
    $
    21,021Accretion expense
    
    
    510Liabilities incurred
    
    
    Liabilities settled
    
    
    Changes in estimates
    
    
    ARO at May 31, 2010
    
    $
    21,531
 Income Taxes
  Earnings Per Share (EPS)
  Use of Estimates
  Fair Value Measurements
   F-6




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Level 1
    
    Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Plan has the ability to access.Level 2
    
    Inputs to the valuation methodology include:
 -
    
    quoted prices for similar assets or liabilities in active markets;-
    
    quoted prices for identical or similar assets or liabilities in
inactive markets;-
    
    inputs other than quoted prices that are observable for the asset or
liability;-
    
    inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
 If the asset or liability has a specified (contractual) term, the Level 2 input must be
observable for substantially the full term of the asset or liability.Level 3
    
    Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
  Subsequent Events
  5. RECENT ACCOUNTING PRONOUNCEMENTS:
  6. RELATED PARTY TRANSACTIONS:
  a.
    
    During the six months ended May 31, 2010 the Company had a net reduction in advances from
Gulftex totaling $107,828. During the six months ended May 31, 2009, the Company received
advances from Gulftex totaling $177,402. The balance due Gulftex as of May 31, 2010 is
$388,774.b.
    
    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 $36,786 for the six months ended May 31, 2010 and $48,607 for the six months
ended May 31, 2009.
 7. STOCK BASED COMPENSATION:
  F-7




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Weighted-AverageShares
    
    
    Exercise PriceOutstanding December 1, 2009
    
    
    25,000
    
    
    $
    0.15Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (25,000
    )
    
    $
    0.15Outstanding May 31, 2010
    
    
    
    
    
    
    Options exercisable at May 31, 2010
    
    
    
    
    
    
    
 8. COMMITMENTS AND CONTINGENCIES:
   9. LAW SUIT SETTLEMENT:
 th
 F-8




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10. COURT ORDERED RESTITUTION:
  11. SALE OF OIL AND GAS PROPERTIES:
  12. INCOME TAXES:
  F-9




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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
    
    
    
    0.74Newark East, Override Interest
    
    
    9
    
    
    
    0.04
 PRODUCTIVE WELLS AND ACREAGE:
  Proved
    
    
    ProvedProved
    
    
    Proved
    
    
    Developed
    
    
    DevelopedReserves:
    
    
    Reserves:
    
    
    Reserves:
    
    
    Reserves:Name of
    
    Oil
    
    
    Gas
    
    
    Oil
    
    
    GasField or Well
    
    (bbls)
    
    
    (mcf)
    
    
    (bbls)
    
    
    (mcf)Newark East
    
    
    1,861
    
    
    
    78,121
    
    
    
    1,861
    
    
    
    78,121
 Notes
 1.
    
    Total Gross Wells are those wells in which the Company holds a working or overriding interest
in as of May 31, 2010.2.
    
    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.5.
    
    All acreage in which we hold a working interest as of May 31, 2010 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
 3




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comprehensive study of all properties currently leased by us would be required to determine
precise developmental potential.
 OIL AND GAS PARTNERSHIP INTERESTS
  CRITICAL ACCOUNTING POLICIES
   OVERVIEW
 Going Concern and Liquidity Problems
   Sale of Assets
  RESULTS OF OPERATIONS
  Revenues-
  4




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Gas
    
    
    MBTU
    
    
    Price/
    
    
    Oil
    
    
    Bbls
    
    
    Price/Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblMay 31, 2010
    
    $
    13,439
    
    
    
    2,519
    
    
    $
    5.33
    
    
    $
    302
    
    
    
    4
    
    
    $
    75.50May 31, 2009
    
    $
    8,487
    
    
    
    2,629
    
    
    $
    3.23
    
    
    $
    1,833
    
    
    
    43
    
    
    $
    42.633 Month Change2010 vs 2009Amount
    
    $
    4,952
    
    
    
    (110
    )
    
    $
    2.10
    
    
    $
    (1,531
    )
    
    
    (39
    )
    
    $
    32.87Percentage
    
    
    58.35
    %
    
    
    -4.18
    %
    
    
    65.02
    %
    
    
    -83.52
    %
    
    
    -90.70
    %
    
    
    77.11
    %
    Gas
    
    
    MBTU
    
    
    Price/
    
    
    Oil
    
    
    Bbls
    
    
    Price/Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblMay 31, 2010
    
    $
    25,542
    
    
    
    4,467
    
    
    $
    5.72
    
    
    $
    10,567
    
    
    
    143
    
    
    $
    73.90May 31, 2009
    
    $
    21,415
    
    
    
    5,477
    
    
    $
    3.91
    
    
    $
    3,430
    
    
    
    89
    
    
    $
    38.546 Month Change2010 vs 2009Amount
    
    $
    4,127
    
    
    
    (1,010
    )
    
    $
    1.81
    
    
    $
    7,137
    
    
    
    54
    
    
    $
    35.36Percentage
    
    
    19.27
    %
    
    
    -18.44
    %
    
    
    46.24
    %
    
    
    208.08
    %
    
    
    60.67
    %
    
    
    91.74
    %
  Expenses-
 %
    
    
    
    
    
    
    
    
    
    
    %Three Months Ended
    
    
    Increase
    
    
    Six Months Ended
    
    
    IncreaseMay 31, 2010
    
    
    May 31, 2009
    
    
    (Decrease)
    
    
    May 31, 2010
    
    
    May 31, 2009
    
    
    (Decrease)Expenses:Lease operating and taxes
    
    $
    11,427
    
    
    $
    8,905
    
    
    
    28.32
    %
    
    $
    19,577
    
    
    $
    20,665
    
    
    
    -5.26
    %General and administrative
    
    
    14,669
    
    
    
    91,271
    
    
    
    -83.93
    %
    
    
    81,077
    
    
    
    219,601
    
    
    
    -63.08
    %Depreciation, depl, amort., & accretion
    
    
    2,537
    
    
    
    2,268
    
    
    
    11.86
    %
    
    
    5,529
    
    
    
    4,662
    
    
    
    18.60
    %Gain on sales of O&G properties
    
    
    
    
    
    
    (1,687
    )
    
    
    -100.00
    %
    
    
    
    
    
    
    (1,687
    )
    
    
    -100.00
    %$
    28,633
    
    
    $
    100,757
    
    
    
    -73.26
    %
    
    $
    106,183
    
    
    $
    243,241
    
    
    
    -56.35
    %
 5




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LIQUIDITY AND CAPITAL RESOURCES
    PLAN OF OPERATION FOR THE FUTURE
  6




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  
 ITEM 4T. CONTROLS AND PROCEDURES
     Limitations on the Effectiveness of Controls.
 7




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PART II. OTHER INFORMATION
 
   
   
   
   
         /s/ Tim Burroughs
 8