##### 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: August 31, 2009
 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
  Large accelerated filer o   
    Accelerated filer
o
    Non-accelerated filer o
    Smaller reporting company
þ(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, 2008
and August 31, 2009 (Unaudited)
    
    
    F-1Condensed Consolidated Statements of Operations for the Three
and Nine months Ended August 31, 2009 and 2008 (Unaudited)
    
    
    F-2Condensed Consolidated Statements of Cash Flows for the Nine
months Ended August 31, 2009 and 2008 (Unaudited)
    
    
    F-3Notes to Condensed Consolidated Financial Statements as of August 31, 2009 (Unaudited)
    
    
    F-4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    3Item 3. Quantitative and Qualitative Disclosures about Market Risk.
    
    
    8Item 4T. Controls and Procedures
    
    
    8PART II  Other InformationItem 1. Legal Proceedings
    
    
    8Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    9Item 3. Defaults Upon Senior Securities
    
    
    9Item 5. Other Information
    
    
    9Item 6. Exhibits
    
    
    9SIGNATURES
    
    
    9EX-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
 August 31,2009
    
    
    November 30,(Unaudited)
    
    
    2008ASSETSCurrent AssetsCash
    
    $
    5,924
    
    
    $
    2,506Oil and gas revenue receivable
    
    
    215,690
    
    
    
    175,812Accounts receivable from affiliate
    
    
    
    
    
    
    21,824Prepaid expense
    
    
    10,000
    
    
    
    10,000Inventory
    
    
    6,226
    
    
    
    Total current assets
    
    
    237,840
    
    
    
    210,142Oil and gas properties (successful efforts method), net
    
    
    51,294
    
    
    
    57,619Other
    
    
    6,211
    
    
    
    6,211Total Assets
    
    $
    295,345
    
    
    $
    273,972LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesTrade accounts payable and accrued expenses
    
    $
    134,194
    
    
    $
    90,789Accounts payable to and advances from affiliate
    
    
    432,100
    
    
    
    173,786Deferred revenue
    
    
    6,226
    
    
    
    Total current liabilities
    
    
    572,520
    
    
    
    264,575Long-term LiabilitiesAsset retirement obligations
    
    
    21,748
    
    
    
    20,981Non-controlling Interest in Consolidated Subsidiary
    
    
    72,000
    
    
    
    72,000Commitments 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 August 31, 2009,
4,027,442 shares issued and outstanding at November 30, 2008
    
    
    40,274
    
    
    
    40,274Additional paid-in capital
    
    
    10,929,940
    
    
    
    10,929,440Accumulated deficit
    
    
    (11,341,137
    )
    
    
    (11,053,298
    )Total stockholders deficit
    
    
    (370,923
    )
    
    
    (83,584
    )Total Liabilities and Stockholders Deficit
    
    $
    295,345
    
    
    $
    273,972
  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 Nine Months EndedAug. 31, 2009
    
    
    Aug. 31, 2008
    
    
    Aug. 31, 2009
    
    
    Aug. 31, 2008Revenues:Oil and gas sales
    
    $
    15,114
    
    
    $
    53,607
    
    
    $
    39,959
    
    
    $
    210,888Total revenues
    
    
    15,114
    
    
    
    53,607
    
    
    
    39,959
    
    
    
    210,888Expenses:Lease operating and taxes
    
    
    8,268
    
    
    
    19,789
    
    
    
    28,932
    
    
    
    220,958General and administrative
    
    
    73,860
    
    
    
    74,888
    
    
    
    293,461
    
    
    
    296,995Depreciation, depletion, amortization
and accretion
    
    
    2,430
    
    
    
    4,004
    
    
    
    7,092
    
    
    
    25,684Total expenses
    
    
    84,558
    
    
    
    98,681
    
    
    
    329,485
    
    
    
    543,637Operating Loss
    
    
    (69,444
    )
    
    
    (45,074
    )
    
    
    (289,526
    )
    
    
    (332,749
    )Other Income (Expense):Gain on sale of oil and gas properties
    
    
    
    
    
    
    
    
    
    
    1,687
    
    
    
    1,092,040Income (Loss) Before Provision for Income
Taxes
    
    
    (69,444
    )
    
    
    (45,074
    )
    
    
    (287,839
    )
    
    
    759,291Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    $
    (69,444
    )
    
    $
    (45,074
    )
    
    $
    (287,839
    )
    
    $
    759,291Net Income (Loss) per Common Share, Basic
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.07
    )
    
    $
    0.19Net Income (Loss) per Common Share, Diluted
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.07
    )
    
    $
    0.18Weighted Average Common Shares Outstanding:Basic
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,021,169Diluted
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,027,442
    
    
    
    4,124,533
  F-2




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TBX RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months EndedAug. 31, 2009
    
    
    Aug. 31, 2008Cash Flows From Operating Activities:Net income (loss)
    
    $
    (287,839
    )
    
    $
    759,291Adjustments to reconcile net income (loss) to net cash used for
operating activities:Gain on sale of oil and gas properties
    
    
    (1,687
    )
    
    
    (1,092,040
    )Depreciation, depletion, amortization and accretion
    
    
    7,092
    
    
    
    25,684Stock based compensation
    
    
    500
    
    
    
    94,750Changes in operating assets and liabilities other than
accounts payable to and advances from affiliate:Decrease (increase) in:Accounts receivable from affiliate
    
    
    21,824
    
    
    
    Oil and gas revenue receivable
    
    
    (39,878
    )
    
    
    (39,793
    )Inventory
    
    
    (6,226
    )
    
    
    (8,393
    )Increase (decrease) in:Trade accounts payable and accrued expenses
    
    
    43,405
    
    
    
    13,339Accounts payable to affiliate
    
    
    
    
    
    
    179,790Asset retirement obligations  current portion
    
    
    
    
    
    
    (29,964
    )Deferred revenue
    
    
    6,226
    
    
    
    8,393Net cash used for operating activities
    
    
    (256,583
    )
    
    
    (88,943
    )Cash Flows From Investing Activities:Development of oil and gas properties
    
    
    
    
    
    
    (28,461
    )Proceeds from sale of oil and gas properties
    
    
    1,687
    
    
    
    Net cash provided by (used in) investing activities
    
    
    1,687
    
    
    
    (28,461
    )Cash Flows From Financing Activities:Advances from affiliate-net
    
    
    258,314
    
    
    
    92,835Exercise of common stock options
    
    
    
    
    
    
    3,750Net cash provided by financing activities
    
    
    258,314
    
    
    
    96,585Net Increase (Decrease) in Cash
    
    
    3,418
    
    
    
    (20,819
    )Cash at beginning of period
    
    
    2,506
    
    
    
    23,821Cash at end of period
    
    $
    5,924
    
    
    $
    3,002Supplemental Non-Cash Activity:Sale of oil and gas properties
    
    $
    
    
    
    $
    106,430Payables to and advances from affiliate
    
    $
    
    
    
    $
    (1,052,547
    )Asset retirement obligations settled
    
    $
    
    
    
    $
    (145,923
    )Write-off of fully depreciated property and equipment in May 2009.
    
    $
    229,074
    
    
    $
    
  F-3




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##### Table of Contents



TBX RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2009
(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
    
    $
    518,538Accumulated depreciation, depletion and
amortization
    
    
    (467,244
    )$
    51,924
 Long-lived Assets
   F-5




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Asset Retirement Obligations
   ARO at November 30, 2008
    
    $
    20,981Accretion expense
    
    
    767Liabilities incurred
    
    
    Liabilities settled
    
    
    Changes in estimates
    
    
    ARO at August 31, 2009
    
    $
    21,748
 Income Taxes
   Earnings Per Share (EPS)
  Use of Estimates
   F-6




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##### Table of Contents



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.
    
    The former 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 sold its interest in
East Texas properties to Gulftex on April 1, 2008; accordingly, there are no fees associated
with operating these wells for the nine months ended August 31, 2009. Fees paid Gulftex for
operating these wells for the nine months ended August 31, 2008 are $3,200.
 F-7




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##### Table of Contents



b.
    
    During the nine months ended August 31, 2009, the Company received net advances from
Gulftex totaling $258,314. The balance due Gulftex as of August 31, 2009 is $432,100.c.
    
    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 $64,312 for the nine months ended August
31, 2009.d.
    
    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 $106,430 to Gulftex. In consideration for the transfer
of the properties, Gulftex forgave the Companys trade payables and advances totaling
$1,052,547. In addition, Gulftex is assumed 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, 2008
    
    
    100,000
    
    
    $
    0.15Granted
    
    
    50,000
    
    
    $
    0.15Exercised
    
    
    
    
    
    $
    0.15Forfeited
    
    
    (75,000
    )
    
    $
    0.15Outstanding August 31, 2009
    
    
    75,000
    
    
    $
    0.15Options exercisable at August 31, 2009
    
    
    75,000
    
    
    $
    0.15Weighted-average fair value of
options granted during this quarter
    
    $
    Weighted-average fair value of
options granted during this year to date
    
    $
    500
  Average expected life in years
    
    
    1Average interest rate
    
    
    4.00
    %Average volatility
    
    
    158.50
    %Dividend yield
    
    
    0
    %
  Weighted Average
    
    
    Weighted AverageGrant Date
    
    
    Grant DateShares
    
    
    Fair Value per Share
    
    
    Fair ValueVested
    
    
    75,000
    
    
    $
    .1100
    
    
    $
    8,250Nonvested
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    75,000
    
    
    $
    .1100
    
    
    $
    8,250
  8. COMMITMENTS AND CONTINGENCIES:
   F-9




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9. SALE OF OIL AND GAS PROPERTIES:
   10. INCOME TAXES:
  11. SUBSEQUENT EVENT:
 th
 F-10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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
    
    
    
    0.73Newark East, Override Interest
    
    
    8
    
    
    
    0.03
 PRODUCTIVE WELLS AND ACREAGE:
  TotalNet
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    Total NetTotal Gross
    
    
    Productive
    
    
    Total Gross
    
    
    Productive
    
    
    Developed
    
    
    DevelopedGeographic Area
    
    Oil Wells
    
    
    Oil Wells
    
    
    Gas Wells
    
    
    Gas Wells
    
    
    Acres
    
    
    AcresWise County
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    .74
    
    
    
    224
    
    
    
    83.14Denton County
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    .03
    
    
    
    566
    
    
    
    18.11
 
 Notes:1.
    
    Total Gross Wells are those wells in which the Company holds a working or overriding interest
in as of August 31, 2009.2.
    
    Net Productive Wells was calculated by multiplying the working or overriding interest held by
the Company in each of the 10 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 August 31, 2009 have or had existing
wells located thereon; thus all acreage leased by the Company may be accurately classified as
developed. 3




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##### Table of Contents



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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Sale of Assets
   RESULTS OF OPERATIONS
  Revenues-
    Gas
    
    
    MBTU
    
    
    Price/
    
    
    Oil
    
    
    Bbls
    
    
    Price/Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblAugust 31, 2009
    
    $
    12,233
    
    
    
    3,151
    
    
    $
    3.88
    
    
    $
    2,800
    
    
    
    43
    
    
    $
    65.12August 31, 2008
    
    $
    39,856
    
    
    
    4,866
    
    
    $
    8.19
    
    
    $
    13,750
    
    
    
    129
    
    
    $
    106.593 Month Change2009 vs 2008Amount
    
    $
    (27,623
    )
    
    
    (1,715
    )
    
    $
    (4.31
    )
    
    $
    (10,950
    )
    
    
    (86
    )
    
    $
    (41.47
    )Percentage
    
    
    -69.31
    %
    
    
    -35.24
    %
    
    
    -52.60
    %
    
    
    -79.64
    %
    
    
    -66.67
    %
    
    
    -38.91
    %
    5




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##### Table of Contents



Sales
    
    
    Sold
    
    
    MBTU
    
    
    Sales
    
    
    Sold
    
    
    BblAugust 31, 2009
    
    $
    33,648
    
    
    
    8,628
    
    
    $
    3.90
    
    
    $
    6,231
    
    
    
    132
    
    
    $
    47.20August 31, 2008
    
    $
    128,790
    
    
    
    16,190
    
    
    $
    7.95
    
    
    $
    83,942
    
    
    
    1,034
    
    
    $
    81.189 Month Change2009 vs 2008Amount
    
    $
    (95,142
    )
    
    
    (7,562
    )
    
    $
    (4.05
    )
    
    $
    (77,711
    )
    
    
    (902
    )
    
    $
    (33.98
    )Percentage
    
    
    -73.87
    %
    
    
    -46.71
    %
    
    
    -50.98
    %
    
    
    -92.58
    %
    
    
    -87.23
    %
    
    
    -41.85
    %
   Expenses-
 %
    
    
    
    
    
    
    
    
    
    
    %Three Months Ended
    
    
    Increase
    
    
    Nine Months Ended
    
    
    IncreaseAug. 31, 2009
    
    
    Aug. 31, 2008
    
    
    (Decrease)
    
    
    Aug. 31, 2009
    
    
    Aug. 31, 2008
    
    
    (Decrease)Expenses:Lease operating and taxes
    
    $
    8,268
    
    
    $
    19,789
    
    
    
    -58.22
    %
    
    $
    28,932
    
    
    $
    220,958
    
    
    
    -86.91
    %General and administrative
    
    
    73,860
    
    
    
    74,888
    
    
    
    -1.37
    %
    
    
    293,461
    
    
    
    296,995
    
    
    
    -1.19
    %Depreciation, depl, amort., & accretion
    
    
    2,430
    
    
    
    4,004
    
    
    
    -39.31
    %
    
    
    7,092
    
    
    
    25,684
    
    
    
    -72.39
    %Total expenses
    
    $
    84,558
    
    
    $
    98,681
    
    
    
    -14.31
    %
    
    $
    329,485
    
    
    $
    543,637
    
    
    
    -39.39
    %
     6




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LIQUIDITY AND CAPITAL RESOURCES
    PLAN OF OPERATION FOR THE FUTURE
    7




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALATIVE DISCLOSURES ABOUT MARKET RISK.
  
 ITEM 4T.
    
    CONTROLS AND PROCEDURES
     Limitations on the Effectiveness of Controls.
 
 PART II. OTHER INFORMATION
 
 Item 1.
    
    LEGAL PROCEEDINGS
 th
 8




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Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 Item 5.
    
    OTHER INFORMATION
  
 Item 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
        SIGNATURE:
    
    /s/ Tim BurroughsTIM BURROUGHS, PRESIDENT/CHIEF FINANCIAL OFFICER
 9