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UNITED STATES SECURITIES EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDING August 31, 2006
 o
    
    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.)
 
   þ o
  o þ
  o þ




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##### 



TBX RESOURCES, INC.
 Index
 Page #PART I  Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheet as of August 31, 2006 (Unaudited)
    
    
    F- 1Condensed Consolidated Statements of Operations Three and Nine Months Ended August
31, 2006 (Unaudited) and 2005 (Restated)
    
    
    F- 2Condensed Consolidated Statements of Cash Flows Three and Nine Months Ended August
31, 2006 (Unaudited) and 2005 (Restated)
    
    
    F- 3Notes to Condensed Consolidated Financial Statements as of August 31, 2006 (Unaudited)
    
    
    F- 4Item 2. Managements Discussion and Analysis
    
    
    3Item 3. Controls and Procedures
    
    
    7PART II  Other Information
    
    
    7Item 1. Legal Proceedings
    
    
    7Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    7Item 3. Defaults Upon Senior Securities
    
    
    7Item 4. Submission of Matters to a Vote of Security Holders
    
    
    7Item 5. Other Information
    
    
    7Item 6. Exhibits
    
    
    8SIGNATURESRevised Employment AgreementCertification of CEO and CFO Pursuant to Section 302Certification of CEO and CFO Pursuant to Section 906
  2




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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 August 31, 2006 (Unaudited)
 ASSETSCurrent AssetsCash
    
    $
    88,257Oil and gas revenue receivable
    
    
    38,996Total current assets
    
    
    127,253Oil and gas properties (successful efforts method), net
    
    
    491,342Other
    
    
    6,211Total Assets
    
    $
    624,806LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesAccounts payable and accrued expenses
    
    $
    261,090Accrued compensation
    
    
    490,000Advances from affiliates
    
    
    64,760Accounts payable to affiliate
    
    
    4,292Asset retirement liabilitycurrent portion
    
    
    106,273Total current liabilities
    
    
    926,415Long-term LiabilitiesAsset retirement obligation, net of current portion
    
    
    68,184Minority interest
    
    
    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; 3,807,417 shares issued and outstanding
    
    
    38,075Additional paid-in capital
    
    
    9,926,139Accumulated deficit
    
    
    (10,406,007
    )Total stockholders deficit
    
    
    (441,793
    )Total Liabilities and Stockholders Deficit
    
    $
    624,806
  F-1




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For Three Months Ended
    
    
    For Nine Months EndedAugust 31, 2006
    
    
    August 31, 2005
    
    
    August 31, 2006
    
    
    August 31, 2005(Restated)
    
    
    
    
    
    
    (Restated)Revenues:Oil and gas sales
    
    $
    83,798
    
    
    $
    17,629
    
    
    $
    228,705
    
    
    $
    64,895Joint venture contract fees (related party)
    
    
    133,615
    
    
    
    315,247
    
    
    
    605,615
    
    
    
    796,577Total revenues
    
    
    217,413
    
    
    
    332,876
    
    
    
    834,320
    
    
    
    861,472Expenses:Lease operating expense and production taxes
    
    
    64,647
    
    
    
    24,431
    
    
    
    262,537
    
    
    
    76,534General and administrative
    
    
    291,769
    
    
    
    241,789
    
    
    
    1,069,570
    
    
    
    568,882Depreciation, depletion, amortization and accretion
    
    
    25,523
    
    
    
    32,507
    
    
    
    72,988
    
    
    
    69,283Total expenses
    
    
    381,939
    
    
    
    298,727
    
    
    
    1,405,095
    
    
    
    714,699Operating Income (Loss)
    
    
    (164,526
    )
    
    
    34,149
    
    
    
    (570,775
    )
    
    
    146,773Other Income (Expense)Interest and other
    
    
    
    
    
    
    248
    
    
    
    
    
    
    
    (3,350
    )Net Income (Loss)
    
    $
    (164,526
    )
    
    $
    34,397
    
    
    
    (570,775
    )
    
    $
    143,423Net Income (Loss) per Common Share, Basic and Diluted
    
    $
    (0.04
    )
    
    $
    0.01
    
    
    $
    (0.15
    )
    
    $
    0.04Weighted average common shares used in calculations:Basic and diluted
    
    
    3,807,417
    
    
    
    3,394,857
    
    
    
    3,806,540
    
    
    
    3,394,857
  F-2




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For the Nine Months EndedAugust 31, 2006
    
    
    August 31, 2005(Restated)Cash Flows From Operating Activities:Net income (loss)
    
    $
    (570,775
    )
    
    $
    143,423Adjustments to reconcile net income (loss) to net cash flow from operating activities:Depreciation, depletion, amortization and accretion
    
    
    72,988
    
    
    
    69,283Changes in operating assets and liabilities:Decrease (increase) in:Trade/affiliate receivables
    
    
    62,600
    
    
    
    (117,487
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    176,470
    
    
    
    (133,689
    )Accounts payable to affiliates
    
    
    (22,924
    )
    
    
    (34,834
    )Accrued compensation
    
    
    365,000
    
    
    
    120,000Other
    
    
    (7,404
    )
    
    
    6,978Net cash provided by operating activities
    
    
    75,955
    
    
    
    53,674Cash Flows From Investing Activities:Purchase of oil and gas properties and PP&ENet cash used in investing activities
    
    
    (99,150
    )
    
    
    (398,017
    )Cash Flows From Financing Activities:Payments to minority interest holders
    
    
    (42,000
    )
    
    
    Advance from affiliate
    
    
    5,000
    
    
    
    Payments to affiliate, net of repayments
    
    
    
    
    
    
    Issuance of common stock for services
    
    
    20,000
    
    
    
    396.611Net cash provided by (used in) financing activities
    
    
    (17,000
    )
    
    
    396,611Net Increase In Cash
    
    
    (40,195
    )
    
    
    52,268Cash at beginning of period
    
    
    128,452
    
    
    
    8,843Cash at end of period
    
    $
    88,257
    
    
    $
    61,111
  F-3




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 August 31, 2006
 (Unaudited)
 1. BASIS OF PRESENTATION:
  Principles of Consolidation
  2. RESTATEMENT OF PRIOR FINANCIAL STATEMENTS:
   As of August 31, 2005As Originally Presented
    
    As RestatedCondensed Consolidated Balance SheetTotal current assets
    
    $
    1,235,120
    
    
    $
    188,991Total assets
    
    $
    3,365,560
    
    
    $
    762,007Total current liabilities
    
    $
    194,187
    
    
    $
    368,283Total liabilities
    
    $
    194,187
    
    
    $
    647,820Accumulated deficit
    
    $
    9,402,834
    
    
    $
    9,274,045Total stockholders equity (deficit)
    
    $
    3,171,373
    
    
    $
    114,188
 For Three Months Ended
    
    For Nine Months EndedAugust 31, 2005
    
    August 31, 2005As Originally
    
    
    
    
    
    As OriginallyPresented
    
    As Restated
    
    Presented
    
    As RestatedCondensed Consolidated Statement of OperationsTotal revenue
    
    $
    317,629
    
    
    $
    332,876
    
    
    $
    815,985
    
    
    $
    861,472Total expenses
    
    $
    1,034,297
    
    
    $
    298,486
    
    
    $
    1,467,664
    
    
    $
    714,699Operating income
    
    $
    (716,668
    )
    
    $
    34,390
    
    
    $
    (651,679
    )
    
    $
    146,773Net income
    
    $
    (716,421
    )
    
    $
    34,142
    
    
    $
    (655,029
    )
    
    $
    143,423Net income per common shareBasic and Diluted
    
    $
    (0.02
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.04Condensed Consolidated Statement of Cash FlowsNet cash provided by operating activities
    
    
    
    
    
    
    
    
    
    $
    179,903
    
    
    $
    53,674Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    
    
    
    
    
    
    
    $
    (132,733
    )
    
    $
    52,268
 F-4




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Reclassifications
  3. BUSINESS ACTIVITIES:
      4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 Revenue Recognition
 Joint Venture Contract Fees
 Oil & Gas Sales
 Asset Retirement Obligation
  F-5




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Balance, November 30, 2005
    
    $
    167,161Accretion Expense
    
    
    14,700Liabilities incurred
    
    
    Liabilities settled
    
    
    Changes in estimates
    
    
    (7,403
    )Balance, August 31, 2006
    
    $
    174,458
 Use of Estimates
  Recent Accounting Pronouncements
  5. RELATED PARTY TRANSACTIONS:
     6. ACCRUED COMPENSATION:
  F-6




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F-7




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7. STOCKHOLDERS EQUITY:
  8. COMMITMENTS AND CONTINGENCIES:
  F-8




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT
  DESCRIPTION OF PROPERTIES
 GENERAL
 PROPERTIES:
 Name of Field
    
    Gross Producing Well Count
    
    Net Producing Well CountMitchell Creek
    
    
    1
    
    
    
    .48Talco
    
    
    5
    
    
    
    2.0Quitman
    
    
    3
    
    
    
    2.4Manziel
    
    
    1
    
    
    
    .8Newark East
    
    
    2
    
    
    
    .7Bridgeport
    
    
    1
    
    
    
    .25Carmargo NW
    
    
    2
    
    
    
    .03Harmon SE
    
    
    1
    
    
    
    .01
 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
    
    
    10
    
    
    
    6.04
    
    
    
    0
    
    
    
    0
    
    
    
    1,172.2
    
    
    
    887.54Wise County
    
    
    2
    
    
    
    .37
    
    
    
    2
    
    
    
    .35
    
    
    
    224
    
    
    
    83Anadarko Basin
    
    
    4
    
    
    
    .29
    
    
    
    0
    
    
    
    0
    
    
    
    480
    
    
    
    14
 Notes




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ANADARKO BASIN- WESTERN OKLAHOMA
  OIL AND GAS PARTNERSHIP INTERESTS
  CRITICAL ACCOUNTING POLICIES
   RESULTS OF OPERATIONS
   Three months ended
    
    
    % increase
    
    
    Nine months ended
    
    
    % increaseAugust 31, 2006
    
    
    August 31, 2005
    
    
    (decrease)
    
    

August 31, 2006
    
    
    August 31, 2005
    
    
    (decrease)(restated)
    
    
    
    
    
    
    
    
    
    
    (restated)Oil & Gas Sales
    
    $
    83,798
    
    
    $
    17,629
    
    
    
    375
    %
    
    $
    228,705
    
    
    $
    64,895
    
    
    
    226
    %Joint Venture
Contract Revenue
    
    
    133,615
    
    
    
    315,247
    
    
    
    (58
    )%
    
    
    605,615
    
    
    
    796,577
    
    
    
    (24
    )%$
    217,413
    
    
    $
    332,876
    
    
    
    (35
    )%
    
    $
    834,320
    
    
    $
    861,472
    
    
    
    (3
    )%




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Three months
    
    ended
    
    % increase
    
    Nine months
    
    ended
    
    % increaseVolumes & Average Price
    
    August 31, 2006
    
    August 31, 2005
    
    (decrease)
    
    August 31, 2006
    
    August 31, 2005
    
    (decrease)Natural Gas (mcf)
    
    
    2,694
    
    
    
    72.3
    
    
    
    36
    %
    
    
    6,756
    
    
    
    479
    
    
    
    1310
    %Oil (bbl)
    
    
    809
    
    
    
    319
    
    
    
    154
    %
    
    
    1,251
    
    
    
    1,329
    
    
    
    (6
    )%Average Price per mcf
    
    $
    5.18
    
    
    $
    5.89
    
    
    
    (12)
    %
    
    $
    5.77
    
    
    $
    5.42
    
    
    
    6
    %Average Price per bbl
    
    $
    57.40
    
    
    $
    53.94
    
    
    
    6
    %
    
    $
    60.94
    
    
    $
    46.89
    
    
    
    30
    %
   Expenses
 %
    
    
    
    
    
    
    
    
    
    
    %Three months ended
    
    
    Increase
    
    
    Nine months ended
    
    
    IncreaseAugust 31, 2006
    
    
    August 31, 2005
    
    
    (Decrease)
    
    
    August 31, 2006
    
    
    August 31, 2005
    
    
    (Decrease)RESTATED
    
    
    
    
    
    
    
    
    
    
    RESTATEDLease
operating & taxes
    
    $
    64,647
    
    
    $
    24,431
    
    
    
    164
    %
    
    $
    262,537
    
    
    $
    76,534
    
    
    
    243
    %General &
administrative
    
    
    291,769
    
    
    
    241,789
    
    
    
    21
    %
    
    
    1,069,570
    
    
    
    568,882
    
    
    
    85
    %D D & A
    
    
    20,623
    
    
    
    32,507
    
    
    
    (-36)
    %
    
    
    58,288
    
    
    
    69,283
    
    
    
    (-16)
    %Accretion
    
    
    4,900
    
    
    
    0
    
    
    
    100
    %
    
    
    14,700
    
    
    
    
    
    
    
    100
    %$
    381,939
    
    
    $
    298,727
    
    
    
    28
    %
    
    $
    1,405,095
    
    
    $
    714,699
    
    
    
    84
    %
   LIQUIDITY AND CAPITAL RESOURCES




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PLAN OF OPERATION FOR THE FUTURE
    
 ITEM 3. CONTROLS AND PROCEDURES




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PART II. OTHER INFORMATION
 
   
  
   
   
     1.
    
    Satisfactory conclusion of due diligence.2.
    
    Registration of the TBX common shares to be used as merger consideration.3.
    
    Receipt of favorable fairness opinion by TBX that the transaction is fair to the TBX stockholders.4.
    
    Certain incoming stockholders execute lock up agreements for the TBX common stock they will
receive as merger consideration.5.
    
    Approval of the merger by each of the parties stockholders.




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1.
    
    Form 8-K/A Current report regarding items 4.01 and 9.01 filed with the commission
on 08-04-2006.2.
    
    Form 8-K Current report regarding items 1.01 and 9.01 filed with the commission
on 09-15-2006.
 
   TBX RESOURCES, INC.DATE: October 27, 2006SIGNATURE:
    
    /s/ Tim BurroughsTIM BURROUGHS, PRESIDENT/CHIEF FINANCIAL OFFICER