##### Table of Contents



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 May 31, 2007
 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
 Pg. #PART I  Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheet as of May 31, 2007 (Unaudited)
    
    
    F-1Condensed Consolidated Statements of Operations for the Three and Six Months Ended
May 31, 2007and 2006 (Unaudited)
    
    
    F-2Condensed Consolidated Statements of Cash Flows for the Six Months Ended
May 31, 2007and 2006 (Unaudited)
    
    
    F-3Notes to Condensed Consolidated Financial Statements as of May 31, 2007 (Unaudited)
    
    
    F-4Item 2. Managements Discussion and Analysis
    
    
    3Item 3. 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
    
    
    10Certification of CEO/CFO Pursuant to Section 302Certification of CEO/CFO Pursuant to Section 906
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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEET
MAY 31, 2007
(Unaudited)
 ASSETSCurrent AssetsCash
    
    $
    20,661Oil and gas revenue receivable
    
    
    44,599Inventory
    
    
    11,000Total current assets
    
    
    76,260Oil and gas properties (successful efforts method), net
    
    
    235,427Other
    
    
    6,211Total Assets
    
    $
    317,898LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesAccounts payable and accrued expenses
    
    $
    160,915Advances from affiliate
    
    
    569,018Deferred revenue
    
    
    11,000Total current liabilities
    
    
    740,933Long-term LiabilitiesAsset retirement obligation
    
    
    196,561Non-controlling interest in Consolidated Subsidiary
    
    
    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;
3,952,442 shares issued and outstanding at May 31, 2007
    
    
    39,524Additional paid-in capital
    
    
    10,727,190Accumulated deficit
    
    
    (11,458,310
    )Total stockholders deficit
    
    
    (691,596
    )Total Liabilities and Stockholders Deficit
    
    $
    317,898
  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, 2007
    
    
    May 31, 2006
    
    
    May 31, 2007
    
    
    May 31, 2006Revenues:Oil and gas sales
    
    $
    75,809
    
    
    $
    23,296
    
    
    $
    143,166
    
    
    $
    98,526Joint venture contract fees (related party)
    
    
    
    
    
    
    322,000
    
    
    
    
    
    
    
    472,000Total revenues
    
    
    75,809
    
    
    
    345,296
    
    
    
    143,166
    
    
    
    570,526Expenses:Lease operating and taxes (including $2,400 for the
three months and $4,800 for the six months of
2007 and 2006 to related party)
    
    
    79,376
    
    
    
    61,687
    
    
    
    122,253
    
    
    
    105,876General and administrative
    
    
    270,511
    
    
    
    372,982
    
    
    
    484,424
    
    
    
    777,801Depreciation, depletion, amortization and accretion
    
    
    19,288
    
    
    
    24,367
    
    
    
    36,954
    
    
    
    47,465Total expenses
    
    
    369,175
    
    
    
    459,036
    
    
    
    643,631
    
    
    
    931,142Operating Loss
    
    
    (293,366
    )
    
    
    (113,740
    )
    
    
    (500,465
    )
    
    
    (360,616
    )Other Income (Expense):Gain on sale of oil and gas property
    
    
    6,250
    
    
    
    
    
    
    
    6,250
    
    
    
    Loss Before Provision for Income Taxes
    
    
    (287,116
    )
    
    
    (113,740
    )
    
    
    (494,215
    )
    
    
    (360,616
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (287,116
    )
    
    $
    (113,740
    )
    
    $
    (494,215
    )
    
    $
    (360,616
    )Net Loss per Common Share, Basic and Diluted
    
    $
    (0.07
    )
    
    $
    (0.03
    )
    
    $
    (0.13
    )
    
    $
    (0.09
    )Weighted Average Common Shares Outstanding:Basic and Diluted
    
    
    3,924,198
    
    
    
    3,806,417
    
    
    
    3,924,198
    
    
    
    3,806,417
  F-2




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TBX RESOURCES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months EndedMay 31, 2007
    
    
    May 31, 2006Cash Flows From Operating Activities:Loss from operations
    
    $
    (500,465
    )
    
    $
    (360,616
    )Adjustments to reconcile net loss to net cash provided by
(used for) operating activities:Depreciation, depletion, amortization and accretion
    
    
    36,954
    
    
    
    47,465Stock based compensation
    
    
    154,250
    
    
    
    Changes in operating assets and liabilities:Decrease (increase) in:Oil and gas revenue receivable
    
    
    (30,734
    )
    
    
    73,664Inventory
    
    
    2,300
    
    
    
    Increase (decrease) in:Accounts payable and accrued expenses
    
    
    28,406
    
    
    
    (4,038
    )Accrued compensation
    
    
    
    
    
    
    335,000Deferred revenue and other
    
    
    (2,300
    )
    
    
    (5,674
    )Net cash provided (used) by operating activities
    
    
    (311,589
    )
    
    
    85,801Cash Flows From Investing Activities:Proceeds from sale of oil and gas property
    
    
    6,250
    
    
    
    Development of oil and gas properties
    
    
    
    
    
    
    (37,031
    )Cash flows used in investing activities
    
    
    6,250
    
    
    
    (37,031
    )Cash Flows From Financing Activities:Advances from affiliate-net
    
    
    317,000
    
    
    
    4,999Exercise of 25,000 common stock options
    
    
    3,750
    
    
    
    Payments to minority interest holders
    
    
    
    
    
    
    (22,000
    )Issuance of common stock for services
    
    
    
    
    
    
    20,000Net cash flows provided by (used in) financing activities
    
    
    320,750
    
    
    
    2,999Net Increase (Decrease) In Cash
    
    
    15,411
    
    
    
    51,769Cash at beginning of period
    
    
    5,250
    
    
    
    128,452Cash at end of period
    
    $
    20,661
    
    
    $
    180,221Non Cash Investing ActivitiesPayment to minority interest holders by affiliate
    
    $
    
    
    
    $
    20,000
  F-3




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TBX RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2007
(Unaudited)
 1. BASIS OF PRESENTATION:
  2. BUSINESS ACTIVITIES:
    3. GOING CONCERN:
  4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 Revenue Recognition
  F-4




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Principles of Consolidation
  Concentration of Credit Risk
  Receivables
  Inventory
  Property and Equipment
   Office furniture, equipment, and software
    
    $
    112,768Accumulated depreciation and amortization
    
    
    (112,768
    )$
    -0-
 Oil and Gas Properties
   F-5




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Proved oil and gas properties
    
    $
    1,299,699Accumulated depreciation, depletion and
amortization
    
    
    (1,064,272
    )$
    235,427
 Long-lived Assets
   Asset Retirement Obligations
   ARO at November 30, 2006
    
    $
    186,761Accretion expense
    
    
    9,800Liabilities incurred
    
    
    Liabilities settled
    
    
    Changes in estimates
    
    
    ARO at May 31, 2007
    
    $
    196,561
 Equity Instruments Issued for Goods and Services
   Earnings Per Share (EPS)
 F-6




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Use of Estimates
  5. RECENT ACCOUNTING PRONOUNCEMENTS:
    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 $4,800 in
both the six months ended May 31, 2007 and 2006 for activities associated with operating
certain wells.
 F-7




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b.
    
    The Company had a services arrangement with Gulftex. Under the arrangement, the Company
provided lease and project generation services and administrative assistance to Gulftex for
each joint venture on a venture-by-venture basis for a fee. The services were provided for a
limited duration, typically three months. During the six months ended May 31, 2006 the
Company earned $472,000, representing 83% of total revenue. The arrangement with Gulftex was
not generated at arms-length. Fees received under this arrangement could differ
significantly had the arrangement been entered into with an unaffiliated third party. The
services agreement was terminated by mutual agreement on August 31, 2006.c.
    
    Gulftex operates certain oil and gas properties on behalf of the Company. At May 31, 2007
the Company has a liability to Gulftex in the amount of $46,575 related to wells operated by
Gulftex on behalf of the Company.d.
    
    During the six months ended May 31, 2007, the Company received advances from Gulftex
totaling $317,000. The balance due Gulftex as of May 31, 2007 is $569,018.e.
    
    The Company rents a total of 4,105 square feet of office space of which 292 square feet
is used gratis by Gulftex.
 7. STOCK BASED COMPENSATION:
     F-8




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Weighted-AverageShares
    
    
    Exercise PriceOptionsGranted at November 30, 2006
    
    
    75,000
    
    
    $
    0.15Granted
    
    
    50,000
    
    
    $
    0.15Exercised
    
    
    (25,000
    )
    
    $
    0.15Forfeited
    
    
    
    
    
    
    Outstanding at May 31, 2007
    
    
    100,000
    
    
    $
    0.15Options exercisable at May 31, 2007
    
    
    100,000
    
    
    $
    0.15Weighted-average fair value of
options granted during this quarter
    
    $
    81,500Weighted-average fair value of
options granted in the year to date
    
    $
    154,250
  Average expected life in years
    
    
    1Average interest rate
    
    
    5.25
    %Average volatility
    
    
    52
    %Dividend yield
    
    
    0
    %
  Weighted AverageGrant DateMay 31, 2007
    
    Shares
    
    Fair ValueVested
    
    
    100,000
    
    
    $
    3.11Nonvested
    
    
    
    
    
    
    Total
    
    
    100,000
    
    
    $
    3.11
  8. COMMITMENTS AND CONTINGENCIES:
   F-9




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F-10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT
     Recent Developments: Going Concern and Liquidity Problems
   LIQUIDITY AND CAPITAL RESOURCES
  3




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RESULTS OF OPERATIONS
  Revenues
 %
    
    
    
    
    
    
    
    
    
    
    %Three Months Ended
    
    
    Increase
    
    
    Six Months Ended
    
    
    IncreaseMay 31, 2007
    
    
    May 31, 2006
    
    
    (Decrease)
    
    
    May 31, 2007
    
    
    May 31, 2006
    
    
    (Decrease)Revenues :Oil and gas sales
    
    $
    70,950
    
    
    $
    23,296
    
    
    
    204.56
    %
    
    $
    143,166
    
    
    $
    98,526
    
    
    
    45.31
    %Joint venture contract fees
    
    
    
    
    
    
    322,000
    
    
    
    -100.00
    %
    
    
    
    
    
    
    472,000
    
    
    
    -100.00
    %Total revenues
    
    $
    70,950
    
    
    $
    345,296
    
    
    
    -79.45
    %
    
    $
    143,166
    
    
    $
    570,526
    
    
    
    -74.91
    %
   Expenses-
 %
    
    
    
    
    
    
    
    
    
    
    %Three Months Ended
    
    
    Increase
    
    
    Six Months Ended
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Expenses:Lease operating and taxes
    
    $
    79,376
    
    
    $
    61,687
    
    
    
    28.68
    %
    
    $
    122,253
    
    
    $
    105,876
    
    
    
    15.47
    %General and administrative
    
    
    270,511
    
    
    
    372,982
    
    
    
    -27.47
    %
    
    
    484,424
    
    
    
    777,801
    
    
    
    -37.72
    %Depreciation, depl, amort., & accretion
    
    
    19,288
    
    
    
    24,367
    
    
    
    -20.84
    %
    
    
    36,954
    
    
    
    47,465
    
    
    
    -22.14
    %Total expenses
    
    $
    369,175
    
    
    $
    459,036
    
    
    
    -19.58
    %
    
    $
    643,631
    
    
    $
    931,142
    
    
    
    -30.88
    %
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DESCRIPTION OF PROPERTIES
 GENERAL
 PROPERTIES
  Gross
    
    NetProducing
    
    ProducingWell
    
    WellName of Field or Well
    
    Count
    
    CountMitchell Creek
    
    
    1
    
    
    
    0.48Talco Field
    
    
    5
    
    
    
    2.00Quitman Field
    
    
    3
    
    
    
    2.40Manziel Field
    
    
    1
    
    
    
    0.80Newark East
    
    
    8
    
    
    
    0.75Camargo NW Field
    
    
    2
    
    
    
    0.03Harmon SE Field
    
    
    1
    
    
    
    0.01
 PRODUCTIVE WELLS AND ACREAGE:
  Total
    
    
    
    
    
    
    TotalTotal
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    Total NetGross Oil
    
    
    Productive
    
    
    Gas
    
    
    Productive
    
    
    Developed
    
    
    DevelopedGeographic Area
    
    Wells
    
    
    Oil Wells
    
    
    Wells
    
    
    Gas Wells
    
    
    Acres
    
    
    AcresEast Texas Region
    
    
    10
    
    
    
    5.68
    
    
    
    
    
    
    
    
    
    
    
    1,172.20
    
    
    
    665.81Wise County
    
    
    2
    
    
    
    0.73
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    81.76Parker County
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    .024
    
    
    
    
    
    
    
    Anadarko Basin
    
    
    3
    
    
    
    .04
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    19.20
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Notes
 1.
    
    Total Gross Oil Wells was calculated by subtracting 5 wells designated as injection wells and
8 wells which are either shut-in or inactive from the 34 wells TBX Resources, Inc holds a
working or overriding interest in as of May 31, 2007.
 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 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 TBX Resources, Inc. in the respective properties.
 5.
    
    All acreage in which we hold a working interest as of May 31, 2007 have or had existing wells
located thereon; thus all acreage leased by TBX Resources, Inc. 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
   6




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OVERVIEW
   PLAN OF OPERATION FOR THE FUTURE
    1.
    
    Satisfactory conclusion of due diligence.2.
    
    Registration of 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 by a majority of TBX stockholders.
   7




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ITEM 3. CONTROLS AND PROCEDURES
     Limitations on the Effectiveness of Controls.
 8




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PART II. OTHER INFORMATION
 
   
   
   
   
   
  (a)
    
    EXHIBITS:
   (b)
    
    REPORTS ON FORM 8-KAmended Form 8-K Current Report, Items 4.01 and 9.01 filed on April 25, 2007.
 9




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TBX RESOURCES, INC.
DATE: July 20, 2007SIGNATURE:
    /s/ Tim BurroughsTIM BURROUGHS, PRESIDENT/CHIEF FINANCIAL OFFICER 10




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No.
    
    Description31.1
    
    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.