SOURCE: TX Holdings, Inc.

TX Holdings Reports First Quarter Results for 2014 Fiscal Year; Revenue Increased 15.7%

Reported Net Income Compared to Net Loss in First Quarter of Fiscal 2013; Fourth Consecutive Quarter Reporting Net Income

ASHLAND, KY - January 27, 2014 - TX Holdings, Inc. (OTCQB: TXHG)

 

-          Revenue for quarter ended December 31, 2013, increased 15.7% as compared to the quarter ended December 31, 2012

 

-          Loss from operations decreased 22.6% as compared to the quarter ended December 31, 2012

 

-          Gross profit for the quarter ended December 31, 2013, increased 23.5% as compared to the quarter ended December 31, 2012

 

-          Net income was $19,647 as compared to a net loss in the quarter ended December 31, 2012

 

-          Fourth consecutive fiscal quarter reporting net income

 

TX Holdings, Inc. (OTCQB: TXHG), a supplier of mining and rail products to the U.S. coal mining industry, today announced financial results for its first fiscal quarter of 2014. The company reported increased sales as compared to the first quarter of fiscal 2013 and posted net income as compared to a net loss in the first quarter of fiscal 2013.

 

Mr. Shrewsbury, the company's CEO and Chairman, stated that "Our results for the quarter ended December 31, 2013, continue to bear out our decision to expand our business into the distribution of rail and mining supplies. Our earnings grew during the first quarter of fiscal 2014 compared to the same quarter in fiscal 2013. We continue to be pleased with our sales and operating results. This is the fourth consecutive quarter in which we have reported net income. We are working to maintain this trend while controlling our product costs and operational expenses, although we continue to incur expenses in connection with litigation against certain members of prior management."

 

First Fiscal Quarter of 2014 - Financial Summary

Revenue for the quarter ended December 31, 2013, was $897,881 as compared to $776,246 for the quarter ended December 31, 2012, an increase of $121,635 or 15.7%.

 

Cost of goods sold was $670,409 as compared to cost of goods sold of $592,048 for the quarter ended December 31, 2012, an increase of $78,361 or 13.2%, due to higher sales volume.

 

Gross profit for the quarter ended December 31, 2013, was $227,472, an increase of $43,274 or 23.5% over the gross profit of $184,198 for quarter ended December 31, 2012.

 

Operating expenses were $277,542 as compared to $248,845 for the quarter ended December 31, 2012, an increase of $28,697 or 11.5%. Commission expense increased $35,714 or 49.8% due to increased sales. Professional fees increased $30,005 or 102.7% as compared to the quarter ended December 31, 2012, as a result of higher legal expenses related to an ongoing litigation matter. Other operating expenses decreased by $35,077 or 24.5%.

 

Loss from operations was $50,070 compared to a loss from operations of $64,647 during the quarter ended December 31, 2012, a decrease of $14,577 or 22.6%.

 

Net income was $19,647 compared to a net loss of $87,247 for the quarter ended December 31, 2012, an increase of $106,894, in part due to the reversal of a prior period debt the company deems no longer payable.

 

At December 31, 2013, cash and cash equivalents were $100,609, a decrease of $74,419 or 42.5% as compared to the year ended September 30, 2013. Cash used in operating activities was $25,319 compared to $201,810 in the quarter ended December 31, 2012, a decrease of $176,491 or 87.5%. The decrease in cash and cash equivalents and the cash used in operating activities reflected the company's continued efforts to increase finished goods inventory by $573,382 from the prior year-end levels to meet projected increases in sales demand and was minimized by an increase in accounts payable of $401,241, net income for the quarter of $19,647, and a decrease in accounts receivable of $184,665. Cash used in financing activities was $49,100 during the quarter ended December 31, 2013, due to the company reducing the amount due under stockholder advances.

 

To fund ongoing operations during the period, the company continued to rely upon financing provided by Mr. Shrewsbury, our CEO, including demand notes and advances of an aggregate of $1.8 million and a secured bank line of credit, of which $248,500 had been drawn upon at December 31, 2013.

 

Accounts receivable were $241,265 as compared to $425,930 as of the year ended September 30, 2013, a decrease of $184,665 or 43.3% due to a decline in demand during the winter months.

 

Inventory was $2,423,369 as compared to $1,849,987 as of the year ended September 30, 2013, an increase of $573,382 or 31.0%. The company increased inventory due to anticipated growth in demand.

 

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA) and other applicable law. When used, the words "believe", "anticipate", "estimate", "project", "should", "expect", "plan", "assume" and similar expressions that do not relate solely to historical matters identify forward-looking statements. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. Forward-looking statements concerning future plans or results are necessarily only estimates and actual results could differ materially from expectations. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: our ability to implement our business strategy; our financial strategy; a downturn in economic environment; our failure to meet growth and productivity objectives; a failure of our innovation initiatives; risks from investing in growth opportunities; fluctuations in financial results and purchases; the impact of local legal, economic, political and health conditions; adverse effects from environmental matters and tax matters; ineffective internal controls; our use of accounting estimates; our ability to attract and retain key personnel and our reliance on critical skills; impact of relationships with critical suppliers; currency fluctuations and customer financing risks; the impact of changes in market liquidity conditions and customer credit risk on receivables; our reliance on third party distribution channels; Securities and Exchange Commission regulations related to trading in "penny stocks;" the continued availability of certain financing provided by our CEO; and other risks, uncertainties and factors discussed in our Quarterly Reports on Form10-Q, our Annual Reports on Form 10-K, and in our other filings with the SEC or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. We assume no obligation to update or revise any forward-looking statement. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, expressly state that the safe harbor for forward looking statements does not apply to companies that issue penny stocks. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward looking statements under the PSLRA may not be apply to us at certain times.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TX Holdings, Inc.

 

BALANCE SHEETS

 

December 31, 2013 and September 30, 2013

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

December 31,

 

 

September 30,

 

 

 

2013

 

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

100,609

 

 

$

175,028

 

 

Accounts receivable, net of allowance for doubtful accounts of $13,993 as of 12/31/13 and 9/30/13

 

 

241,265

 

 

 

425,930

 

 

Inventory

 

 

2,423,369

 

 

 

1,849,987

 

 

Commission advances

 

 

16,169

 

 

 

3,546

 

 

Notes receivable-current

 

 

10,000

 

 

 

10,000

 

 

Other current assets

 

 

10,857

 

 

 

23,275

 

 

 

Total current assets

 

 

2,802,269

 

 

 

2,487,766

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

40,887

 

 

 

43,387

 

Notes receivable, less current portion

 

 

27,380

 

 

 

27,380

 

Other

 

 

-

 

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

2,870,536

 

 

$

2,558,733

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

$

823,900

 

 

$

889,885

 

 

Accounts payable

 

 

1,093,421

 

 

 

692,180

 

 

Advances from stockholders/officers

 

 

456,483

 

 

 

499,583

 

 

Bank- line of credit

 

 

248,500

 

 

 

248,500

 

 

 

Total current liabilities

 

 

2,622,304

 

 

 

2,330,148

 

 

 

 

 

 

 

 

 

 

 

Notes payable to a stockholder

 

 

1,351,997

 

 

 

1,351,997

 

 

 

Total Liabilities

 

 

3,974,301

 

 

 

3,682,145

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock: no par value, 1,000,000 shares authorized; no shares outstanding

 

 

-

 

 

 

-

 

 

Common stock: no par value, 250,000,000 shares authorized, and 48,053,084 shares issued and outstanding at December 31, 2013 and September 30, 2013

 

 

9,293,810

 

 

 

9,293,810

 

 

Additional paid-in capital

 

 

4,304,280

 

 

 

4,304,280

 

 

Accumulated deficit

 

 

(14,701,855

)

 

 

(14,721,502

)

 

 

 

Total stockholders' deficit

 

 

(1,103,765

)

 

 

(1,123,412

)

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$

2,870,536

 

 

$

2,558,733

 

The accompanying notes are an integral part of the financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TX HOLDINGS, INC.

 

STATEMENTS OF OPERATIONS

 

For the Three Months Ended December 31, 2013 and 2012

 

 

Unaudited

 

 

December 31,

 

 

December 31,

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

Revenue

$

897,881

 

 

$

776,246

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

(670,409

)

 

 

(592,048

)

 

 

 

 

 

 

 

 

Gross profit

 

227,472

 

 

 

184,198

 

 

 

 

 

 

 

 

 

Operating expenses, except items shown separately below

 

108,322

 

 

 

133,283

 

 

Commission expense

 

107,493

 

 

 

71,779

 

 

Professional fees

 

59,227

 

 

 

29,222

 

 

Loss on settlement of accounts payable

 

-

 

 

 

10,116

 

 

Depreciation expense

 

2,500

 

 

 

4,445

 

 

 

Total operating expenses

 

277,542

 

 

 

248,845

 

 

 

 

 

 

 

 

 

Income/(loss) from operations

 

(50,070

)

 

 

(64,647

)

 

 

 

 

 

 

 

 

Other income and (expense):

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

93,167

 

 

 

-

 

 

Gain/(loss) on disposal of fixed assets

 

-

 

 

 

500

 

 

Other income

 

-

 

 

 

-

 

 

Interest expense

 

(23,450

)

 

 

(23,100

)

 

 

 

 

 

 

 

 

Total other income and (expense), net

 

69,717

 

 

 

(22,600

)

 

 

 

 

 

 

 

 

Income (loss) before provision for

 

 

 

 

 

 

 

income taxes

$

19,647

 

 

$

(87,247

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Income taxes

 

8,000

 

 

 

-

 

Utilization of net operating loss carry forward

 

(8,000

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

$

19,647

 

 

$

(87,247

)

 

 

 

 

 

 

 

 

Net earnings/(loss) per common share

 

 

 

 

 

 

 

Basic and Diluted

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

Weighted average of common shares outstanding-

 

 

 

 

 

 

 

Basic

 

48,053,084

 

 

 

47,417,214

 

Diluted

 

48,203,084

 

 

 

47,417,214

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

 

 

 

 

 

 

 

TX HOLDINGS, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT (UNAUDITED)

For the Three Months Ended December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Preferred Stock

 

Common Stock

 

Paid in

 

Accumulated

 

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2013

 

-

 

-

 

48,053,084

 

$

9,293,810

 

$

4,304,280

 

$

(14,721,502

)

 

$

(1,123,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,647

 

 

 

19,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

-

 

-

 

48,053,084

 

$

9,293,810

 

$

4,304,280

 

$

(14,701,855

)

 

$

(1,103,765

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

TX HOLDINGS, INC.

 

STATEMENTS OF CASH FLOWS

 

For the Three Months Ended December 31, 2013 and 2012

 

 

Unaudited

 

 

December 31,

 

 

December 31,

 

 

2013

 

 

2012

 

Cash flows used by operating activities:

 

 

 

 

 

 

 

 

Net income/(loss)

$

19,647

 

 

$

(87,247

)

 

Adjustments to reconcile net income/(loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Depreciation expense

 

2,500

 

 

 

4,445

 

 

 

Loss on settlement of accounts payable

 

-

 

 

 

10,116

 

 

 

Gain on sale of equipment

 

-

 

 

 

(500

)

 

 

Gain on extinguishment of debt

 

(93,167

)

 

 

-

 

 

 

Deposit write-off

 

200

 

 

 

-

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Commission advances

 

(12,623

)

 

 

(2,783

)

 

 

Finished goods inventory

 

(573,382

)

 

 

(536,768

)

 

 

Other current assets

 

12,418

 

 

 

28,771

 

 

 

Accounts receivable

 

184,665

 

 

 

(122,343

)

 

 

Accrued liabilities

 

27,182

 

 

 

57,584

 

 

 

Accounts payable

 

401,241

 

 

 

440,915

 

 

 

Stockholder advances for operations

 

6,000

 

 

 

6,000

 

 

Net cash used in operating activities

 

(25,319

)

 

 

(201,810

)

 

 

 

 

 

 

 

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

 

 

Purchase of equipment

 

-

 

 

 

(13,144

)

 

 

Proceeds received on sale of equipment

 

-

 

 

 

500

 

 

Net cash used in investing activities

 

-

 

 

 

(12,644

)

 

 

 

 

 

 

 

 

Cash flows provided by financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

-

 

 

 

240,000

 

 

 

Proceeds from stockholder/officer advances

 

900

 

 

 

30,000

 

 

 

Payments of stockholders advances

 

(50,000

)

 

 

(42,000

)

 

Net cash used in financing activities

 

(49,100

)

 

 

228,000

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

(74,419

)

 

 

13,546

 

Cash and cash equivalents at beginning of period

 

175,028

 

 

 

3,135

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

100,609

 

 

$

16,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Accounts payable exchanged for common stock

 

-

 

 

$

49,884

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

Contact:

William "Buck" Shrewsbury
Chairman and CEO
TX Holdings, Inc.
(606) 928-1131

 

 

SOURCE: TX Holdings Inc.