SOURCE: TX Holdings Inc.

TX Holdings Reports Second Quarter Results for 2014 Fiscal Year; Revenue Increased 26.5%; Income From Operations Increased 25.8%; Net Income Increased 107%

TX Holdings, Inc. (OTCQB: TXHG) –

 

-          Revenue for quarter ended March 31, 2014, increased 26.5% as compared to the quarter ended March 31, 2013

 

-          Income from operations increased 25.8% as compared to the quarter ended March 31, 2013

 

-          Net income increased 107% as compared to the quarter ended March 31, 2013

 

TX Holdings, Inc., a supplier of mining and rail products to the U.S. coal mining industry, today announced financial results for its 2014 second fiscal quarter. During the 2014 second fiscal quarter, the company posted quarterly revenue of $1.2 million, a 26.5% increase when compared to 2013, and reported a 107% increase in net income when compared to 2013.

 

Mr. Shrewsbury, the company's CEO and Chairman, stated that "We are pleased with our quarterly results, especially since this is the fifth consecutive quarter in which we have reported net income. Our earnings grew during the second quarter of fiscal 2014 compared to 2013. We continue to focus on expanding our customer base and product offerings and controlling our product costs and operating expenses. Also, we have been able to restructure certain of our outstanding indebtedness, thereby reducing our total interest expense, and have begun to reduce certain of our indebtedness. Our cash flow is beginning to be sufficient to fund operational expenses, although we continue to rely upon outstanding indebtedness to finance our inventory."

 

Second Fiscal Quarter of 2014 - Financial Summary

Revenue for the three months ended March 31, 2014 was $1,206,567 as compared to $954,074 for the same period in 2013, an increase of $252,493 or 26.5%.

 

Cost of goods sold was $807,452 as compared to cost of goods sold of $681,709 for the same quarter in 2013, an increase of $125,743 or 18.5 %.

 

Gross profit for the quarter ended March 31, 2014 increased as a percentage of revenue from 28.5% to 33.1% when compared to 2013.

 

Operating expenses for the three months ended March 31, 2014 were $339,352 as compared to $224,862 for the three months ended March 31, 2013, an increase of $114,490 or 50.9%. Commission expense was $162,822 compared to $96,986 for 2013, an increase of $65,836 or 67.9%. Other operating expenses increased by $45,830 or 60.7% compared to 2013.

 

Income from operations for the quarter ended March 31, 2014, was $59,763, an increase of 25.8%. Net income was $51,255, an increase of 107%.

 

At March 31, 2014, cash and cash equivalents were $578 compared to $175,028 at September 30, 2013. Net cash used in operating activities was $144,400 during the six months ended March 31, 2014. Net cash used in operating activities during the same six month period in 2013 was $423,392. Cash flow provided by investing activities for the six months ended March 31, 2014 was $18,000 as compared to cash flow used in investing activities of $12,644 during the same period in 2013. During the six months ended March 31, 2014, net cash used in financing activities was $48,050 due to the company's reduction of a stockholder's advance by $55,000. Cash flow provided by financing activities was $456,001 during the same period of 2013.

 

Mr. Shrewsbury, TX's Chairman and CEO, has provided financing in the form of demand notes and advances to fund the company's operations. Effective February 25, 2014, TX and Mr. Shrewsbury consolidated and restructured the principal and interest under such notes and certain advances due as of January 31, 2014, by issuing a new ten-year consolidated secured promissory note in the principal amount of $2,000,000 to Mr. Shrewsbury that bears interest at the rate of 5% per annum or prime rate if higher than 5% per annum, and is subject to certain events of default. The new note will be secured by the death benefit proceeds of key man insurance to be purchased by TX on the life of Mr. Shrewsbury. As of March 31, 2014, non-interest bearing advances due to Mr. Shrewsbury were $77,687. Also, TX continues to rely upon its bank line of credit which is guaranteed by Mr. Shrewsbury, of which $248,500 had been drawn upon as of March 31, 2014.

 

Accounts receivable were $752,946 as of March 31, 2014, as compared to $425,930 as of the year ended September 30, 2013, an increase of 76.8%.

 

Inventory was $2,328,034 as of March 31, 2014 an increase of 25.8% as compared to the year ended September 30, 2013. In anticipation of the continued growth of its rail and mining supplies business, the company increased its inventory levels to meet anticipated higher sales 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: reliance upon indebtedness furnished or guaranteed by our CEO; risks related to substantial indebtedness; 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

 

March 31, 2014 and September 30, 2013

 

 

 

Unaudited

 

 

 

March 31,

 

 

September 30,

 

 

 

2014

 

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

578

 

 

$

175,028

 

 

Accounts receivable, net of allowance for doubtful accounts of $13,993

 

 

752,946

 

 

 

425,930

 

 

Inventory

 

 

2,328,034

 

 

 

1,849,987

 

 

Commission advances

 

 

_

 

 

 

3,546

 

 

Notes receivable-current

 

 

10,000

 

 

 

10,000

 

 

Other current assets

 

 

26,466

 

 

 

23,275

 

 

 

Total current assets

 

 

3,118,024

 

 

 

2,487,766

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

31,454

 

 

 

43,387

 

Notes receivable, less current portion

 

 

24,514

 

 

 

27,380

 

Other

 

 

_

 

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,173,992

 

 

$

2,558,733

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

$

603,946

 

 

$

889,885

 

 

Accounts payable

 

 

1,296,369

 

 

 

692,180

 

 

Advances from stockholder/officer

 

 

77,687

 

 

 

499,583

 

 

Bank- line of credit

 

 

248,500

 

 

 

248,500

 

 

 

Total current liabilities

 

 

2,226,502

 

 

 

2,330,148

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable to a stockholder

 

 

2,000,000

 

 

 

1,351,997

 

 

 

Total Liabilities

 

 

4,226,502

 

 

 

3,682,145

 

 

 

 

 

 

 

 

 

 

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 March 31, 2014 and September 30, 2013

 

 

9,293,810

 

 

 

9,293,810

 

 

Additional paid-in capital

 

 

4,304,280

 

 

 

4,304,280

 

 

Accumulated deficit

 

 

(14,650,600

)

 

 

(14,721,502

)

 

 

Total stockholders' deficit

 

 

(1,052,510

)

 

 

(1,123,412

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$

3,173,992

 

 

$

2,558,733

 

The accompanying notes are an integral part of the financial statements

 

 

 

 

 

 

 

 

 

TX HOLDINGS, INC.

 

STATEMENTS OF OPERATIONS

 

For the Three and Six Months Ended March 31, 2014 and 2013

 

 

 

Unaudited

 

 

 

THREE MONTHS ENDED

 

 

SIX MONTHS ENDED

 

 

 

March 31,

 

 

March 31,

 

 

March 31,

 

 

March 31,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,206,567

 

 

$

954,074

 

 

$

2,104,447

 

 

$

1,730,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

807,452

 

 

 

681,709

 

 

 

1,477,861

 

 

 

1,273,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

399,115

 

 

 

272,365

 

 

 

626,586

 

 

 

456,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses, except items shown separately below

 

 

121,290

 

 

 

75,460

 

 

 

229,611

 

 

 

208,743

 

 

Commission expense

 

 

162,822

 

 

 

96,986

 

 

 

270,315

 

 

 

168,765

 

 

Professional fees

 

 

53,000

 

 

 

47,971

 

 

 

112,227

 

 

 

87,309

 

 

Depreciation expense

 

 

2,240

 

 

 

4,445

 

 

 

4,740

 

 

 

8,890

 

 

 

Total operating expenses

 

 

339,352

 

 

 

224,862

 

 

 

616,893

 

 

 

473,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

59,763

 

 

 

47,503

 

 

 

9,693

 

 

 

(17,143

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

 

_

 

 

 

_

 

 

 

93,167

 

 

 

_

 

 

Gain on sale of property and equipment

 

 

10,807

 

 

 

_

 

 

 

10,807

 

 

 

500

 

 

Interest expense

 

 

(19,315

)

 

 

(22,759

)

 

 

(42,765

)

 

 

(45,680

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income and (expense), net

 

 

(8,508

)

 

 

(22,759

)

 

 

61,209

 

 

 

(45,180

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

$

51,255

 

 

$

24,744

 

 

$

70,902

 

 

$

(62,323

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

21,015

 

 

 

_

 

 

 

29,070

 

 

 

_

 

Utilization of net operating loss carry forward

 

 

(21,015

)

 

 

_

 

 

 

(29,070

)

 

 

_

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

51,255

 

 

$

24,744

 

 

$

70,902

 

 

$

(62,323

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

_

 

 

$

_

 

 

$

_

 

 

$

_

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average of common shares outstanding-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

48,053,084

 

 

 

48,053,084

 

 

 

48,053,084

 

 

 

47,731,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

TX HOLDINGS, INC.

 

STATEMENTS OF CASH FLOWS

 

For the Six Months Ended March 31, 2014 and 2013

 

 

 

Unaudited

 

 

 

March 31,

 

 

March 31,

 

 

 

2014

 

 

2013

 

Cash flows used by operating activities:

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

70,902

 

 

$

(62,323

)

 

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

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

4,740

 

 

 

8,890

 

 

 

Loss on settlement of accounts payable

 

 

_

 

 

 

10,116

 

 

 

Gain on sale of property and equipment

 

 

(10,807

)

 

 

(500

)

 

 

Gain on extinguishment of debt

 

 

(93,167

)

 

 

_

 

 

 

Other assets

 

 

200

 

 

 

_

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Commission advances

 

 

3,546

 

 

 

(7,551

)

 

 

Deposits

 

 

_

 

 

 

50,000

 

 

 

Inventory

 

 

(478,047

)

 

 

(740,924

)

 

 

Other current assets

 

 

(3,191

)

 

 

24,572

 

 

 

Accounts receivable

 

 

(327,016

)

 

 

(150,195

)

 

 

Notes receivable

 

 

2,866

 

 

 

_

 

 

 

Accrued liabilities

 

 

69,385

 

 

 

57,993

 

 

 

Accounts payable

 

 

604,189

 

 

 

374,530

 

 

 

Stockholder advances for operations

 

 

12,000

 

 

 

12,000

 

 

Net cash used in operating activities

 

 

(144,400

)

 

 

(423,392

)

 

 

 

 

 

 

 

 

 

Cash flows provided (used) in investing activities:

 

 

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

_

 

 

 

(13,144

)

 

 

Proceeds received on sale of equipment

 

 

18,000

 

 

 

500

 

 

Net cash provided (used) in investing activities

 

 

18,000

 

 

 

(12,644

)

 

 

 

 

 

 

 

 

 

Cash flows provided (used) in financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

_

 

 

 

248,500

 

 

 

Proceeds from stockholder/officer advances

 

 

6,950

 

 

 

281,501

 

 

 

Repayments of stockholders advances

 

 

(55,000

)

 

 

(74,000

)

 

Net cash provided (used) in financing activities

 

 

(48,050

)

 

 

456,001

 

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

 

(174,450

)

 

 

19,965

 

Cash and cash equivalents at beginning of period

 

 

175,028

 

 

 

3,135

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

578

 

 

$

23,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

Accrued Interest exchanged for notes payable to a stockholder

 

$

262,157

 

 

 

_

 

 

 

Advances from stockholder exchanged for notes payable to stockholder

 

$

385,846

 

 

 

_

 

 

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.