SOURCE: TX Holdings Inc.

January 27, 2014 08:00 ET

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--(Marketwired - Jan 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 Information

  • Contact:

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