SOURCE: TX Holdings Inc.

April 28, 2014 09:45 ET

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

ASHLAND, KY--(Marketwired - Apr 28, 2014) - 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 Information

  • Contact:

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