SOURCE: TX Holdings Inc

August 03, 2015 09:00 ET

TX Holdings Reports Third Quarter 2015 Results

ASHLAND, KY--(Marketwired - Aug 3, 2015) - TX Holdings, Inc. (OTCQB: TXHG), a supplier of mining and rail products to the U.S. coal mining industry, today announced financial results for the third quarter of fiscal 2015. During the third quarter, revenues decreased due to overall lower sales demand and the company incurred an $82,913 net loss. Gross profit was $133,087 compared with $281,768 in the third quarter 2014.

Mr. Shrewsbury, the company's CEO and Chairman, stated that "We were very disappointed with the results of recent quarters. We believed the indicators we saw in the U. S. coal mining industry showed a turn-around was starting; however, our assessment and its timing proved to be incorrect. We continue to have full confidence in the future of the U.S. coal mining industry. Coal on dollar cost basis per BTU remains one of the cheapest fuels in the energy industry. The recent ruling by the Supreme Court on certain regulations adopted by the EPA and affecting the coal mining industry economic growth, coupled with efficiencies and consolidation in the industry augur well for the future. As reported, I recently bought additional shares of the company in the open market thereby increasing my holdings and believe this to be indicative of my continued belief in the future of the U.S. coal industry and our company."

Financial Summary

Revenue for third quarter 2015 was $636,388, a decrease of $599,879 or 48.5% when compared to 2014.

Cost of goods sold for the current quarter was $503,301 compared to $954,499 in 2014, a decrease of 47.3%.

Gross profit for the third quarter of 2015 was $133,087, and decreased as a percentage of revenue to 20.9% from 22.8% in 2014.

Net loss for third quarter of 2015 was $82,913 compared to a net profit in the same quarter of 2014 of $326,209.

Earnings (loss) per diluted share was $0.00 a decrease of $0.01 from 2014.

Operating expenses decreased 33.9% as compared to the same quarter of fiscal 2014. Other expenses in the third quarter 2015 were $28,858 compared to other net income of $327,387 in 2014.

Cash used in operating activities for the nine months ended June 30, 2015 was $224,478 as compared to cash provided from operating activities of $78,142 during the same period in 2014. The cash used increase was a direct result of the $310,318 net loss incurred by the company during the nine months ended June 30, 2015. Cash flows provided by financing activities increased by $199,349 due to further drawdown under the company's line of credit of $171,049 and net cash advance from Mr. Shrewsbury of $28,300. At June 30, 2015, the company had cash and cash equivalents of $44,812, a decrease of $27,972 when compared to September 30, 2014. Inventories and accounts payable decreased 7.9% and 14.8% respectively, compared to year end as a result of lower sales demand. Accounts receivable were $504,839 as of June 30, 2015, as compared to $502,617 as of September 30, 2014, an increase of 0.5%. To fund ongoing operations, the company continued to rely upon financing provided by its CEO, including a note and noninterest bearing advances aggregating approximately $2.08 million and a secured bank line of credit, of which $719,549 had been drawn upon at quarter end that is guaranteed by our CEO..

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, including in the U.S. coal industry; changes in regulations affecting the U.S. coal mining industry and U.S. coal-fired power plants; 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 Forms10-Q, our Annual Report 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 1933, 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.
CONSOLIDATED BALANCE SHEETS
June 30, 2015 and September 30, 2014
    Unaudited
    June 30,   September 30,
    2015   2014
ASSETS        
Current assets:        
  Cash and cash equivalents   $ 44,812     $ 72,784  
  Accounts receivable, net of allowance for doubtful                
  accounts of $32,343 as of 6/30/15 and 9/30/14     504,839       502,617  
  Inventory     2,545,243       2,762,535  
  Commission advances     36,460       _  
  Note receivable-current     10,000       10,000  
  Other current assets     28,032       45,327  
    Total current assets     3,169,386       3,393,263  
                 
Property and equipment, net     67,441       72,530  
Note receivable, less current portion     19,983       21,289  
Other assets     500       _  
                 
    Total Assets   $ 3,257,310     $ 3,487,082  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
Current liabilities:                
  Accrued liabilities   $ 643,497     $ 606,099  
  Accounts payable     898,355       1,054,556  
  Advances from stockholder/officer     71,637       43,337  
  Bank-line of credit     719,549       548,500  
    Total current liabilities     2,333,038       2,252,492  
                 
  Note payable to a stockholder     2,000,000       2,000,000  
    Total Liabilities     4,333,038       4,252,492  
                 
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, 48,053,084 shares issued and outstanding at June 30, 2015 and September 30, 2014     9,293,810       9,293,810  
  Additional paid-in capital     4,320,982       4,320,982  
  Accumulated deficit     (14,690,520 )     (14,380,202 )
    Total stockholders' deficit     (1,075,728 )     (765,410 )
    Total Liabilities and Stockholders' Deficit   $ 3,257,310     $ 3,487,082  
                     
 
 
TX HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended June 30, 2015 and 2014
    Unaudited
    THREE MONTHS ENDED   NINE MONTHS ENDED
    June 30,   June 30,   June 30,   June 30,
    2015   2014   2015   2014
                 
Revenue   $ 636,388     $ 1,236,267     $ 2,229,033     $ 3,340,715  
                                 
Cost of goods sold     503,301       954,499       1,810,712       2,432,360  
                                 
Gross profit     133,087       281,768       418,321       908,355  
                                 
Operating expenses, except items shown                                
separately below:     116,356       140,717       406,268       371,871  
  Commission expense     52,553       109,144       158,486       379,460  
  Professional fees     14,201       30,386       72,511       141,070  
  Depreciation expense     4,032       2,699       9,238       7,439  
    Total operating expenses     187,142       282,946       646,503       899,840  
                                 
Income (loss) from operations     (54,055 )     (1,178 )     (228,182 )     8,515  
                                 
Other income and (expense):                                
  Legal Settlement     _       374,025       _       374,025  
  Gain on extinguishment of accounts payable     _       _       _       93,167  
  Gain on sale of property and equipment     _       _       _       10,807  
  Bad debt expense     _       (18,350 )             (18,350 )
  Other income     2,952       _       15,505       _  
  Interest expense     (31,810 )     (28,288 )     (97,641 )     (71,054 )
                                 
  Total other income and (expenses), net     (28,858 )     327,387       (82,136 )     388,595  
                                 
Income (loss) before provision for                                
income taxes   $ (82,913 )   $ 326,209     $ (310,318 )   $ 397,110  
                                 
Provision for income taxes     _       133,745       _       162,815  
Utilization of net operating loss carry forward     _       (133,745 )     _       (162,815 )
                                 
Net income (loss)   $ (82,913 )   $ 326,209     $ $ (310,318 )   $ 397,110  
                                 
Net earnings (loss) per common share                                
  Basic and Diluted   $ 0.00     $ 0.01     $ (0.01 )   $ 0.01  
                                 
Weighted average of common shares                                
outstanding-                                
  Basic     48,053,084       48,053,084       48,053,084       48,053,084  
  Diluted     48,053,084       48,053,084       48,053,084       48,053,084  
 
The accompanying notes are an integral part of the consolidated financial statements
 
 
 
TX HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, 2015 and 2014
    (Unaudited)   (Unaudited)
    June 30,   June 30,
    2015   2014
Cash flows used in operating activities:        
  Net income (loss)   $ (310,318 )   $ 397,110  
  Adjustments to reconcile net income (loss) to net cash used in operating activities:                
    Depreciation expense     9,238       7,439  
    Bad debt reserve     _       18,350  
    Fair value of warrants issued to an officer     _       14,971  
    Gain on extinguishment of accounts payable     _       (93,167 )
    Gain on sale of property and equipment     _       (10,807 )
  Changes in operating assets and liabilities:                
    Inventory     217,292       (459,867 )
    Commission advances     (36,460 )     3,546  
    Accounts receivable     (2,222 )     (251,388 )
    Other current assets     17,295       (14,515 )
    Accrued liabilities     31,398       38,626  
    Accounts payable     (156,201 )     409,644  
    Other assets     (500 )     200  
    Stockholder/officer advances for operations     6,000       18,000  
  Net cash used in operating activities     (224,478 )     78,142  
                 
Cash flows provided by (used in) investing activities:                
    Note receivable     1,306       2,866  
    Purchase of equipment     (4,149 )     (38,809 )
    Proceeds received on sale of equipment     _       18,000  
  Net cash provided by (used in) investing activities     (2,843 )     (17,943 )
                 
Cash flows provided by (used in) financing activities:                
    Proceeds from bank line of credit     171,049       _  
    Proceeds from stockholder/officer advances     64,300       24,450  
    Repayment of stockholder/officer advances     (36,000 )     (110,850 )
  Net cash provided by (used in) financing activities     199,349       (86,400 )
                 
Decrease in cash and cash equivalents     (27,972 )     (26,201 )
Cash and cash equivalents at beginning of period     72,784       175,028  
                 
Cash and cash equivalents at end of period   $ 44,812     $ 148,827  
                 
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  
                     

Contact Information

  • Contact:

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