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TX Holdings Reports Second Quarter Results for 2017 Fiscal Year

April 28, 2017

ASHLAND, KY / ACCESSWIRE / April 28, 2017 / TX Holdings, Inc. (OTC PINK: TXHG), a supplier of mining and rail products to the U.S. coal mining industry, today announced financial results for the second quarter of fiscal 2017. During the 2017 second fiscal quarter, the company reported quarterly revenue of $923,403, a 63.5% increase when compared to the same quarter in the prior year. Net loss for the second quarter of fiscal 2017 was $54,059, an increase of $2,955 when compared to a net loss of $51,104 for the same period in the prior year.

Mr. Shrewsbury, the company's CEO and Chairman, stated, "We are encouraged by our current quarter sales demand increase, we continue to seek expansion in our customer base, and prior customers' mines have started to re-open, contributing to recent higher sales in our rail, as well as our mining related products. The recent energy outlook by The U.S. Energy Information Administration has reported an expected increase in coal-fired electricity generation to contribute a 4% and 2% increase in coal production on 2017 and 2018, respectively, denoting a positive turn in the coal mining industry."

Second Quarter 2017 Financial Summary

Revenue for second quarter 2017 was $923,403, an increase of $358,490, or 63.5%, compared to 2016.

Cost of goods sold for the current quarter was $804,9642, compared to $394,611 in 2016, an increase of 104.0%.

Gross profit for the second quarter of 2017 was $118,439, and decreased as a percentage of revenue to 12.8% from 30.1% compared to 2016.

Net loss for second quarter 2017 was $54,059, compared to a net loss in the same quarter of 2016 of $51,104.

Earnings (loss) per diluted share was $0.00, remaining unchanged from 2016.

Operating expenses decreased 25.5%, as compared to the same quarter of fiscal 2016. Other expenses in the second quarter 2017 were $29,764, compared to other expense of $29,744 in 2016.

Cash provided by operating activities for the three months ended March 31, 2017 was $36,366, as compared to cash used in operating activities of $124,484 during same period in 2016. The increase was a direct result of an increase in accounts payable of $208,265 and a decrease in inventory of $302,491 partially offset by an increase in accounts receivable of $425,783 during the three months ended March 31, 2017. Cash flows used by financing activities decreased by $17,227 due to payment on our term loan of $24,427 and a net advance from stockholder/officer of $7,200. At March 31, 2017, the company had cash and cash equivalents of $22,201, an increase of $19,139 when compared to September 30, 2016.

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.

Contact:

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

TX HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2017 and September 30, 2016

Unaudited
March 31,
September 30,
2017
2016
ASSETS
(Reclassified)
Current assets:
Cash and cash equivalents
$ 22,201 $ 3,062
Accounts receivable, net of allowance for doubtful
accounts of $113,643 at March 31, 2017 and September 30, 2016
660,280 235,402
Inventory
1,503,527 1,806,018
Commission advances
48,406 68,718
Note receivable-current
10,000 10,000
Other current assets
1,337 136
Total current assets
2,245,751 2,123,336
Inventory, non-current
300,000 300,000
Property and equipment, net
51,881 56,779
Note receivable, less current portion
19,983 19,983
Other
500 500
Total Assets
$ 2,618,115 $ 2,500,598
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued liabilities
$ 872,248 $ 831,053
Accounts payable
833,352 625,087
Advances from officer
205,837 198,637
Bank-term loan-current portion
69,011 61,430
Total current liabilities
1,980,448 1,716,207
Bank-term-loan, less current portion
568,674 600,682
Note payable to officer
2,000,000 2,000,000
Total Liabilities
4,549,122 4,316,889
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 March 31, 2017 and September 30, 2016
9,293,810 9,293,810
Additional paid-in capital
4,321,329 4,321,329
Accumulated deficit
(15,546,146 ) (15,431,430 )
Total stockholders' deficit
(1,931,007 ) (1,816,291 )
Total Liabilities and Stockholders' Deficit
$ 2,618,115 $ 2,500,598

TX HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended March 31, 2017 and March 31, 2016

Unaudited
THREE MONTHS ENDED
SIX MONTHS ENDED
March 31,
March 31,
March 31,
March 31,
2017
2016
2017
2016
Revenue
$ 923,403 $ 564,913 $ 1,420,320 $ 1,347,178
Cost of goods sold
(804,964 ) (394,611 ) (1,201,777 ) (938,457 )
Gross profit
118,439 170,302 218,543 408,721
Operating expenses, except items shown
separately below
103,892 133,597 201,836 254,297
Commission expense
32,839 35,541 56,356 63,373
Professional fees
3,554 20,075 7,620 41,421
Bad debt expense
-
-
905 1,926
Depreciation expense
2,449 2,449 4,898 4,898
Total operating expenses
142,734 191,662 271,615 365,915
Income (loss) from operations
(24,295 ) (21,360 ) (53,072 ) 42,806
Other expense
Interest expense
(29,764 ) (29,744 ) (61,644 ) (63,278 )
Total other expense
(29,764 ) (29,744 ) (61,644 ) (63,278 )
Net loss
$ (54,059 ) $ (51,104 ) $ (114,716 ) $ (20,472 )
Net earnings (loss) per common share
Basic and Diluted
$ 0.00 $ 0.00 $ 0.00 $ 0.00
Weighted average of common shares
outstanding-
Basic and 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 Six Months Ended March 31, 2017 and 2016

(Unaudited)
March 31,
March 31,
2017
2016
Cash flows provided/(used) in operating activities:
Net loss
$ (114,716 ) $ (20,472 )
Adjustments to reconcile loss to net cash used
in operating activities:
Depreciation expense
4,898 4,898
Bad debt expense
905 1,926
Changes in operating assets and liabilities:
Accounts receivable
(425,783 ) 63,173
Inventory
302,491 (165,635 )
Commission advances
20,312 (7,173 )
Other current assets
(1,201 ) 1,538
Accrued liabilities
23,195 29,305
Accounts payable
208,265 (44,044 )
Stockholder/officers advances for operations
18,000 12,000
Net cash provided/(used) in operating activities
36,366 (124,484 )
Cash flows provided/(used) in investing activities:
Net cash provided/(used) in investing activities
-
-
Cash flows provided/(used) by financing activities:
Payment on Term Loan
(24,427 ) (14,438 )
Repayment of bank line of credit
-
(1,073 )
Proceeds from officer advances
106,000 79,800
Repayment of officer advances
(98,800 )
-
Net cash provided/(used) by financing activities
(17,227 ) 64,289
Increase/(decrease) in cash and cash equivalents
19,139 (60,195 )
Cash and cash equivalents at beginning of period
3,062 61,564
Cash and cash equivalents at end of period
$ 22,201 $ 1,369

Supplemental Disclosure of Cash Flow Information

Cash paid during the year for interest
$ 10,374 $ 63,278

Suppemental Schedule of Non-Cash investing and Financing Activities

Payments of line of credit through issuance of note payable
-
$ 711,376

SOURCE: TX Holdings, Inc.