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TX Holdings Reports Results for Fiscal Year Ended September 30, 2020

TX Holdings
·7 min read

ASHLAND, Ky., Nov. 05, 2020 (GLOBE NEWSWIRE) -- TX Holdings, Inc. (OTC Markets PINK: TXHG), a supplier of mining and rail products to the U.S. coal mining industry, today announced financial results for its 2020 fiscal year. During the 2020 fiscal year, the company reported annual revenue of $2,335,590, a 40.6% decrease when compared to the same period the prior year. Net income for fiscal year 2020 was $4,128, an income decrease of $38,316, when compared to a net income of $42,444 for the prior year.

Mr. Shrewsbury, the company’s CEO and Chairman, stated that

“Our 9/30/2020 year was very disappointing. The coal mining industry was negatively impacted by reduced consumption of coal due to slowing economic growth related to COVID-19 and efforts to mitigate it. We are currently seeing in the current quarter a positive change resulting in some mines reopening and an increase in orders”.

The U.S. Energy Information Administration (EIA), expects total U.S. coal production for 2020 to be 525 million short tons compared with 705 MMst in 2019, a 26% decrease. The coal industry has experienced reduced demand from the U.S. electric power sector amid low natural gas prices which have contributed to coal mines idling and mine closures. EIA expects coal production to rise o t625 MMst in 2021, up 19% from 2020.This forecast increase reflects rising demand for coal from U.S. electricity generators because of higher natural gas prices compared with 2020.

Fiscal Year 2020 - Financial Summary

Revenue for the year ended September 30, 2020 was $2,335,590 as compared to $3,934,689 for the same period in the prior year, a decrease of $1,599,099 or 40.6%.

Cost of goods sold was $1,883,735 as compared to cost of goods sold of $3,313,609 for the same period the prior year, a decrease of $1,429,874 or 43.2 %.

Gross profit for the year ended September 30, 2020 increased as a percentage of revenue from 15.8% to 19.4% when compared to the same period the prior year. The gross profit increase is the result of higher margin products sold in the current year.

Operating expenses for the year ended September 30, 2020 were $505,793 as compared to $552,307 for the twelve months ended September 30, 2019, a decrease of $46,514 or 8.4%.

Other income/expense for the year ended September 30, 2020 resulted in income of $58,606 as compared to a loss of $26,329 in the prior year. The favorable Other income/expense variance of $84,395 was the result primarily of a reduction in interest expense on the $2,000,000 promissory note due to Mr. William Shrewsbury, our chairman and CEO, who elected to forego any interest due to him by the Company for the year 2020.

Net income for the current year was $4,128, compared to a net income of $42,444, incurred in the fiscal year 2019.

At September 30, 2020, cash and cash equivalents were $24,082 compared to $17,098 at September 30, 2019. Net cash used in operating activities was $113,677 during the twelve months ended September 30,2020. Net cash used in operating activities was $64,331 during the same twelve months period in the prior year. Net cash used for investment in delivery equipment during the current fiscal year was $21,645 as compared to cash flow of $10,500 received from the sale of equipment the prior year. During the fiscal year ended September 30, 2020, net cash provided by financing activities was $142,296 due to an increase of stockholder’s advances. Cash flow provided by financing activities was $34,320 during the same period in the prior year.

Accounts receivable were $114,985 as of September 30, 2020, as compared to $275,356 as of September 30, 2020, a decrease of $160,371 or 58.2%.

Inventory was $2,039,391 as of September 30, 2020, an increase of $557,762 or 37.6% as compared to September 30, 2020. The Company has increased inventory in anticipation of higher sales in the 2021 fiscal year.

Contact:

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

TX HOLDINGS, INC.

BALANCE SHEETS

September 30, 2020 and 2019

September 30,

September 30,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

24,082

$

17,098

Accounts receivable, net of allowance for doubtful

accounts of $ 0 at September 30, 2020 and September 30, 2019

114,985

275,356

Inventory

2,039,391

1,481,629

Other current assets

483

2,158

Total current assets

2,178,941

1,776,241

Inventory, non-current

350,000

Property and equipment, net

28,075

15,144

Total Assets

$

2,207,016

$

2,141,385

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accrued expenses, primarily to officers

$

264,179

$

329,179

Accounts payable

253,583

320,985

Accrued interest to officer

559,726

559,726

Advances from officer

388,287

181,487

Deferred revenue

99,000

96,000

Stockholder/officers advances for operations-warehouse rent

132,000

108,000

Bank-term loan-current portion

429,866

69,011

Other current liability

29,800

5,191

Total current liabilities

2,156,441

1,669,579

Bank-term loan,less current portion

_

425,359

Note payable to officer

2,000,000

2,000,000

Total Liabilities

4,156,441

4,094,938

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 September 30, 2020 and September 30, 2019

9,293,810

9,293,810

Additional paid-in capital

4,321,329

4,321,329

Accumulated deficit

(15,564,564

)

(15,568,692

)

Total stockholders' deficit

(1,949,425

)

(1,953,553

)

Total Liabilities and Stockholders' Deficit

$

2,207,016

$

2,141,385



TX HOLDINGS, INC.

STATEMENTS OF OPERATIONS

For the Years Ended September 30, 2020 and 2019

September 30,

September 30,

2020

2019

Revenue

$

2,335,590

$

3,934,689

Cost of goods sold

(1,883,735

)

(3,313,609

)

Gross profit

451,855

621,080

Operating expenses, except items shown

separately below

383,179

399,106

Commission expense

106,780

123,053

Professional fees

4,611

8,359

Bad debt expense

2,510

14,621

Depreciation expense

8,713

7,168

Total operating expenses

505,793

552,307

Income from operations

(53,938

)

68,773

Other income and (expense):

Loss on disposal of property and equipment

_

(7,000

)

Other income

79,206

112,043

Interest expense

(21,140

)

(131,372

)

Total other income and (expense), net

58,066

(26,329

)

Net income/(loss)

$

4,128

$

42,444

Net income per common share

Basic

$

0.00

$

0.00

Weighted average of common shares

outstanding-

Basic

48,053,084

48,053,084



TX HOLDINGS, INC.

STATEMENTS OF CASH FLOWS

For the Years Ended September 30, 2020 and 2019

September 30,

September 30,

2020

2019

Cash flows provided/(used) in operating activities:

Net income/(loss)

$

4,128

$

42,444

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

operating activities:

Depreciation expense

8,714

7,168

Bad debt expense

2,510

14,621

Loss on sale of fixed asset

_

7,000

Changes in operating assets and liabilities:

Accounts receivable, net

157,861

(30,283

)

Inventory

(207,762

)

(33,089

)

Commission advances

_

_

Other current assets

1,675

(1,058

)

Accrued liabilities, primarily to officer

(65,000

)

(87,457

)

Accounts payable

(67,402

)

(208,868

)

Accrued interest to officers

_

100,000

Stockholder/officers advances for operations-warehouse rent

24,000

24,000

Deferred revenue

3,000

96,000

Other current liabilities

24,609

5,191

Net cash used in operating activities

(113,667

)

(64,331

)

Cash flows provided/(used) in investing activities:

Purchase of equipment

(21,645

)

_

Proceeds from sale of fixed asset

_

10,500

Net cash provided/(used) in investing activities

10,500

10,500

Cash flows provided/(used ) in financing activities:

Repayment of bank term loan

(64,504

)

(54,680

)

Proceeds from officer advances

354,800

219,500

Repayment of officer advances

(148,000

)

(130,500

)

Net cash provided in financing activities

142,296

34,320

Decrease in cash and cash equivalents

6,984

(19,511

)

Cash and cash equivalents at beginning of period

17,098

36,609

Cash and cash equivalents at end of period

$

24,082

$

17,098

Supplemental Disclosure of Cash Flow Information

Cash paid during the year for interest

$

19,273

$

28,928