TX Holdings, Inc. - Quarter Report: 2010 December (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2010
___________________________
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____to _____
Commission File No. 0-32335
TX HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
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GEORGIA
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58-2558702
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(State or other jurisdiction of
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(I.R.S. Employer Identification. No.)
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|
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incorporation or organization)
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12080 Virginia Blvd.
Ashland, KY 41102
(Principal Address of Issuer)
(606) 928-1131
Issuer's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Smaller reporting company x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO x
Transitional Small Business Disclosure Format (check one): YES o NO x
As of February 10, 2011 there were 53, 041,897 shares of common stock outstanding.
TX Holdings, Inc.
Form 10-Q
For the Quarter Ended December 31, 2010
Table of Contents
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PART 1-FINANCIAL INFORMATION
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3
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4
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5
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12
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13
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18
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20
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PART II-OTHER INFORMATION
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21
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21
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21
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21
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22
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23
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2
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
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Unaudited
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Audited
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|||||||
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December 31,
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September 30,
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|||||||
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2010
|
2010
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$ | 8,995 | $ | 5,848 | ||||
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Accounts Receivable-(Net of Allowance for Doubtful Accounts)
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_
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_
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||||||
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Total current assets
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8,995 | 5,848 | ||||||
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Unproved oil and gas properties-successful efforts, net
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187,814 | 188,702 | ||||||
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Other
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50,000 | 50,000 | ||||||
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Total Assets
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$ | 246,809 | $ | 244,550 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
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Current liabilities:
|
||||||||
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Notes payable to a stockholder
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$ | 289,997 | $ | 289,997 | ||||
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Accounts payable and accrued liabilities
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1,055,489 | 1,003,737 | ||||||
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Accounts payable-related party
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158,308 | 158,308 | ||||||
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Advances from stockholder/officer
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77,897 | 51,397 | ||||||
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Convertible debt to stockholder/officer
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1,199,886 | 1,199,886 | ||||||
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Total current liabilities
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2,781,577 | 2,703,325 | ||||||
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Asset Retirement Obligation
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50,981 | 50,981 | ||||||
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Total Liabilities
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2,832,558 | 2,754,306 | ||||||
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Commitments and contingencies
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||||||||
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Stockholders' deficit:
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||||||||
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Preferred stock: no par value, 1,000,000 shares authorized
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||||||||
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no shares outstanding as of December 31,2010 and September 30,2010
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_
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_
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||||||
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Common stock:no par value, 250,000,000 shares
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||||||||
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authorized, 53,041,897 and 53,041,897 shares
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||||||||
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issued and outstanding at December 31, 2010
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||||||||
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and September 30, 2010, respectively
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10,558,437 | 10,558,437 | ||||||
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Additional paid-in capital
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1,379,409 | 1,379,409 | ||||||
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Accumulated deficit
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(1,803,507 | ) | (1,803,507 | ) | ||||
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Losses accumulated in the development stage
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(12,720,088 | ) | (12,644,095 | ) | ||||
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Total stockholders' deficit
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(2,585,749 | ) | (2,509,756 | ) | ||||
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Total liabilities and stockholders' deficit
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$ | 246,809 | $ | 244,550 | ||||
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The accompanying notes are an integral part of these financial statements.
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||||||||
3
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended December 31, 2010, and 2009 and for the Period From
Inception of the Development Stage, October 1, 2004 to December 31, 2010
|
|
Inception of
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||||||||||||
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Development
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||||||||||||
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THREE MONTHS ENDED
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Stage to
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|||||||||||
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December 31,
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December 31,
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December 31,
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||||||||||
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2010
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2009
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2010
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||||||||||
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Revenue
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$ | 159 | $ | 6,406 | $ | 36,623 | ||||||
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Operating expenses, except items shown
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||||||||||||
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separately below
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$ | 42,574 | $ | 55,126 | $ | 2,340,060 | ||||||
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Stock-based compensation
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_
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177,500 | 7,452,389 | |||||||||
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Professional fees
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1,183,016 | |||||||||||
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Impairment Expense
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686,648 | |||||||||||
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Lease expense
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_
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_
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17,392 | |||||||||
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Loss on write-off of leases and equipment
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263,383 | |||||||||||
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Depreciation expense
|
888 |
_
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7,585 | |||||||||
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Advertising expense
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_
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_
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83,265 | |||||||||
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Total Operating Expenses
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43,462 | 232,626 | $ | 12,033,738 | ||||||||
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Loss from operations
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(43,303 | ) | (226,220 | ) | $ | (11,997,115 | ) | |||||
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Other income and (expense):
|
||||||||||||
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Legal settlement
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_
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_
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204,000 | |||||||||
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Other income
|
_
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_
|
838 | |||||||||
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Forbearance agreement costs
|
_
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_
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(211,098 | ) | ||||||||
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Interest expense
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(32,690 | ) | (32,289 | ) | (716,713 | ) | ||||||
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Total other income and (expenses), net
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(32,690 | ) | (32,289 | ) | (722,973 | ) | ||||||
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Net loss
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$ | (75,993 | ) | $ | (258,509 | ) | $ | (12,720,088 | ) | |||
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Net loss per common share
|
||||||||||||
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basic and diluted
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$ |
-
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$ | (0.01 | ) | |||||||
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Weighted average number of common shares
|
||||||||||||
|
outstanding-basic and diluted
|
53,041,897 | 46,272,587 | ||||||||||
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The accompanying notes are an integral part of the financial statements.
|
||||||||||||
4
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
|
For the Period from Development Stage , October 1, 2004 to June 30, 2010
|
| Losses | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | in the | |||||||||||||||||||||||||||
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Preferred Stock
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Common Stock
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Paid -In
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Accumulated
|
Development | ||||||||||||||||||||||||
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Shares
|
Amount |
Shares
|
Amount
|
Capital
|
Deficit
|
Stage |
Total
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|||||||||||||||||||||
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Balance at September 30, 2004
|
$ | $ | 15,793,651 | $ | 1,532,111 | - | $ | (1,912,397 | ) | $ | $ | (380,286 | ) | |||||||||||||||
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Inception of the development
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||||||||||||||||||||||||||||
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stage on October 1, 2004
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- | - | - | |||||||||||||||||||||||||
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Common stock issued for
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||||||||||||||||||||||||||||
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professional services
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450,000 | 40,000 | - | 40,000 | ||||||||||||||||||||||||
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Common stock issued for
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||||||||||||||||||||||||||||
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prepaid services
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100,000 | 10,000 | - | 10,000 | ||||||||||||||||||||||||
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Common stock issued to
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||||||||||||||||||||||||||||
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settle accounts payable
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361,942 | 36,194 | - | 36,194 | ||||||||||||||||||||||||
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Warrants issued under
|
||||||||||||||||||||||||||||
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forbearence agreement
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- | - | 211,098 | 211,098 | ||||||||||||||||||||||||
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Net income (loss)
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- | - | - | 108,890 |
(449,790
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) | (340,900 | ) | ||||||||||||||||||||
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Balance at September 30, 2005
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$ | $ | 16,705,593 | 1,618,305 | 211,098 | $ | (1,803,507 | ) | $ |
(449,790
|
) | $ | (423,894 | ) | ||||||||||||||
The accompanying notes are an integral part of the financial statements
5
|
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period from Development Stage, October 1, 2004 to June 30, 2010
|
| Losses | |||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||
| Additional | in the | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Development | |||||||||||||||||||||||||||
| Shares | Amount |
Shares
|
Amount
|
Capital
|
Deficit |
Stage
|
Total
|
||||||||||||||||||||||||
|
Balance at September 30, 2005
|
- | $ | - | 16,705,593 | $ | 1,618,305 | 211,098 | $ | (1,803,507 | ) | $ | (449,790 | ) | $ | (423,894 | ) | |||||||||||||||
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Common stock issued for
|
|||||||||||||||||||||||||||||||
|
professional services
|
- | 4,649,300 | 2,318,295 | - | 2,318,295 | ||||||||||||||||||||||||||
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Common stock issued for cash
|
- | 4,633,324 | 1,164,997 | - | 1,164,997 | ||||||||||||||||||||||||||
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Common stock issued upon
|
|||||||||||||||||||||||||||||||
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exercise of warrants
|
- | 294,341 | 2,943 | - | 2,943 | ||||||||||||||||||||||||||
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Common stock surrendered
|
(500,000 | ) | - | - | |||||||||||||||||||||||||||
|
Warrants issued for services
|
- | - | 376,605 | - | - | 376,605 | |||||||||||||||||||||||||
| - | - | - | |||||||||||||||||||||||||||||
|
Preferred stock issued to the
|
|||||||||||||||||||||||||||||||
|
Company's chief executive
|
- | - | - | - | - | ||||||||||||||||||||||||||
|
officer/stockholder
|
1,000 | $ | 1,018, 000 | - | 1,018,000 | ||||||||||||||||||||||||||
| - | - | ||||||||||||||||||||||||||||||
|
Net income (loss)
|
- | - | - | - | - | (5,015,719 | ) | (5,015,719 | ) | ||||||||||||||||||||||
| - | - | ||||||||||||||||||||||||||||||
|
Balance at September 30, 2006
|
1,000 | $ | 1,018,000 | 25,782,558 | $ | 5,104,541 | $ | 587,703 | $ | (1,803,507 | ) | $ | (5,465,509 | ) | $ | (558,772 | ) | ||||||||||||||
The accompanying notes are an integral part of the financial statements
6
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
|
For the Period from Development Stage , October 1, 2004 to June 30, 2010
|
|
Losses
|
||||||||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Additional
|
in the
|
|||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock |
Paid-In
|
Accumulated
|
Development
|
||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares |
Amount
|
Capital
|
Deficit
|
Stage
|
Total
|
|||||||||||||||||||||||||
|
Balance at September 30, 2006
|
1,000 | $ | 1,018,000 | 25,782,558 | $ | 5,104,541 | $ | 587,703 | $ | (1,803,507 | ) | $ | (5,465,509 | ) | $ | (558,772 | ) | |||||||||||||||
|
Common stock issued for
|
||||||||||||||||||||||||||||||||
|
professional services
|
- | - | 3,475,555 | 2,501,222 | - | - | 2,501,222 | |||||||||||||||||||||||||
|
Contribution by stockholder
|
- | - | - | - | 53,325 | - | 53,325 | |||||||||||||||||||||||||
|
Warrants issued for service
|
- | - | - | - | 159,381 | - | 159,381 | |||||||||||||||||||||||||
|
Common stock issued upon
|
||||||||||||||||||||||||||||||||
|
exercise of warrants
|
- | - | 355,821 | 75,461 | - | - | 75,461 | |||||||||||||||||||||||||
|
Common stock issued in
settlement of notes payable and
|
||||||||||||||||||||||||||||||||
|
and interest
|
- | - | 833,333 | 546,666 | - | - | 546,666 | |||||||||||||||||||||||||
|
Common stock issued in settle-
|
||||||||||||||||||||||||||||||||
|
of accounts payable
|
- | - | 1,437,088 | 215,114 | - | - | 215,114 | |||||||||||||||||||||||||
|
Net loss
|
- | - | - | - | - | - | (4,085,033 | ) | (4,085,033 | ) | ||||||||||||||||||||||
|
Balance at September 30, 2007
|
1,000 | $ | 1,018,000 | 31,884,355 | $ | 8,443,004 | $ | 800,409 | $ | (1,803,507 | ) | (9,550,542 | ) | (1,092,636 | ) | |||||||||||||||||
The accompanying notes are an integral part of the financial statements
7
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
|
For the period from development Stage, October 1, 2004 to June 30, 2010
|
| Losses | ||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||
|
Additional
|
in the | |||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid-In
|
Accumulated | Development | ||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit | Stage | Total | |||||||||||||||
|
Balance at September 30, 2007
|
1,000
|
|
$
|
1,018,000
|
31,884,355
|
$
|
8,443,004
|
$
|
800,409
|
$
|
(1,803,507
|
) |
$
|
(9,550,542
|
) |
$
|
(1,092,636
|
) | ||||
|
Common stock issued in
|
||||||||||||||||||||||
| exchange of preferred stock |
-1,000
|
-1,018,000
|
10,715,789
|
1,018,000
|
-
|
-
|
-
|
-
|
||||||||||||||
|
Common stock issued for
|
||||||||||||||||||||||
| professional services |
-
|
-
|
450,680
|
128,440
|
-
|
-
|
-
|
128,440
|
||||||||||||||
|
Common stock issued for
|
||||||||||||||||||||||
| cash |
-
|
-
|
780,000
|
73,000
|
-
|
-
|
-
|
73,000
|
||||||||||||||
|
Common stock issued in
|
||||||||||||||||||||||
| settlement of legal claim |
-
|
-
|
175,000
|
31,500
|
-
|
-
|
-
|
31,500
|
||||||||||||||
|
Contribution by stockholder
|
-
|
-
|
-
|
-
|
10,643
|
10,643
|
||||||||||||||||
|
Common stock returned
|
||||||||||||||||||||||
| to treasury |
-
|
-
|
-300,000
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
|
Accrued salary contributed by
|
||||||||||||||||||||||
| officer/stockholder |
-
|
-
|
-
|
-
|
125,000
|
-
|
-
|
125,000
|
||||||||||||||
|
Accounting for employee
|
||||||||||||||||||||||
| stock warrants |
-
|
-
|
-
|
-
|
190,000
|
-
|
-
|
190,000
|
||||||||||||||
|
Accounting for options issued
|
||||||||||||||||||||||
| to a consultant |
-
|
-
|
-
|
-
|
19,000
|
-
|
-
|
19,000
|
||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(676,123
|
) |
(676,123
|
) | ||||||||||||
|
Balance at September 30, 2008
|
-
|
$
|
-
|
43,705,824
|
$
|
9,693,944
|
$
|
1,145,052
|
$
|
(1,803,507
|
) |
$
|
(10,226,665
|
) |
$
|
(1,191,176
|
) | |||||
The accompanying notes are an integral part of the financial statements
8
TX HOLDINGS INC.
A CORPORATION IN THE DEVELOPMENT STAGE
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
|
For the Period from Inception of the Development Stage, October 1, 2004, to June 30, 2010
|
|
Losses
|
||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||
|
Additional
|
in the
|
|||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid in
|
Accumulated
|
Development
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Stage
|
Total
|
|||||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
September 30, 2008
|
_
|
_
|
43,705,824 | $ | 9,693,944 | $ | 1,145,052 | $ | (1,803,507 | ) | $ | (10,226,665 | ) | $ | (1,191,176 | ) | ||||||||||
|
Common stock issued
|
||||||||||||||||||||||||||
|
in Payment for
|
||||||||||||||||||||||||||
|
Shareholders'advances
|
_
|
_
|
2,581,073 | 258,108 |
_
|
_
|
_
|
258,108 | ||||||||||||||||||
|
Common stock issued
|
||||||||||||||||||||||||||
|
for professional
|
||||||||||||||||||||||||||
|
services
|
_
|
_
|
2,450,000 | 244,000 |
_
|
_
|
_
|
244,000 | ||||||||||||||||||
|
Common stock sold
|
||||||||||||||||||||||||||
|
to private investors
|
_
|
_
|
200,000 | 20,000 |
_
|
_
|
_
|
20,000 | ||||||||||||||||||
|
Common stock returned
|
||||||||||||||||||||||||||
|
to treasury
|
_
|
_
|
(1,300,000 | ) |
_
|
_
|
_
|
_
|
_
|
|||||||||||||||||
|
Shareholders' advances
|
||||||||||||||||||||||||||
|
previously reported as
|
||||||||||||||||||||||||||
|
Additional Paid in Capital
|
_
|
_
|
_
|
_
|
(10,643 | ) |
_
|
_
|
(10,643 | ) | ||||||||||||||||
|
Imputed salary contributed
|
||||||||||||||||||||||||||
|
by officer/stockholder
|
_
|
_
|
_
|
_
|
125,000 |
_
|
_
|
125,000 | ||||||||||||||||||
|
Accounting for employee
|
||||||||||||||||||||||||||
|
stock warrant
|
_
|
_
|
_
|
_
|
120,000 |
_
|
_
|
120,000 | ||||||||||||||||||
|
Net Loss
|
_
|
_
|
_
|
_
|
_
|
_
|
(1,276,127 | ) | (1,276,127 | ) | ||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
September 30, 2009
|
_
|
_
|
47,636,897 | $ | 10,216,052 | $ | 1,379,409 | $ | (1,803,507 | ) | $ | (11,502,792 | ) | $ | (1,710,838 | ) | ||||||||||
|
The accompanying notes are an integral part of these financial statements.
|
9
TX HOLDINGS INC.
A CORPORATION IN THE DEVELOPMENT STAGE
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
|
For the Period from Inception of the Development Stage , October 1, 2004 to September 30, 2010
|
|
Losses
|
||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||
|
Additional
|
in the
|
|||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid in
|
Accumulated
|
Development
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Stage
|
Total
|
|||||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
September 30, 2009
|
_
|
_
|
47,636,897 | $ | 10,216,052 | $ | 1,379,409 | $ | (1,803,507 | ) | $ | (11,502,792 | ) | $ | (1,710,838 | ) | ||||||||||
|
Common stock issued
|
||||||||||||||||||||||||||
|
for professional
|
||||||||||||||||||||||||||
|
services
|
_
|
_
|
3,355,000 | 239,885 |
_
|
_
|
_
|
239,885 | ||||||||||||||||||
|
Common stock sold
|
||||||||||||||||||||||||||
|
to private investors
|
_
|
_
|
2,050,000 | 102,500 |
_
|
_
|
_
|
102,500 | ||||||||||||||||||
|
Net Loss
|
_
|
_
|
_
|
_
|
_
|
_
|
(1,141,303 | ) | (1,141,303 | ) | ||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
September 30, 2010
|
_
|
_
|
53,041,897 | $ | 10,558,437 | $ | 1,379,409 | $ | (1,803,507 | ) | $ | (12,644,095 | ) | $ | (2,509,756 | ) | ||||||||||
|
The accompanying notes are an integral part of these financial statements.
|
10
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period from Inception of the Development Stage , October 1, 2004 to December 31, 2010
For the Period from Inception of the Development Stage , October 1, 2004 to December 31, 2010
Additional
|
Losses
Accumulated
in the |
|||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid in
|
Accumulated
|
Development
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Stage
|
Total
|
|||||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
September 30, 2010
|
_
|
_
|
53,041,897 | $ | 10,558,437 | $ | 1,379,409 | $ | (1,803,507 | ) | $ | (12,644,095 | ) | $ | (2,509,756 | ) | ||||||||||
|
Net Loss
|
_
|
_
|
_
|
_
|
_
|
_
|
(75,993 | ) | (75,993 | ) | ||||||||||||||||
|
Balance at
|
||||||||||||||||||||||||||
|
December 31, 2010
|
_
|
_
|
53,041,897 | $ | 10,558,437 | $ | 1,379,409 | $ | (1,803,507 | ) | $ | (12,720,088 | ) | $ | (2,585,749 | ) | ||||||||||
|
The accompanying notes are an integral part of these financial statements.
|
||||||||||||||||||||||||||
11
TX HOLDINGS, INC.
A CORPORATION IN THE DEVELOPMENT STAGE
For the Nine Months Ended June 30, 2010 and 2009 and for the Period From
Inception of the Development Stage, October 1, 2004, to June 30, 2010
|
Inception of
|
||||||||||||
|
Development
|
||||||||||||
|
THREE MONTHS ENDED
|
Stage to
|
|||||||||||
|
12/31/2010
|
12/31/2009
|
12/31/2010
|
||||||||||
|
Cash flows used by operating activities:
|
||||||||||||
|
Net loss
|
$ | (75,993 | ) | $ | (258,509 | ) | $ | (12,720,088 | ) | |||
|
Adjustments to reconcile net loss to net cash used
|
||||||||||||
|
in operating activities:
|
||||||||||||
|
Warrants issued for forbearance agreement
|
_
|
_
|
211,098 | |||||||||
|
Loss on disposal of equipment
|
_
|
_
|
263,383 | |||||||||
|
Impairment of unproved oil and gas properties
|
686,648 | |||||||||||
|
Depreciation expense
|
888 |
_
|
7,585 | |||||||||
|
Bad Debt Expense
|
_
|
_
|
1,729 | |||||||||
|
Common and preferred stock issued for services
|
_
|
177,500 | 6,060,224 | |||||||||
|
Accounting for Warrants issued to employees and
|
||||||||||||
|
a consultant
|
_
|
_
|
329,000 | |||||||||
|
Warrants issued for services
|
_
|
_
|
376,605 | |||||||||
|
Common stock issued to settle accounts payable
|
_
|
_
|
251,308 | |||||||||
|
Common stock issued in payment of interest expense
|
_
|
_
|
196,666 | |||||||||
|
Common stock issued by an officer/stockholder to
|
||||||||||||
|
satisfy expenses of the Company and increase
|
||||||||||||
|
stockholder advances
|
_
|
_
|
616,750 | |||||||||
|
Common stock issued in settlement of legal claim
|
_
|
_
|
31,500 | |||||||||
|
Accrued salary contributed by stockholder/former officer
|
_
|
_
|
250,000 | |||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Accrued stock-based compensation reversal
|
||||||||||||
|
resulting from legal claim settlement
|
_
|
_
|
(231,000 | ) | ||||||||
|
Prepaid expenses and other assets
|
_
|
(2,000 | ) | (49,750 | ) | |||||||
|
Accounts receivable
|
_
|
_
|
(1,729 | ) | ||||||||
|
Accounts payable and accrued liabilities
|
51,752 | 38,366 | 1,960,686 | |||||||||
|
Net cash used by operating activities
|
$ | (23,353 | ) | (44,643 | ) | (1,759,385 | ) | |||||
|
Cash flows used in investing activities:
|
||||||||||||
|
Deposits paid for oil and gas property acquisitions
|
_
|
_
|
(378,000 | ) | ||||||||
|
Property and equipment additions
|
_
|
_
|
(425,329 | ) | ||||||||
|
Net cash used in investing activities
|
_
|
_
|
(803,329 | ) | ||||||||
|
Cash flows provided by financing activities:
|
||||||||||||
|
Proceeds from stockholder/officer contribution
|
_
|
_
|
10,643 | |||||||||
|
Repayment of note payable to a bank
|
_
|
_
|
(20,598 | ) | ||||||||
|
Proceeds from note payable to stockholder
|
_
|
_
|
520,000 | |||||||||
|
Proceeds from sale of common stock
|
_
|
55,000 | 1,360,497 | |||||||||
|
Proceeds from exercise of warrants
|
_
|
_
|
78,404 | |||||||||
|
Proceeds from stockholder/officer advances
|
26,500 |
_
|
629,663 | |||||||||
|
Payments of stockholders advances
|
_
|
(6,900 | ) | (6,900 | ) | |||||||
|
Net cash provided by financing activities
|
26,500 | 48,100 | 2,571,709 | |||||||||
|
Increase in cash and cash equivalents
|
3,147 | 3,457 | 8,995 | |||||||||
|
Cash and cash equivalents at beginning of period
|
5,848 | 6,588 |
_
|
|||||||||
|
Cash and cash equivalent at December 31, 2009 and 2008
|
$ | 8,995 | $ | 10,045 | $ | 8,995 | ||||||
|
Non-cash investing and financing activities:
|
||||||||||||
|
Common stock issued in payment of Shareholders' advances
|
_
|
_
|
$ | 258,107 | ||||||||
|
Shareholders'advances converted to notes payable from stockholder
|
_
|
_
|
$ | 119,997 | ||||||||
|
Shareholders' advances previously reported as paid-in capital
|
_
|
_
|
$ | (10,643 | ) | |||||||
|
Increase in property and equipment from recognition of asset retirement obligation
|
_
|
_
|
$ | 86,455 | ||||||||
|
The accompanying notes are an integral part of these financial statements.
|
||||||||||||
12
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
NOTE 1- BACKGROUND AND CRITICAL ACCOUNTING POLICIES
INTERIM FINANCIAL STATEMENTS
The accompanying interim unaudited financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s 2010 Annual Report. The results of operations for interim periods are not necessarily indicative of the results for any subsequent quarter or the entire year ending September 30, 2011.
CAUTIONARY NOTE TO U.S. INVESTORS
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION PERMITS OIL AND GAS COMPANIES, IN THEIR FILINGS WITH THE SEC, TO DISCLOSE ONLY PROVED RESERVES THAT A COMPANY HAS DEMONSTRATED BY ACTUAL PRODUCTION OR CONCLUSIVE FORMATION TESTS TO BE ECONOMICALLY AND LEGALLY PRODUCIBLE UNDER EXISTING ECONOMIC AND OPERATING CONDITIONS. WE USE CERTAIN TERMS HEREIN, SUCH AS "PROBABLE", "POSSIBLE", "RECOVERABLE",AND “RISKED," AMONG OTHERS, THAT THE SEC'S GUIDELINES STRICTLY PROHIBIT US FROM INCLUDING IN FILINGS WITH THE SEC. READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS DISCLOSURES MADE BY US WHICH ATTEMPT TO ADVISE INTERESTED PARTIES OF THE ADDITIONAL FACTORS WHICH MAY AFFECT OUR BUSINESS
OVERVIEW OF BUSINESS
TX Holdings, Inc. ("TX Holdings" or the "Company"), formerly named R Wireless, Inc. ("RWLS") and HOM Corporation ("HOM"), is a Georgia corporation incorporated on May 4, 2000. In December 2004 the Company began to structure itself into an oil and gas exploration and production company. The Company acquired oil and gas leases and began development of a plan for oil and gas producing operations in April 2006.
The Company is actively engaged in the development, and acquisition of crude oil and natural gas in the counties of Callahan and Eastland, Texas. In November 2006, the Company entered into a Purchase and Sale Agreement with Masada Oil & Gas, Inc. ("Masada"). Masada has previously served as the operator on the Park’s Lease in which TX Holdings previously held a 75% working interest as of December 31, 2010 (See note 5).
The Parks lease covers 320 acres in which the company owns a 75% working interest and Masada owned the remaining 25%. The land owners of this lease have a 12.5% royalty interest in the production. TX Holdings is the lease operator of the lease and there are currently 22 wells with minimal production rates. (2 to 3 bbls per day). On January 28, 2011, the company purchased from Masada Oil the remaining 25% and thereby holding 100% working interest on the Parks lease.
The Company has an estimated 8% working interest on the Perth lease which is currently under litigation. On September 30, 2010, the Company recorded an impairment loss of $302,560.
13
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
|
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
NOTE 1- BACKGROUND AND CRITICAL ACCOUNTING POLICIES- CONT’D
OVERVIEW OF BUSINESS-CONT’D
The Company owned a 100% working interest and was the operator of the 843 acre Williams Lease. An on-going dispute with the land owner of the lease has prevented the Company from operating or reporting any production on this lease. On September 30, 2009, the Company elected to cease operation of the Williams lease resulting in impairment of the lease. The Company recorded an impairment loss of $68,222 for the year ended September 30, 2009 related to this lease.
The Company plans to continue using a combination of debt and equity financing to acquire additional fields and to develop those fields. Currently, management cannot provide any assurance regarding the successful development of acquired oil and gas fields, the completion of additional acquisitions or the continued ability to raise funds, however, it is using its best efforts to complete field work on the fields acquired, acquire additional fields and finance
The Company has experienced substantial costs for engineering and other professional services during 2005 through 2010 in making the attempt to transition to an oil and gas exploration and production company from its current development stage status.
GOING CONCERN CONSIDERATIONS
Since it ceased its former business operations, the Company has devoted its efforts to securing financing and has not earned significant revenue from its planned principal operations. Accordingly, the financial statements are presented in accordance with FASB Accounting Standards Codification (“ASC”) Topic 915 Development Stage Entities.
The Company, with its prior subsidiaries, has suffered recurring losses while devoting substantially all of its efforts to raising capital and identifying and pursuing advantageous businesses opportunities. Management currently believes that its best opportunities lie in the oil and gas industry. The Company's total liabilities exceed its total assets and the Company's liquidity has depended excessively on raising new capital.
These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates continuing operations and realization of assets and liquidation of liabilities in the ordinary course of business. The Company's ability to continue as a going concern is dependent upon its ability to raise sufficient capital and to implement a successful business plan to generate profits sufficient to become financially viable. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern.
RECENTLY ISSUED ACCOUNTING STANDARDS
During the three months ended December 31, 2010, there were several new accounting pronouncements issued by the FASB the most recent of which was Accounting Standards Update 2011-01, Receivables: Deferral of the Effective Date of Disclosures about Trouble Debt Restructurings in Update No. 201020s. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.
14
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
| NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS |
SUBSEQUENT EVENTS
Upon evaluation, the Company notes that there were no material subsequent events between the date of the financial statements and the date that the financial statements were issued except as disclosed in Note 5.
NOTE 2 - NOTES PAYABLE TO A STOCKHOLDER AND CONVERTIBLE DEBT TO OFFICER/STOCKHOLDER
Mark Neuhaus, the former Chairman of the Board of Directors and former Chief Executive Officer of the Company caused the Company in September 2007 to issue to him a convertible promissory note in the amount of $1,199,886 bearing interest at 8% per annum and due and payable within two years for payments in cash and common stock made on behalf of the Company through that date. The conversion price is $0.28 per common share (the market price of the Company's common stock on the date of the note) which will automatically convert on the two-year anniversary of the note if not paid in full by the Company. The conversion price is subject to adjustments for anti-dilution. The Company disputed that the note was not supported by consideration or that it was properly authorized under Georgia law and on November 11, 2008 the Company entered into a settlement agreement with Mr. Neuhaus and his wife which included provisions cancelling the indebtedness represented by the note contingent on the closing of a third party transaction within 90 days of November 11, 2008. The Company was not successful in finalizing the transaction with the third party within the stipulated period resulting in the cancellation of the settlement agreement between the Company and Mark Neuhaus and his wife.
NOTE 3 - INCOME TAXES
Following is an analysis of deferred taxes at December 31, 2010:
|
Deferred tax assets:
|
|||
|
Net operating losses
|
$ | 1,783,000 | |
|
Accrued expenses
|
257,000 | ||
|
Valuation allowance
|
(2,040,000 | ) | |
|
Total deferred tax assets
|
_
|
||
|
Deferred tax liabilities:
|
|||
|
Basis of property and equipment
|
_
|
||
|
Net deferred tax asset
|
$ |
_
|
|
The Company has tax net operating loss carryforwards totaling approximately $5,277,000, expiring in 2018 through 2030. Approximately $1,200,000 of net operating losses were incurred prior to December 12, 2002 at which date MA&N acquired 51% of the Company and are consequently subject to certain limitation described in section 382 of the Internal Revenue Code. The Company estimates that, due to the limitations and expiration dates, only $424,000 of the net operating losses incurred prior to December 12, 2002 will be available to offset future taxable income.
15
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
|
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
NOTE 3 - INCOME TAXES-CONT’D
Net operating losses after December 12, 2002 through December 31, 2010 were approximately $4,077,000. The total net operating losses available to the Company to offset future taxable income is approximately $4,501,000. Following is a reconciliation of the tax benefit at the federal statutory rate to the amount reported in the statement of operations for the three months ended December 31, 2010 and 2009:
|
Three Months Ended Dec. 31,
|
|||||||
|
2010
|
2009
|
||||||
|
Benefit for income tax at federal
|
|||||||
|
statutory rate
|
$
|
26,000
|
$
|
88,000
|
|||
|
Change in valuation allowance
|
_
|
(28,000
|
) | ||||
|
Non-deductible stock-based
|
|||||||
|
Compensation
|
(26,000
|
) |
(60,000
|
) | |||
|
$
|
-
|
$
|
-
|
||||
NOTE 4 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Mark Neuhaus, former President, CEO and Chairman of the Board, has represented that in May 2006 the Company entered into an employment agreement with him. Mr. Neuhaus claims that the agreement provided that he was to be compensated at the rate of $25,000 per month plus bonus based on oil and gas production. In addition he claims that the employment agreement granted to Mr. Neuhaus 1,000 shares of preferred stock. The preferred stock which Mr. Neuhaus caused to be issued to himself had the following rights and privileges:
|
1.
|
Super voting rights: The preferred stock has the right to vote on any item of business submitted to the common shareholders for a vote the equivalent number of votes representing 50% of the outstanding common shares then issued by the Company.
|
|
2.
|
No other rights: The preferred shares have no other rights, including but not limited to no conversion rights; no dividend rights; and no liquidation priority rights.
|
During the fiscal year 2006, Mr. Neuhaus waived his salary. However, Mr. Neuhaus obtained a letter from Baron Capital Group, Inc. stating that value of the preferred stock value was no greater than $1,018,000. On December 24, 2007, and in connection with Mr. Neuhaus’ resignation, the 1,000 preferred shares were exchanged for 10,715,789 common shares, which exchange assumed that the preferred stock had a value of $1,018,000. Current management of the Company has not seen documentation establishing that an employment agreement existed between Mr. Neuhaus and the Company; that any such agreement was authorized in accordance with Georgia law or that the preferred stock was duly authorized or validly issued in accordance with law.
COMMON STOCK
During the period September 30, 2010 through December 31, 2010, the Company has not issued Common stock to raise capital, compensate employees and professionals, and to settle liabilities.
16
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
|
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
NOTE 4 – STOCKHOLDERS’ EQUITY-CONT’D
POTENTIALLY DILUTIVE OPTIONS AND WARRANTS
At December 31, 2010, the Company has outstanding 1,000,000 warrants which were not included in the calculation of diluted net loss per share since their inclusion would be anti-dilutive.
Following is a summary of outstanding stock warrants at December 31, 2010
|
Number of
|
Exercise
|
Weighted
|
||||||||||
|
Shares
|
Price
|
Avg. Price
|
||||||||||
|
Warrants at September 30,2010
|
1,000,000 | $ | 0.28 | $ | 0.28 | |||||||
|
Issued
|
_
|
_
|
_
|
|||||||||
|
Expired
|
_
|
_
|
_
|
|||||||||
|
Warrants at December 31, 2010
|
1,000,000 | $ | 0.28 | $ | 0.28 | |||||||
A summary of outstanding warrants at December 31, 2010, follows:
|
Contractual
|
||||||||||||
|
Remaining
|
||||||||||||
|
Number of
|
Exercise
|
Life
|
||||||||||
|
Expiration Date
|
Shares
|
Price
|
(Years)
|
|||||||||
|
September, 2011
|
1,000,000 | 0.28 | .75 | |||||||||
| 1,000,000 | ||||||||||||
NOTE 5 – RELATED PARTY TRANSACTIONS
Beginning with the quarter ended March 31, 2008 to the present, the Company recognized crude oil sales from a lease for which the operator is company owned by a stockholder/director of the Company. These sales account for 100% of our oil and gas revenue for the Three months ended December 31, 2010.
As of December 31, 2010, the Company has an outstanding note payable to Mr. Shrewsbury, the Company’s Chairman and CEO, for the amount of $289,997, the note bears a 10% interest and is payable on demand.
Included in the financial statements at December 31, 2010 are advances from stockholder/officer of $51,397. Interest has been accrued on the notes payables at rates ranging from 8% to 10%. In the quarter ended December 31, 2010 interest expense of $31,504, in the accompanying statement of operations, relates to the promissory notes.
In June 2007, the Company entered into a strategic alliance agreement with Hewitt Energy Group, LLC (“Hewitt Energy”) to identify reserves and prospects, and to establish production from the projects mutually owned or contemplated to be jointly owned by the entities in states of Texas, Kansas and Oklahoma. Hewitt Energy is controlled by a former member of the Company's board of directors. During 2007, the Company's former Chief Executive Officer, who is a major stockholder, claimed that he transferred stock on behalf of the Company with a market value of $352,560 to Hewitt Energy Group, LLC to acquire an interest in the Perth field in Kansas. There is currently a dispute as to the extent of the Company’s performance under the leases and agreement with Hewitt Energy.
17
|
TX HOLDINGS, INC.
|
|
A CORPORATION IN THE DEVELOPMENT STAGE
|
|
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
NOTE 5 – RELATED PARTY TRANSACTIONS-CON’TD
On November 11, 2008, the Company entered into a settlement agreement with Mark Neuhaus and Nicole Neuhaus. The agreement was subject to the Company finalizing a transaction with a third party involving certain oil and gas properties within 90 days of November 11, 2008 ("Third Party Closing"). If the third party transaction closes, the agreement provides for mutual general releases between the Company, Mark Neuhaus and Nicole Neuhaus. In connection with the agreement, seven million shares of the common stock of the Company previously issued to Mark Neuhaus were delivered to the Company to be held pending the Third Party Closing. If the Third Party Closing occurs within the 90 day period, (1) four million five hundred thousand of the deposited shares will be cancelled and returned to authorized but unissued shares of the Company,(2) two million five hundred thousand of the deposited shares will be delivered to Nicole Neuhaus and (3) certain alleged claims of Mark Neuhaus against the Company for compensation and reimbursement for advances in the aggregate amount of $178,862 and a purported indebtedness of the Company to Mark Neuhaus in the amount of $1,320,071,including interest accrued through December 31, 2008 and represented by a convertible note dated as of September 28, 2007 will be cancelled. If the Third Party Closing does not occur within 90 days of November 11, 2008, the settlement agreement will be void and of no force and effect and the deposited shares will be returned. On February 6, 2009, an amendment to the settlement agreement was signed by all parties. The amendment extends the period of time provided in paragraph 10 of the settlement agreement by an additional 30 days so that the agreement would remain in full force and effect until March 11, 2009. The Company was not successful in finalizing the transaction with the third party within the stipulated period resulting in the cancellation of the settlement agreement between the Company and Mark Neuhaus and Nicole Neuhaus.
On January 28, 2010 TX Holdings,Inc entered into an agreement with Masada Oil & Gas Inc. to acquire the remaining 25% working interest in the Park’s lease which the Company currently owns a 75% working interest. As part of the agreement, the Company also acquired a storage building and approximately two acres of land. In return, the Company will relinquish an 8.5% working interest which it currently holds in the Contract Area 1 lease, pay the sum of $10,000 and, assume the current 25% lease owners’ liability estimated at approximately $20,000.
INTRODUCTION
The following discussion is intended to facilitate an understanding of our business and results of operations and includes forward-looking statements that reflect our plans, estimates and beliefs. It should be read in conjunction with our audited consolidated financial statements and the accompanying notes to the consolidated financial statements included herein. Our actual results could differ materially from those discussed in these forward-looking statements.
18
The Company has never earned a profit, and has incurred an accumulated deficit of $14,523,595 as of December 31, 2010. As of September 30, 2006, the Company had raised $1,240,000 in equity. The Company has used these funds to purchase or place deposits on three oil and gas fields to begin its operations as an oil and gas exploration and production company. Revenues derived from the planned production and sale of oil will be based on the evaluation and development of fields. If our development plan is successful, it is estimated it will take approximately one year to reach production levels to sufficiently capitalize the Company on an ongoing basis. During this initial ramp up period, the Company believes it will need to raise additional funds to fully develop its fields, purchase equipment and meet general administrative expenses. The Company may seek both debt and equity financing. The Company currently has twenty two wells located on one field located in Texas. Each of the wells will need to be reworked to establish production at a cost of approximately $7,000 to $10,000 per well. Initial production from each well is estimated to be between two to five barrels per day. Once initial production has been established the Company intends to begin a water flood program that injects water into the oil producing zone through injector wells. The water then forces the oil towards the producing well and, if successful, may increase production of each well up to an estimated four to seven barrels per day per well. If the Company is able to produce its wells upon the re-completion the Company revenues will exceed current operating expenses if 40 barrels of oil is produced and the price of oil remains above $55.00 per barrel. The Company's success is dependent on if and how quickly it can reach these levels of production. The Company plans to use all revenues for general corporate purposes as well as, future expansion of its current oil producing properties and the acquisition of other oil and gas properties. There is no certainty that the Company can achieve profitable levels of production or that it will be able to raise additional capital through any means.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2010 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2009
REVENUES FROM OPERATIONS
Revenues for the three months ended December 31, 2010 and 2009 were $159 and $6,406 respectively. During the quarter ended December 31, 2010, the Company had limited production as a result of well workover performed during the quarter to increase future production. On December 5, 2004, the Company began to structure itself into an oil and gas production and exploration company. The Company has acquired one oil and gas lease in the counties of Eastland and Callahan, Texas and has begun development of oil and gas. The Company received its first revenues from oil and gas operations in March 2008. The Company believes that it will place additional wells into operation during the current fiscal year. Since it ceased its former business operations, the Company has devoted its efforts to research prospective leases and business combinations and secure financing.
EXPENSES FROM CONTINUING OPERATIONS
The Company operating expenses for the three months ended December 31, 2010 were $43,462. The current quarter operating expenses represent a positive variance of $189,164 when compared to operating expenses of $232,626 for the quarter ended December 31, 2009. Lower stock based compensation for services, in the current quarter, account for a favorable variance in the amount of $177,500 when compared to the same quarter the prior year. Lower contract labor, lower equipment rental expense, and lower travel expenses primarily account for the remaining favorable variance of $11,664 in the current quarter.
NET INCOME/LOSS
For the quarter December 31, 2010, the Company had a net loss of $75,993 representing a positive variance of $182,516 when compared to a net loss of $258,509 for the quarter ended December 31, 2009. The favorable variance in the current quarter as noted above in “Expenses from Continuing Operations” resulted from lower stock based compensation, lower contract labor expense, lower equipment rental and lower travel expenses.
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Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting were not effective as of December 31, 2010, under the criteria set forth in the Internal Control—Integrated Framework. The determination was made partially due to the small size of the company and a lack of segregation of duties. The Company continues to implement control processes to mitigate the control weaknesses that are present in a small Company with very few employees.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with management’s evaluation during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Management is currently aware of no pending, past or present litigation involving the Company which management believes could have a material adverse effect on the Company.
On November 17, 2009 the Company filed a legal claim in the Miami Circuit Court against several defendants for alleged services and reimbursed expenses paid by the Company. The claim stipulates that the defendants did not perform any services on TX Holdings behalf which would have entitled them to receive compensation or reimbursement of expenses. Management believes that this matter can be resolved and will have no material effect on the Company’s operations.
Except as disclosed above, the Company has no material legal proceedings in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.
None.
None.
None.
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Exhibit 31.1
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Section 302 Certification of Chief Executive Officer
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Exhibit 31.2
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Section 302 Certification of Chief Financial Officer
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Exhibit 32.1
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Section 906 Certification of Chief Executive Officer
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Exhibit 32.2
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Section 906 Certification of Chief Financial Officer
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In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TX HOLDINGS, INC. | |||||
| By: |
/s/ William “Buck” Shrewsbury
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William “Buck” Shrewsbury
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Chief Executive Officer
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Dated: February 10, 2011
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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/s/ William “Buck” Shrewsbury
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Chairman of the Board of Directors and | ||||
| William “Buck” Shrewsbury | Chief Executive Officer | ||||
| February 10, 2011 | |||||
| /s/ Richard (Rick) Novack | President and Director | ||||
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Richard (Rick) Novack
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| February 10, 2011 | |||||
| /s/ Jose Fuentes | Chief Financial Officer | ||||
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Jose Fuentes
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| February 10, 2011 | |||||
| /s/ Bobby S. Fellers | Director | ||||
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Bobby S. Fellers
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| February 10, 2011 | |||||
| /s/ Martin Lipper | Director | ||||
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Martin Lipper
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| February 10, 2011 |
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