UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended September 30, 2018 OR
	For the fiscal year ended September 30, 2019
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________
Commission File No. 000-32335
TX HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter)

Georgia (State or Other Jurisdiction of Incorporation or Organization)	58-2558702 (I.R.S. Employer Identification No.)
12080 Virginia Blvd., Ashland, KY 41102 (Address of Principal Executive Offices and Zip Code)	(606) 928-1131 (Registrant’s Telephone Number, Including Area Code)

Commission File No. 000-32335

TX HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Georgia

(State or Other Jurisdiction of Incorporation or

Organization)

58-2558702

(I.R.S. Employer Identification No.)

12080 Virginia Blvd., Ashland, KY 41102

(Address of Principal Executive Offices and Zip Code)

(606) 929-5655

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act: None

Securities registered pursuant to Section 12(g) of the Securities Exchange Act: Common Stock, no par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act. Yes ☐ No ☒

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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Emerging growth company ☐ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐☒ Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The aggregate market value of the voting common equity held by non-affiliates based upon the average bid and asked prices for the Common Stock on March 31, ~~2018~~2019, the last business day of the registrant’s most recently completed second fiscal quarter as reported on the OTC Markets Group, Inc.’s OTCPINK was approximately $~~684~~207,~~828~~391.

As of December 199, ~~2018~~2019, the number of shares of the registrant’s common stock outstanding was 48,053,084.

DOCUMENTS INCORPORATED BY REFERENCE

None

FORWARD-LOOKING STATEMENTS

This report contains “forward looking statements,” that is statements regarding future, not past, events. Forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast" or "target." All statements that are not statements of historical fact are “forward looking statements.”

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

● cyclical economic conditions affecting the coal mining industry and competitive pressures and changes affecting the coal mining industry, including demand for coal; ● general economic conditions, including those affecting the domestic and global coal mining industry generally; ● changes in environmental laws and regulations promulgated by the Environmental Protection Agency and similar state agencies or their interpretation and enforcement as they affect the mining industry and, in particular, the coal mining industry; ● our ability to generate cash from operations, obtain funding on favorable terms and manage our liquidity needs; ● challenges arising from acquisitions or our development and marketing of new products; ● information concerning possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings, earnings growth, revenue and revenue growth; ● statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues; ● statements about expected future sales trends for our products; ● statements about our future capital requirements and the sufficiency of our cash, cash equivalents, and available bank borrowings to meet these requirements; ● other statements about our plans, objectives, expectations and intentions; and ● factors that are described in the Risk Factor section of this Annual Report on Form 10-K for the year ended September 30, 2019.

● general economic conditions, including those affecting the domestic and global coal mining industry generally;

● changes in environmental laws and regulations promulgated by the Environmental Protection Agency and similar state agencies or their interpretation and enforcement as they affect the mining industry and, in particular, the coal mining industry;

● our ability to generate cash from operations, obtain funding on favorable terms and manage our liquidity needs;

● challenges arising from acquisitions or our development and marketing of new products;

● information concerning possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings, earnings growth, revenue and revenue growth;

● statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues;

● statements about expected future sales trends for our products;

● statements about our future capital requirements and the sufficiency of our cash, cash equivalents, and available bank borrowings to meet these requirements;

● other statements about our plans, objectives, expectations and intentions; and

● factors that are described in the Risk Factor section of this Annual Report on Form 10-K for the year ended September 30, 2018.

These and other uncertainties may cause our actual results to be materially different from those expressed in our forward-looking statements. You should not unduly rely on these forward-looking statements which speak only as of the date of this report. We do not ordinarily make projections of our future operating results and do not undertake to publicly revise any forward-looking statement to reflect circumstances or events after the date of this report, or to reflect the occurrence of unanticipated events.

Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 expressly state that the safe harbor for forwarding looking statements does not apply to companies that issue “penny stocks.” Because we may from time to time be considered an issuer of penny stock, the safe harbor for forward looking statements under such statutory provisions may not be applicable to us at certain times.

We obtained certain statistical data, market data and other industry data and forecasts used in this Form 10-K from publicly available information. While we believe that such data is reliable, we have not independently verified the data, and we do not make any representation as to the accuracy of the information.

FORM 10-K

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, ~~2018~~2019

TABLE OF CONTENTS

Forward-Looking Statements

PART I
Item 1.	Business	4	4
Item 1A.	Risk Factors	8	8
Item 1B.	Unresolved Staff Comments	14	14
Item 2.	Properties	15	15
Item 3.	Legal Proceedings	15	15
Item 4.	Mine Safety Disclosures	15	15
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15	15
Item 6.	Selected Financial Data	16	16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	16
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	24	24
Item 8.	Financial Statements and Supplementary Data	24	24
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	43	44
Item 9A.	Controls and Procedures	43	44
Item 9B.	Other Information	44	45
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	44	45
Item 11.	Executive Compensation	46	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47	48
Item 13.	Certain Relationships and Related Transactions, and Director Independence	47	49
Item 14.	Principal Accountant Fees and Services	50	52
PART IV
Item 15.	Exhibits and Financial Statement Schedules	52	53
Item 16.	Form 10-K ~~Summary~~	53	54
SIGNATURES		54	55

PART I

ITEM 1. BUSINESS

Introduction

TX Holdings, Inc., a Georgia corporation ("TX Holdings," the "Company," “we,” “our,” or “us”), is a supplier and distributor of drill bits, related tools and other mining supplies and rail products directly and through other suppliers to United States’ coal mining companies and operators for use in their extraction and transportation processes.

Our products are supplied to us by certain manufacturers and suppliers and warehoused and distributed from the Company’s principal business location in Ashland, Kentucky.

We were incorporated in the State of Georgia on May 15, 2000.

Our web site address is www.txholdings.com. Information contained on our web site is not part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (“SEC”).

Recent Financing Activities

Since November 2011, Mr. Shrewsbury, our CEO, has provided financing to us that, in addition to a bank term loan, we have relied upon to fund and expand our business operations. On February 25, 2014, Mr. Shrewsbury agreed to consolidate and restructure this indebtedness and we issued in exchange for such indebtedness a Consolidated Secured Promissory Note (the “Consolidated Note”) in the principal amount of $2,000,000. The Consolidated Note bears interest at the rate of 5% per annum or prime rate if higher than 5% per annum is repayable in full ten years from the date of issuance and is subject to certain events of default. Payment of the Consolidated Note is secured by the death benefit proceeds of a $2 million key man term life insurance policy purchased by the Company on the life of Mr. Shrewsbury which has been assigned to Mr. Shrewsbury. In addition, in consideration of Mr. Shrewsbury agreeing to consolidate the indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of common stock pursuant to the terms of a Non-Qualified Stock Option Agreement, issued February 25, 2014. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation, merger, or sale of all or substantially all of the assets. The options were exercisable for a period of three years commencing April 1, 2014 and expired on March 31, 2017.

As of September 30, ~~2018~~2019, Mr. Shrewsbury had advanced to the Company an additional $92181,487 which is not interest bearing and is repayable upon demand.

During fiscal 2015 and through December 3, 2015, we maintained a $750,000 line of credit with a bank. On December 3, 2015, we refinanced the line of credit with a new term loan from the bank in the amount of $711,376 and utilized the proceeds of the new loan to repay the line of credit. The new loan is for a term of five years and matures on December 3, 2020. During the term of the loan, we have agreed to make equal monthly repayments of principal and interest of $6,967 commencing January 3, 2016 and make a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due, estimated to be approximately $391, 896. Interest under the new loan is variable and is based upon the Wall Street Journal Prime rate, currently 5.00% per annum. In the event of a default, interest under the loan may be increased by 2%. The line of credit is secured by a priority security interest in our inventory and accounts receivable and is guaranteed by our CEO.

The Consolidated Note and advances due to Mr. Shrewsbury are subordinate to the Company’s bank indebtedness.

Our Business

Background

Mining and Rail Supplies

We supply and distribute rail products including rail, switches, ties and related products, and drill bits, augurs, related tools and mining supplies to U.S. coal mine operators and distributors primarily located in Ohio, Pennsylvania, Kentucky and West Virginia.

Although, the Company has experienced an increase in sales starting in the second fiscal quarter of 2017 as compared to the two prior years, when the U.S. Coal industry was facing declining U.S. coal production and bankruptcies and restructurings among certain U.S. coal companies, the demand for, and production of, coal continue to be adversely affected by several factors, including increased environmental regulation in the U.S., declining coal consumption in the electric power sector, increased competition from natural gas, and a strong U.S. dollar.

The U.S. Energy Information Administration (EIA) forecasted in its Short-Term Energy Outlook (STEO) released October 108, ~~2018~~2019, that U. S. coal production will decline by 210% to ~~756MMst~~679MMst in ~~2018~~2019, ~~despite~~which would be a ~~12%~~76MMst ~~(11MMst)~~decline ~~increase~~from inthe ~~coal~~2018 ~~export~~level. ~~The~~Declining ~~production~~coal ~~decrease~~demand isand ~~largely~~related ~~attributable~~bankruptcies, toownership achanges, ~~forecast~~and ~~decline~~sudden ofclosures 4%have ~~(26MMst)~~contributed into ~~domestic~~a ~~coal~~fluctuating ~~consumption~~production ~~in 2018~~environment. The EIA also expects coal production to decline further by 211% ~~(13MMst)~~ in ~~2019~~2020 ~~because~~to ~~it forecasts that coal exports and coal consumption will decrease by 7% and 5%, respectively~~603MMst.

~~EIA~~Coal ~~expects~~consumption in the ~~share~~United ofStates Udecreased for the fifth consecutive year in 2018, reaching 13.S.2 ~~total~~quads, ~~utility-scale~~the ~~electricity~~lowest ~~generation~~level ~~from~~since ~~natural~~1975 ~~gas~~and toabout ~~rise~~half ~~from~~of ~~32%~~its peak in ~~2017~~2005. toIn ~~35%~~1950, nearly half of the U.S. coal consumption was in ~~both~~the ~~2018~~industrial ~~and~~sector ~~2019~~(47%), and, the ~~forecast~~transportation ~~for~~sector ~~electricity~~also ~~generation~~consumed a significant share ~~from~~(13%). However, since the 1960s nearly all U.S. coal ~~averages~~has ~~28%~~been inused ~~2018~~to ~~and~~generate ~~27%~~electricity. inIn ~~2019~~2018, ~~down~~the ~~from~~electric 30power sector accounted for 91% inof ~~2017~~U.S. coal consumption.

~~Electricity~~The ~~generators~~United ~~that~~States ~~use~~is ~~fossil~~a ~~fuels~~net ~~continue~~exporter toof becoal. ~~the~~The ~~most~~U.S ~~common~~coal ~~sources~~exports reached a high of ~~electricity~~126MMst ~~generation~~equal into ~~most~~12% ~~states~~of U.S. Incoal ~~all~~production ~~but~~in 152012. ~~states,~~U.S. coal, ~~natural~~export ~~gas,~~decline oreach ~~petroleum~~year ~~liquids~~from ~~were~~2012 ~~the~~through ~~most-used~~2016 ~~electricity~~and ~~generation~~then ~~fuel~~increased in 2017. ~~Since~~and ~~2007~~2018, the ~~number~~United ofStates ~~states~~exported ~~where~~about ~~coal~~116 ~~was~~MMst ~~the~~of ~~most~~coal ~~prevalent~~which ~~electricity~~equal ~~generation~~about ~~fuel~~15% ~~has~~of ~~fallen~~U.S. ascoal ~~natural~~production. ~~gas,~~The ~~nuclear~~coal oris ~~hydroelectricity~~exported ~~have~~to ~~gained~~at ~~market~~least ~~share.~~52 Incountries ~~2017~~with ~~coal provided~~ the ~~largest~~top ~~generation~~five ~~share~~destination ingoing 18to ~~states~~India, ~~down~~The ~~from~~Netherlands, 28Japan, ~~states~~South inKorea ~~2007~~ and ~~natural gas had the largest share in 16 states up from 11 in 2007~~Brazil.

~~Coal~~EIA ~~production~~expects ~~for~~U.S. ~~the~~CO2 ~~first~~emissions ~~six~~in ~~months~~2019 ofto ~~2018~~decline ~~was~~because ~~368~~the ~~MMst,~~share 16of ~~MMst~~electricity ~~(4%)~~generated ~~lower~~from ~~than~~natural ingas ~~the~~and ~~same~~renewables ~~period~~will inincrease ~~2017.~~while ~~Coal~~the ~~production~~share isgenerated ~~expected~~from tocoal, ~~decrease~~which byis 2%more incarbon-intensive ~~2018~~energy ~~and~~source, bywill ~~2% in 2019~~decrease.

Coal exports for the first six months of 2018 totaled 58 MMst, compared to 44MMst in 2017 or 62% higher than the prior year. EIA expects growth in coal exports for all 2018 forecast at 108 MMst, representing a 12% increase over 2017.

Continued distress in the U.S. coal mining industry will materially affect the demand for our products.

Principal Products

Drilling Products

We distribute and sell drill steel mining products for use in the coal mining industry, including:

● drill ~~steel~~bit products and accessories, used for ~~drilling~~hard ~~holes~~and ~~for~~soft ~~bolts~~rock ~~supporting~~mining ~~mine ceilings~~operations; ● tungsten carbide drill bits and augurs, and ● related accessories and tools.

● drill bit products and accessories, used for hard and soft rock mining operations;

● tungsten carbide drill bits and augurs, and

● related accessories and tools.

Rail Products

We distribute and sell drill steel mining products used by the coal industry in its extraction process, including:

● tee rails, used for railroad tracks for the transportation of coal by coal mine operators; ● steel ties for securing rail; ● switches, and ● related accessories and tools.

● steel ties for securing rail;

● switches, and

● related accessories and tools.

Cyclicality

Changes in economic conditions affecting the global and domestic mining industry can occur abruptly and unpredictably, which may have significant effects on our sales. Cyclicality is driven, primarily, by price volatility of coal, as well as product life cycles, competitive pressures and other economic factors affecting the mining industry, such as company consolidations and mergers, bankruptcies, increased regulation of the coal mining or electrical utility industry, and competition affecting demand for coal, and the broader economy, including changes in government monetary or fiscal policies and from market expectations with respect to such policies. Falling prices for coal have in the past, and may in the future, lead to reduced production levels of existing mines, a contraction in the number of existing mines and the closure of less efficient mines, and are likely to lead to a decrease in demand for our mining supplies and rail products. Conversely, rising coal prices typically lead to the expansion of existing mines, opening of new mines or re-opening of less efficient mines. Increased mining activity typically leads to an increase in demand for our mining supplies and rail products.

Seasonality

Our business is subject to moderate seasonality, with the first quarter of our fiscal year (October to December), generally experiencing lower sales than the last three quarters of our fiscal year.

Manufacturers and Suppliers

Our drill steel mining products, drill bits, and related products are manufactured and supplied to us by several manufacturers located overseas. Our rail products are supplied to us by several suppliers located overseas and, in the U.S.

Management does not believe that the loss of any of such manufacturers or suppliers would adversely affect the Company’s business and believes that alternative manufacturers and suppliers would be readily available to us.

Distribution and Sales

We sell our mining supplies and rail products primarily through ~~one~~two independent sales agent and, to a limited extent, directly to our customers. Our sales ~~agent~~agents isare an independent ~~contractor~~contractors and isare compensated on a commission basis. Our sales ~~agent~~agents sell our mining supplies to resellers as well as directly to coal mine operators.

Our products are delivered to us ~~and~~at ~~warehoused~~our warehouse in ~~our~~ Ashland, Kentucky ~~warehouse facility~~, from where they are shipped to our customers primarily by road. Shipping costs are normally paid for by the purchaser.

Customers

We distribute and sell our mining supplies and rail products principally to certain coal mining companies located in Ohio, Pennsylvania, Kentucky and West Virginia and certain distributors. Our customers include both large and small mining companies and operators. During the year ended September 30, ~~2018~~2019, one customer accounted for approximately 3530% of our revenues (1535% in ~~2017~~2018), and accounted for 45less than 1% of our accounts receivable (45% in 2018) as of the year end, one customer accounted for approximately 1124% of our revenues (711% in ~~2017~~2018), one customer accounted for approximately 96% of our revenues (46% in ~~2017~~2018) and, one customer accounted for approximately 95% of our revenues (~~30%~~ ~~in 2017), three customers accounted for approximately 6% each of our revenues (1%,1% ,and~~ 2% ~~respectively,~~ in ~~2017~~2018) ~~and~~All ~~accounted~~remaining ~~for~~customers aaccount ~~cumulative~~for 7%less ofthan ~~our accounts receivable as of the year end (3~~5% as of ~~the year ended September 30, 2017), and one customer accounted for 9% of~~ our ~~accounts receivable as of the year end~~revenue. The loss of any one or more of our major customers or if our inability to collect on outstanding accounts receivable from one or more of these customers could have a material adverse effect on our business and financial condition. We continue to seek to increase our customer base and reduce our reliance on a limited number of customers.

Competitive Business Conditions

We compete with large and small manufacturers and suppliers of drill bits and other cutting tools and related products to the U.S. coal mining industry. We compete with several manufacturers and distributors of mine rail and related products. Many of our competitors are large manufacturers or distributors or divisions of large companies, however, our industry remains relatively fragmented with several hundred fabricators and toolmakers. Many of these competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition, and more established relationships in the industry than we have. We believe we compete on the basis of the reliability, quality and performance of our products, competitive pricing, prompt delivery and good customer service and support.

Patents and Proprietary Rights

In connection with our mining and rail supplies business, we rely on a combination of common law trademark, service mark, copyright and trade secret law to establish and protect our proprietary rights and promote our reputation and the growth of our business. We do not own any patents with regard to our rail or mining products that would prevent or inhibit our competitors from using our products or entering our market, although we may seek such protection in the future.

We do not require our employees, consultants and independent contractors to enter into agreements containing non-disclosure, non-competition and non-solicitation restrictions and covenants, accordingly, we rely only upon common law protections to prevent misappropriation of our proprietary rights or to deter independent third-party development of products similar to the products we distribute and sell.

Governmental Regulation

We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulation of the distribution of mining supplies and rail products. We are subject to the laws and regulations of those jurisdictions in which we sell our products, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our business is not subject to special regulatory and/or supervisory requirements. We do not believe our current business is subject to any environmental or similar laws. However, we may become subject to product liability claims related to the products we distribute and sell.

In connection with our prior oil and gas business operations, we were subject to various federal, state and local laws and regulations governing the protection of the environment. In particular, our exploration, development and production operations, our activities in connection with storage and transportation of oil and other hydrocarbons and our use of facilities for treating, processing or otherwise handling hydrocarbons and related wastes may be subject to regulation under these and similar state legislation.

If it is subsequently determined that we failed to comply with these laws and regulations we may be subject to the assessment of administrative, civil and criminal fines, penalties or other liability, or the imposition of injunctive relief that could have a material adverse impact on us and our financial condition.

Insurance

We maintain general liability insurance and auto coverage liability insurance in the amount of $1,000,000 to cover certain liabilities associated with the distribution of our mining supplies and rail products.

We purchased a $2 million key man term life insurance policy on the life of our CEO (William Shrewsbury) that has been assigned to Mr. Shrewsbury as security for a loan he has made to us. In addition, we purchased a $500,000 key man term life insurance policy on the life of our CFO (Jose Fuentes) that has been assigned to Mr. Fuentes to cover prior years’ accrued but unpaid compensation.

Research and Development Expenditure

No research and development cost ~~was~~were incurred in ~~2018~~2019 or ~~2017~~2018.

Employees

As of September 30, ~~2018~~2019, we employed four full-time employees ~~and one part-time employees~~. None of our employees are a party to a collective bargaining agreement and we believe our relationship with our employees is good. Also, we employ certain consultants and independent contractors on a regular basis to assist in the marketing and sale of our products. Our sales agents are compensated on a commission basis.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are filed with the “SEC”. We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with or to the SEC. Such reports and other information filed by us with the SEC are available free of charge via our website at www.txholdings.com when such reports are available on the SEC’s website. The public may read and copy any materials filed by us with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this report. Further, references to the URLs for these websites are intended to be inactive textual references only.

Principal Executive Offices

Our principal executive offices are located at 12080 Virginia Blvd, Ashland, Kentucky 41102. Our principal telephone number at such location is (606) ~~928~~929-~~1131~~5655.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and other information contained in this filing before deciding to invest in our common stock. The risks described below are not the only ones facing our company. Additional risks not presently known to us or which we currently consider immaterial may also adversely affect our company. If any of the following risks actually occur, our business, financial condition and operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and you could lose a part of your investment.

Risks Related to Our Operations

We have a limited operating history in our current business and our success is subject to substantial risks inherent in the establishment of a new business. We can give no assurance we will be profitable in the future.

We are in the business of distributing and selling mining supplies and rail products to U.S. coal mining companies and operators and were a development stage company until March 31, 2012. We have encountered unforeseen costs, expenses, problems, difficulties and delays frequently associated with new ventures, and these costs, expenses, problems, difficulties and delays may continue. We have incurred losses for fiscal 2018 and 2017, and there is no assurance we will be successful in the future. We anticipate our operating expenses will increase if and as our business expands or if we pursue additional business opportunities we will need to generate revenues sufficient to meet all of our expenses to achieve profitability and obtain additional financing to fund such expenses. However, such financing may not be available to us or may be available upon terms that are not acceptable to us.

WeThere ~~incurred~~is ano ~~net~~assurance ~~loss~~we inwill ~~fiscal~~be ~~years~~successful ~~2018~~in ~~and~~the ~~2017~~future. ~~and~~We aanticipate ~~net~~our ~~income~~operating ~~for~~expenses ~~2013~~will ~~and~~increase ~~2014~~if ~~fiscal~~and ~~years.~~as ~~Prior~~our tobusiness ~~fiscal~~expands ~~2013,~~or if we ~~had~~pursue aadditional ~~history~~business ofopportunities, ~~net~~We ~~losses.~~will Weneed ~~can~~to ~~provide~~generate norevenues ~~assurance~~sufficient weto ~~will~~meet beall ~~profitable~~of inour ~~the~~expenses ~~future.~~to Ifachieve weprofitability ~~fail~~and obtain additional financing to ~~achieve~~fund ~~profitability~~such expenses. However, wesuch financing may ~~need~~not be available to ~~reduce~~us or ~~eventually~~may ~~cease~~be ~~our~~available ~~operations~~upon terms that are not acceptable to us.

We ~~had~~incurred ~~net~~a ~~losses~~small ofprofit ~~$55,200~~ in ~~2018~~2019 and ~~$124,506~~a innet ~~2017.~~loss Atin ~~September~~fiscal ~~30,~~years 2018 and 2017, weand ~~had~~a ~~accumulated~~net ~~deficits~~income offor ~~$15,611,136~~2013 and ~~$15,555,936,~~2014 ~~respectively~~fiscal years. ~~Based~~Prior onto ~~current~~fiscal ~~expectations~~2013, we ~~may~~had ~~need~~a tohistory ~~obtain~~of ~~additional~~net ~~financing~~losses. toWe ~~expand~~can ~~our~~provide ~~mining~~no ~~and~~assurance ~~mining~~we ~~rail~~will ~~supplies~~be ~~distribution~~profitable ~~business~~in the future. ~~Also,~~If we ~~require~~fail ~~additional financing~~ to ~~fund~~achieve ~~ongoing~~profitability, ~~operations~~we ifmay ~~our~~need ~~current~~to ~~sales~~reduce ~~and~~or ~~revenue~~eventually ~~growth~~cease ~~are insufficient to meet~~ our ~~operating costs~~operations.

We had a $42,444 profit in 2019 and a loss of $55,200 in 2018. At September 30, 2019 and 2018, we had accumulated deficits of $15,568,692 and $15,611,136, respectively. Based on current expectations, we may need to obtain additional financing to expand our mining and rail supplies distribution business. Also, we require additional financing to fund ongoing operations if our current sales and revenue growth are insufficient to meet our operating costs.

In the past we have been able to raise financing from our chief executive officer through notes and advances and from a bank term loan that our chief executive officer guaranteed. Our inability to obtain necessary capital or financing to fund these needs will adversely affect our ability to fund operations and continue as a going concern. Additional financing may not be available when needed or may not be available on terms acceptable to us. If adequate funds are not available, we may be required to delay, scale back or eliminate one or more of our strategies, which may affect our overall business results of operations and financial condition. Also, under our new loan agreement with a bank, we may not incur additional indebtedness without the bank’s consent.

We are dependent on financing provided or guaranteed by our CEO to fund our business and ongoing operations. We have incurred substantial debt which could affect our ability to obtain additional financing and may increase our vulnerability to business downturns. We may be unable to repay advances due to our CEO if he demands repayment of the outstanding advances.

As of September 30, ~~2018~~2019, we have incurred debt due to Mr. Shrewsbury, our CEO, in the form of a note and advances in the aggregate amount of $2,~~092~~181,487 of which $2,000,000 is covered by a note due in February 24, 2024, and advances, which are due on demand, of $92181,487. We have outstanding accounts payable of $~~529~~320,~~853~~985 and other accrued liabilities of $~~500~~888,~~636~~905, which includes $~~459~~559,726 accrued interest on the note due to our CEO. Also, as of September 30, ~~2018~~2019, we owed $~~549~~494,~~050~~370 on a bank term loan. Under the term loan, we are required to make equal monthly repayments of principal and interest of $6, 967 commencing January 3, 2016 and to make a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due, estimated to be approximately $~~391~~425, ~~896~~359. The term loan is secured by our inventory and accounts receivable and guaranteed by our CEO. Also, under the term loan, without the consent of the bank, we are not permitted to incur any indebtedness other than trade debt incurred in the ordinary course. We are subject to the risks associated with substantial indebtedness, including insufficient funds to repay the outstanding loans when they become due and advances if our chief executive officer demands their repayment.

There may be some doubts about our ability to continue as a going concern and, if we are unable to continue our business, our shares may have little or no value.

Our independent registered public accounting firm’s report on our financial statements included in our annual report on Form 10-K for the years ended September 30, ~~2018~~2019 and ~~2017~~2018, contains an explanatory paragraph wherein they expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that might occur if we are unable to continue in business as a going concern. Accordingly, careful consideration of such opinions should be given in determining whether to continue or become our stockholder.

We depend on a small number of customers for a substantial portion of our revenues. The loss of one or more of these customers, or our inability to collect outstanding receivables from such customers could have a material adverse effect on our financial results.

Our customers include both large and small mining companies and operators. During the year ended September 30, ~~2018~~2019, one customer accounted for approximately 3530% of our revenues (1530% in ~~2017~~2018), and accounted for 45less than 1% of our accounts receivable (45% in 2018) as of the year end, one customer accounted for approximately 1124% of our revenues (711% in ~~2017~~2018), one customer accounted for approximately 96% of our revenues (46% in ~~2017~~2018) and, one customer accounted for approximately 95% of our revenues (~~30%~~ ~~in 2017), three customers accounted for approximately 6% each of our revenues (1%,1% ,and~~ 2% ~~respectively,~~ in ~~2017~~2018) ~~and~~All ~~accounted~~remaining ~~for~~customers aaccount ~~cumulative~~for 7%less ofthan ~~our accounts receivable as of the year end (3~~5% as of ~~the year ended September 30, 2017), and one customer accounted for 9% of~~ our ~~accounts receivable as of the year end~~revenue. The loss of any one or more of our major customers or if our inability to collect on outstanding accounts receivable from one or more of these customers could have a material adverse effect on our business and financial condition. We continue to seek to increase our customer base and reduce our reliance on a limited number of customers. Although we are seeking to diversify our customer base and reduce our reliance upon sales to a small number of large mine operators, we expect sales to such customers to continue to constitute a significant portion of our revenues in the near term.

Exchange rate fluctuations and import tariffs could cause a decline in our financial condition and results of operations.

We import most of our mining supplies products from overseas. Fluctuations in exchange rates on foreign currencies and import domestic tariffs could adversely affect our results in the event that our imported products sales prices cannot be increased to offset a potential exchange fluctuation or imposed tariffs negative impact. From time to time, as and when we determine it is appropriate and advisable to do so, we will seek to mitigate the effect of exchange rate fluctuations through the use of derivative financial instruments. We cannot assure that we will continue this practice or be successful in these efforts.

WeOur ~~are implementing a~~ growth strategy which, if successful, will place significant demands on us and subject us to numerous risks.

Growing businesses often have difficulty managing their growth. If our growth strategy is successful, significant demands will be placed on our management, accounting, financial, information and other systems and on our business. We will have to expand our management and recruit and employ experienced executives and key employees capable of providing the necessary support. In addition, to manage our anticipated growth we will need to continue to improve our financial, accounting, information and other systems in order to effectively manage our growth and, in doing so, could incur substantial additional expenses that could harm our financial results. We cannot assure you that our management will be able to manage our growth effectively or successfully, or that our financial, accounting, information or other systems will be able to successfully accommodate our external and internal growth. Our failure to meet these challenges could materially impair our business.

We may undertake acquisitions which pose risks to our business.

As part of our growth strategy, we have and may in the future acquire or enter into joint venture arrangements with, form strategic alliances with, invest in, or acquire complementary businesses. Any such acquisition, investment, strategic alliance or related effort will be accompanied by the risks commonly encountered in such transactions. These risks may include:

● Difficulty of identifying appropriate acquisition candidates; ● Paying more than the acquired company is worth; ● Difficulty in assimilating the operations of the new business; ● Costs associated with the development and integration of the operations of the new entity; ● Existing business may be disrupted; ● Entering markets in which we have little or no experience; ● Accounting for acquisitions could require us to amortize substantial intangible assets (goodwill), adversely affecting our results of operations; ● Inability to retain the management and key personnel of the acquired business; ● Inability to maintain uniform standards, controls, policies and procedures; or ● Customer attrition with respect to customers acquired through the acquisition.

● Paying more than the acquired company is worth;

● Difficulty in assimilating the operations of the new business;

● Costs associated with the development and integration of the operations of the new entity;

● Existing business may be disrupted;

● Entering markets in which we have little or no experience;

● Accounting for acquisitions could require us to amortize substantial intangible assets (goodwill), adversely affecting our results of operations;

● Inability to retain the management and key personnel of the acquired business;

● Inability to maintain uniform standards, controls, policies and procedures; or

● Customer attrition with respect to customers acquired through the acquisition.

We cannot assure you that we would successfully overcome these risks or any other problems associated with any acquisition, investment, strategic alliances, or related efforts. Also, if we use our common stock in connection with an acquisition, your percentage ownership in us will be reduced and you may experience additional dilution.

Our business may be impacted by political events, war, terrorism, public health issues, natural disasters and other circumstances that are not within our control.

War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on us, our suppliers, and manufacturing vendors. Our business operations are subject to interruption by natural disasters, fire, power shortages, nuclear power plant accidents, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond our control. Such events could decrease demand for our products, make it difficult or impossible for us to make and deliver products to our customers, or to receive products from our manufacturers and suppliers, and create delays and inefficiencies in our supply chain. If major public health issues, including pandemics, arise, we could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products, and disruptions in the operations of our manufacturing vendors and suppliers. In the event of a natural disaster, we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume operations.

Increased IT security threats and sophisticated computer crime pose a risk to our systems, networks, products and services.

We rely on information technology ("IT") systems and networks in connection with our business activities, and we collect and store sensitive data. IT security threats and sophisticated computer crime, including advanced persistent threats such as attempts to gain unauthorized access to our systems, are increasing in sophistication and frequency. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. As we grow, we may experience attempts from hackers and other third parties to gain unauthorized access to our IT systems and networks. Any such attacks could have a material adverse effect on our financial condition, results of operations or liquidity. While we actively manage IT risks within our control, we can provide no assurance that our actions will be successful in eliminating or mitigating risks to our systems, networks and data. A failure of or breach in IT security could expose us and our customers and suppliers to risks of misuse of information or systems, the compromise of confidential information, manipulation and destruction of data and operations disruptions. Any of these events in turn could adversely affect our reputation, competitive position, business and results of operations. In addition, such breaches in security could result in litigation, regulatory action and potential liability, as well as the costs and operational consequences of implementing further data protection measures.

Risks Related to Our Company

Investor confidence in the price of our stock may be adversely affected if we are unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002.

As an SEC registrant, we are subject to the rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, which require us to include in our annual report on Form 10-K our management’s report on, and assessment of the effectiveness of, our internal control over financial reporting (“management’s report”). If we fail to achieve and maintain the adequacy of our internal control over financial reporting, there is a risk that we will not comply with all of the requirements imposed by Section 404. Moreover, effective internal control over financial reporting, particularly that relating to revenue recognition, is necessary for us to produce reliable financial reports and is important in helping to prevent financial fraud. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss in investor confidence in the reliability of our financial statements, which ultimately could harm our business and could negatively impact the market price of our common stock. Investor confidence and the price of our common stock may be adversely affected if we are unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002.

In order to comply with public reporting requirements, we must continue to strengthen our financial systems and controls, and failure to do so could adversely affect our ability to provide timely and accurate financial statements.

Refinement of our internal controls and procedures will be required as we manage future growth successfully and operate effectively as a public company. Such refinement of our internal controls, as well as compliance with the Sarbanes-Oxley Act of 2002 and related requirements, will be costly and will place a significant burden on management. We cannot assure you that measures already taken, or any future measures, will enable us to provide accurate and timely financial reports, particularly if we are unable to hire additional personnel in our accounting and financial department, or if we lose personnel in this area. Any failure to improve our internal controls or other problems with our financial systems or internal controls could result in delays or inaccuracies in reporting financial information, or non-compliance with SEC reporting and other regulatory requirements, any of which could adversely affect our business and stock price.

Certain provisions of our charter and bylaws may discourage mergers and other transactions.

Certain provisions of our certificate of incorporation and bylaws may make it more difficult for someone to acquire control of us. These provisions may make it more difficult for stockholders to take certain corporate actions and could delay or prevent someone from acquiring our business. These provisions could limit the price that certain investors might be willing to pay for shares of our common stock. The ability to issue “blank check” preferred stock is a traditional anti-takeover measure. This provision may be beneficial to our management and the board of directors in a hostile tender offer, and may have an adverse impact on stockholders who may want to participate in such tender offer, or who may want to replace some or all of the members of the board of directors.

Our board of directors may issue additional shares of preferred stock without stockholder approval.

Our certificate of incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock. Accordingly, our board of directors may, without shareholder approval, issue one or more new series of preferred stock with rights which could adversely affect the voting power or other rights of the holders of outstanding shares of common stock. In addition, the issuance of shares of preferred stock may have the effect of rendering more difficult or discouraging, an acquisition or change of control of TX Holdings. Although we do not have any current plans to issue any shares of preferred stock, we may do so in the future.

We depend on key personnel and an independent sales agent.

Our success depends on the contributions of our key management personnel, including Mr. William “Buck” Shrewsbury, Chairman and Chief Executive Officer, and Mr. Jose Fuentes, our Chief Financial Officer. If we lose the services of any of such personnel we could be delayed in or precluded from achieving our business objectives.

In addition, the loss of our independent sales ~~agent~~agents could temporarily jeopardize our relations with our customers. Our ~~agreements~~agreement with such sales ~~agent~~agents is terminable upon 30 days’ notice. Any loss of a sales ~~agent~~agents would jeopardize the stability of our infrastructure and our ability to provide the service levels our customers expect.

The loss of any of our key officers or our sales ~~agent~~agents could impair our ability to successfully execute our business strategy.

We may need to attract and retain additional skilled personnel to develop our business and attract customers.

In the future, we may need to attract, train, motivate and retain additional highly skilled managerial and sales personnel. Competition for such personnel with appropriate qualifications and skills is intense. Locating candidates with the appropriate qualifications, particularly in the desired geographic location, can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy, or we may need to provide higher compensation to such personnel than we currently anticipate. If we fail to attract and retain sufficient numbers of qualified employees or sales agents, our ability to provide the necessary products may be limited and, as a result, we may be unable to attract customers and grow our business.

There is a limited market for our shares.

Our shares of common stock are quoted on the OTC Markets Group, Inc.’s Pink marketplace. As a result, relatively small trades in our stock could have disproportionate effect on our stock price. In addition, many institutional investors, which account for significant trading activity, are restricted from investing in stocks that trade below specified prices, have less than specified market capitalizations, or have less than specified trading volume. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A limited trading volume may limit the ability of our shareholders to resell their shares at times and in such amounts as they may desire. No assurance can be given that an active market will develop for our common stock or, if it develops, that it will continue.

We have never declared or paid cash dividends on our common stock.

We have never declared or paid a cash dividend on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions or covenants in our bank indebtedness, capital requirements, business prospects and other factors that our board of directors considers relevant. Accordingly, investors will only see a return on their investment if the value of our securities appreciates.

Our directors and named executive officers own a substantial percentage of our common stock.

As of September 30, ~~2018~~2019, our directors and executive officers beneficially owned approximately 2428.1407% of our shares of common stock. Our directors and executive officers are entitled to cast an aggregate of approximately 1113,~~599~~487,~~317~~980 votes on matters submitted to our stockholders for a vote or approximately 2428.1407% of the total number of votes entitled to be cast at a meeting of our stockholders. These stockholders, if they acted together, could exert substantial control over matters requiring approval by our stockholders. These matters would include the election of directors and the approval of mergers or other business combination transactions. This concentration of ownership may discourage or prevent someone from acquiring our business.

Future sales of our common stock by our existing stockholders may cause our stock price to fall.

The market price of our common stock could decline as a result of sales by our existing stockholders of shares of common stock in the market or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate and thus inhibit our ability to raise additional capital when it is needed.

Our common stock is subject to the SEC’s penny stock regulations.

Our common stock is subject to the SEC’s “penny stock” rules. These regulations define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, these rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to the broker-dealer and the sales person, current quotations for the securities, information on the limited market in penny stocks and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. In addition, the broker-dealer must obtain a written statement from the customer that such disclosure information was provided and must retain such acknowledgment for at least three years. Further, monthly statements must be sent disclosing current price information for the penny stock held in the account. The penny stock rules also require that broker-dealers engaging in a transaction in a penny stock make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the purchase. The foregoing rules may materially and adversely affect the market for, and liquidity of, our common stock, including the ability of broker-dealers to sell our common stock, the ability of holders of our shares to obtain accurate price quotations and may therefore impede the ability of holders of our common stock to sell such securities in the secondary market.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the penny stock rules promulgated by the SEC, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market for our shares.

As an issuer of “penny stock,” the protection provided by federal securities laws related to forward looking statements does not apply to us.

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of “penny stock.” As a result, we may not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

Our stock price is volatile.

The stock market from time to time experiences significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These broad market fluctuations may cause the market price of our common stock to drop. In addition, the market price of our common stock is highly volatile. Factors that may cause the market price of our common stock to drop include:

● fluctuations in our results of operations; ● timing and announcements of new customer orders, new products, or those of our competitors; ● any acquisitions that we make or joint venture arrangements we enter into with third parties; ● changes in stock market analyst recommendations regarding our common stock; ● failure of our results of operations to meet the expectations of stock market analysts and investors; ● increases in the number of outstanding shares of our common stock resulting from sales of new shares, or the exercise of warrants, stock options or convertible securities; ● reluctance of any market maker to make a market in our common stock; ● changes in investors’ perception of the United States’ coal mining industry and related supply businesses; and ● general stock market conditions.

● timing and announcements of new customer orders, new products, or those of our competitors;

● any acquisitions that we make or joint venture arrangements we enter into with third parties;

● changes in stock market analyst recommendations regarding our common stock;

● failure of our results of operations to meet the expectations of stock market analysts and investors;

● increases in the number of outstanding shares of our common stock resulting from sales of new shares, or the exercise of warrants, stock options or convertible securities;

● reluctance of any market maker to make a market in our common stock;

● changes in investors’ perception of the United States’ coal mining industry and related supply businesses; and

● general stock market conditions.

Risks Related to Our Industry

Our business is materially impacted by cyclical economic conditions affecting the U.S. and global mining industry.

Changes in economic conditions affecting the domestic and global mining industry can occur abruptly and unpredictably, which may have significant effects on our sales. Cyclicality is driven, primarily, by price volatility of coal, as well as product life cycles, competitive pressures and other economic factors affecting the U.S. mining industry, such as company consolidations and mergers, bankruptcies, increased regulation of the U.S. coal mining or electrical utility industry, and competition affecting demand for coal, and the broader economy, including changes in government monetary or fiscal policies and from market expectations with respect to such policies. Falling prices for coal have in the past, and may in the future, lead to reduced production levels of existing mines, a contraction in the number of existing mines and the closure of less efficient mines, and are likely to lead to a decrease in demand for our mining supplies and rail products. Conversely, rising coal prices typically lead to the expansion of existing mines, opening of new mines or re-opening of less efficient mines. Increased mining activity typically leads to an increase in demand for our mining supplies and rail products. In addition to declining orders for our products and services, adverse economic conditions for our customers may make it more difficult for us to collect accounts receivable in a timely manner, or at all, which may adversely affect our working capital. As a result of this cyclicality in the global mining industry, we have experienced significant fluctuations in our business, results of operations and financial condition, and we expect our business to continue to be subject to these fluctuations in the future.

We are largely dependent on the continued demand for coal, which is subject to economic and climate related risks

Many of our customers supply coal for the generation of electricity and/or steel production. Demand for steel is affected by the global level of economic activity and economic growth. The pursuit of the most cost effective form of electricity generation continues to take place throughout the world and coal-fired electricity generation faces intense price competition from other fuel sources, particularly natural gas. In addition, coal combustion generates significant greenhouse gas emissions and governmental and private sector goals and mandates to reduce greenhouse gas emissions may increasingly affect the mix of electricity generation sources. Further developments in connection with legislation, regulations, international agreements or other limits on greenhouse gas emissions and other environmental impacts or costs from coal combustion, both in the United States and in other countries, could diminish demand for coal as a fuel for electricity generation. If lower greenhouse gas emitting forms of electricity generation, such as nuclear, solar, natural gas or wind power, become more prevalent or cost effective, or diminished economic activity reduces demand for steel, demand for coal will decline. Reduced demand for coal would result in reduced demand for our products and adversely affect our business, financial condition and results of operations.

Environmental regulations impacting the mining industry may adversely affect demand for our products.

Our customers’ operations are subject to or affected by a wide array of regulations in the U.S., including those directly impacting coal mining activities and those indirectly affecting their businesses, such as applicable environmental laws. In addition, new environmental legislation or administrative regulations relating to coal mining or affecting demand for mined supplies, or more stringent interpretations of existing laws and regulations, may require our customers to significantly change or curtail their operations. The high cost of compliance with environmental regulations may discourage our customers from expanding existing coal mines or developing new mines and may also cause customers to limit or even discontinue their mining operations. As a result of these factors, demand for the mining equipment and rail products we distribute could be adversely affected by environmental regulations directly or indirectly impacting the coal mining industry. Any reduction in demand for our products as a result of environmental regulations is likely to have an adverse effect on our business, financial condition or results of operations.

Demand for our products may be adversely impacted by regulations related to mine safety.

Our principal customers are surface and underground coal mining companies. The coal mining industry has encountered increased scrutiny as it relates to safety regulations, primarily due to recent high profile mining accidents. New legislation or regulations relating to mine safety standards and the increased cost of compliance with such standards may induce customers to discontinue or limit their mining operations and may discourage companies from developing new mines, which in turn could diminish demand for our products.

We may face competition from manufacturers and other distributors of mining supplies and rail products.

The market for our mining supplies is highly fragmented and we face competition from other companies offering products they manufacture or distribute that are competitive with our products. We also face potential competition from other companies that manufacture and sell rail products. Business in general is highly competitive, and we compete with both large manufacturers and smaller companies that manufacture and/or distribute drill bits and related products to the coal industry, in some instances in accordance with customer requirements and specifications. Some of our competitors have more capital, longer operating and market histories, greater manufacturing capabilities, and greater resources than we have, and may offer a broader range of products and at lower prices than we offer.

Liability claims may occur if our products are defective.

Any failure by our engineered metalwork products and tools could expose us to claims for negligence, breach of contract, personal injury, wrongful death, and products liability. Any such claims could be costly to defend and divert management time and resources. In addition, we cannot make assurances that we will have appropriate insurance available to us in the future at commercially reasonable rates to cover such claims. Currently, we maintain general liability insurance in the amount of $1,000,000. Such coverage may not be adequate to cover any claim that may be made against us. Claims brought against us that are not covered by insurance or that result in recoveries in excess of our insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

Our future operating results may be affected by fluctuations in the prices and availability of raw materials.

The raw materials used in the manufacture of our products include ore for our steel products and carbide for our drilling bit products. Our manufacturing vendors are supplied with a significant portion of their raw materials from sources outside the U.S. The raw materials industry as a whole is highly cyclical and at times pricing and supply can be volatile due to a number of factors beyond our control, including natural disasters, general economic and political conditions, labor costs, competition, import duties, tariffs and currency exchange rate fluctuations. This volatility can significantly affect our suppliers’ raw material costs. In an environment of increasing raw material prices, competitive conditions can affect how much of the price increases in raw materials that we can recover in the form of higher sales prices for our products. To the extent our manufacturer vendors pass on the cost of such increases and we are unable to pass on any raw material price increases to our customers, our profitability would be adversely affected. Furthermore, restrictions on the supply of tungsten and other raw materials could adversely affect our operating results. If the prices for such raw materials increase or our manufacturing vendors are unable to secure adequate supplies of raw materials on favorable terms, our profitability could be impaired.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Disclosure in response to this item is not required of a smaller reporting company.

ITEM 2. PROPERTIES

Our principal executive offices and other facilities consist of approximately 4,800 square feet of office and warehouse space and certain land located at 12080 Virginia Blvd, Ashland, Kentucky, which we lease from Mr. Shrewsbury, our CEO, and Mrs. Shrewsbury pursuant to the terms of a lease we entered into with them on November 19, 2012, for a monthly lease payment of $2,000. The lease had a two year term starting October 1, 2012 and ending August 31, 2014. On September 1, 2014, the parties agreed to extend the lease for an additional 24 month period upon the same terms and conditions. Subsequently, the Company has extended the lease ~~twice~~three times upon the same terms and conditions with a new ending term of August 31, ~~2019~~2020. As of September 30, ~~2018~~2019, the Company had accrued but unpaid lease payments due to Mr. and Mrs. Shrewsbury in the amount of $84108,000; accordingly, the Company may be deemed to be in default under the terms of the lease agreement with Mr. and Mrs. Shrewsbury. However, the Company has not received a notice of default or termination under the lease agreement as of the date of the filing of this report. The Company believes that such office, warehouse and land space will be sufficient for its current needs.

ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceeding.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTC Market Group, Inc.’s Pink marketplace under the symbol “TXHG.”

The following table provides the high and low bid prices of our common stock for each quarterly period during the two most recent fiscal years as regularly quoted by the OTC Markets Group, Inc.’s Pink marketplace. The quotations set forth below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

Quarter Ended	High		Low
	$	$	$	$
September 30, 2019		0.009		0.006
June 30, 2019		0.014		0.006
March 31, 2019		0.012		0.006
December 31, 2018		0.011		0.006
September 30, 2018		0.020		0.010
June 30, 2018		0.024		0.015
March 31, 2018		0.034		0.016
December 31, 2017		0.017		0.009
September 30, 2017		0.012		0.008
June 30, 2017		0.020		0.008
March 31, 2017		0.025		0.006
December 31, 2016		0.010		0.003

As of September 30, ~~2018~~2019, there were approximately 655 holders of record of our shares of common stock.

Dividends

We have never declared or paid a cash dividend on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions and covenants included under our bank indebtedness, capital requirements, business prospects and other factors that our board of directors considers relevant.

Unregistered Sales of Equity Securities

On May 16, 2012, the Board of Directors authorized the issuance of an aggregate of 400,000 common stock purchase warrants to a sales agent. The warrants were issuable over a four-year period in equal tranches of 50,000. The first tranche was issued on July 1, 2012, followed by additional tranches every six months thereafter with the last tranche to be issued on January 1, 2016. The warrants were exercisable at a price of $0.10 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation or merger, or sale of all or substantially all of our assets, become exercisable upon the date of issuance and expire two years after the date of such issuance. The warrants were issuable in reliance upon the exemption from the registration requirements under the Securities Act set forth in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. As of September 30, 2018, all warrants issuable to the sales agent have expired, with the last 50,000 tranche expiring on January 1, 2018.

Purchases of Equity Securities

We did not purchase any of our equity securities during the year ended September 30, ~~2018~~2019.

ITEM 6. SELECTED FINANCIAL DATA

Disclosure in response to this item is not required of a smaller reporting company.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

You should read the following summary together with the more detailed information, consolidated financial statements and financial notes, and the schedules appearing elsewhere in this report. Throughout this report when we refer to the “Company,” “TX Holdings,” “we,” “our” or “us,” we mean TX Holdings, Inc.~~, and its subsidiaries.~~

The discussion and analysis contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is based upon our consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates, including those related to revenue recognition, intangible assets, and contingencies. We base our estimates on historical experience, where available, and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Except for historical information, the statements and other information contained in this MD&A are forward-looking. Our actual results could differ materially from the results discussed in the forward-looking statements, which include certain risks and uncertainties.

Our independent registered public accounting firm’s report on our financial statements for the years ended September 30, ~~2018~~2019, and September 30, ~~2017~~2018, contains an explanatory paragraph that there is substantial doubt about our ability to continue as a going concern.

Accordingly, careful consideration of such opinion should be given in determining whether to continue or become our stockholder.

Please refer to and carefully consider the factors described in the Risk Factors section in this report.

Business and Operational Overview

Our Business

We are in the business of supplying, distributing and selling drill bits, related tools, and other mining supplies, rail and rail material directly and through other suppliers to United States’ coal mining companies for use in their production and transportation processes. Our coal mining customers are primarily located in Ohio, Pennsylvania, Kentucky and West Virginia. Our principal executive offices and warehousing facility is located in Ashland, Kentucky. ~~Our coal mining customers are primarily located in Ohio, Pennsylvania, Kentucky and West Virginia.~~

We purchase mining supplies from several manufacturers and rail products from several suppliers of such products. The products are shipped to our warehouse in Ashland, Kentucky, and then distributed to our customers. Our products are transported primarily by road to our customers. Shipping costs are born by our customers.

We distribute and sell our products through ~~one~~two independent sales ~~agent~~agents who are compensated on a commission basis.

We were incorporated in the State of Georgia in 2000.

Recent Developments in U.S. Coal Industry

Although, the Company has experienced an increase in sales starting in the second fiscal quarter of 2017 as compared to the two prior years, when the U.S. Coal industry was ~~phasing~~facing declining U.S. coal production and bankruptcies and restructurings among certain U.S. coal companies, the demand for, and production of, coal continue to be adversely affected by several factors, including increased environmental regulation in the U.S., declining coal consumption in the electric power sector, increased competition from natural gas, and a strong U.S. dollar.

~~Coal~~Continued ~~exports~~distress ~~for the first six months of 2018 totaled 58 MMst, compared to 44MMst~~ in ~~2017 or 62% higher than~~ the ~~prior year~~U.S. ~~EIA expects growth in~~ coal ~~exports~~mining ~~for~~industry ~~all~~will ~~2018~~materially ~~forecast~~affect atthe ~~108~~demand ~~MMst,~~for ~~representing~~our ~~a 12% increase over 2017~~products.

~~Continued~~Results ~~distress~~of ~~in the U.S. coal mining industry will materially affect the demand for our products.~~Operations

~~Results~~Our ofrevenues ~~Operations~~for the year ended September 30, 2019, were $3,934,689 as compared to $3,840,095 for 2018.

~~Our~~Gross ~~revenues~~profit ~~for~~as ~~the~~a ~~year~~percentage ~~ended~~of ~~September~~sales ~~30,~~in ~~2018,~~the ~~were~~year $decreased by 1.3~~,840,095~~% aswhen compared to ~~$3,006,599 for 2017~~2018.

~~Gross~~We ~~profit~~had net income of $42,444 in fiscal 2019 compared to a net loss of $55,200 in 2018. The year ended September 30, 2019, is the first fiscal year ~~decreased~~in bywhich ~~10.6%~~we ~~when~~have ~~compared~~reported tonet ~~2017~~income after four consecutive loss years.

WeLiquidity ~~had~~and aCapital net loss of $55,200 in fiscal 2018 compared to a net loss of $124,506 in 2017. The year ended September 30, 2018, is the fourth fiscal year in which we have reported a net loss after two previously profitable years. The current year loss is a direct result of lower sales margins during the current year. Resources

~~Liquidity~~At September 30, 2019, we had cash and ~~Capital~~cash ~~Resources~~equivalents of $17,098 compared to cash and cash equivalents of $36,609 at September 30, 2018 a decrease of $19,511.

AtNet ~~September 30, 2018, we had~~ cash ~~and~~used ~~cash~~in ~~equivalents~~operating ofactivities was $3664,~~609~~331 ~~compared~~during tothe ~~cash~~year ~~and~~ended ~~cash~~September ~~equivalents~~30, ~~of $40~~2019,~~345~~ atcomparing ~~September~~negatively ~~30,~~to ~~2017~~net acash ~~decrease~~used in operating activities of $35,~~736~~281 in 2018.

~~Net~~Cash ~~cash~~flow ~~used~~provided in ~~operating~~financing activities was $510,~~281~~500 ~~during~~for the year ended September 30, ~~2018,~~2019 ~~comparing~~and ~~negatively~~there towas ~~net~~no cash ~~provided~~flow byfrom ~~operating~~investing activities offor ~~$258,040~~the inyear ~~2017~~ended September 30, 2018.

~~There was no cash flow from investing activities for either 2018 or 2017.~~17

17Cash provided by financing activities during the current year was $34,320 as compared to cash provided in financing activities of $1,545 in 2018. The current year cash provided by financing activities resulted from stockholder’s net advances of $89,000, partially offset by a repayment of our term loan of $54,680. During 2018, cash provided in stockholder’s net advance was $58,500 and cash repayment of our term loan was $56,955.

~~Cash~~Mr. ~~provided~~William byShrewsbury, ~~financing~~our ~~activities~~Chairman ~~during~~and CEO, has provided financing in the ~~current~~form ~~year~~of ~~was~~a consolidated promissory note in the amount of $12,~~545~~000,000 as(“Consolidated ~~compared~~Note”) toon ~~cash~~which ~~used~~we inhave ~~financing~~accrued ~~activities~~interest of $~~220~~559,~~757~~726, inand ~~2017.~~the principal and interest under the Consolidated Note is due February 24, 2024 The ~~current~~principal ~~year~~bears ~~cash~~interest ~~provided~~at bythe ~~financing~~rate ~~activities~~of ~~resulted~~5% ~~from~~per ~~stockholder’s~~annum ~~net~~or ~~advances~~prime rate if higher than 5% per annum, and is subject to certain events of default. Accrued interest of $58100,~~500~~000 per-year due on the Promissory Note was recorded for the years ended September 30, ~~partially~~2019 ~~offset~~and 2018. The Consolidated Note is secured or otherwise payable by aus ~~repayment~~out of ~~our~~the ~~term~~death ~~loan~~benefit proceeds of key man insurance of $~~56,955~~2 million that has been purchased by us on the life of Mr. ~~During~~Shrewsbury. ~~2017~~As of September 30, ~~cash~~2019, ~~used~~Mr. byShrewsbury ~~stockholder’s~~had ~~net~~also ~~advance~~provided ~~repayment~~non-interest-bearing ~~was~~advances to us of $~~164~~181,~~650~~487. ~~and~~Also, ~~cash~~as ~~repayment~~ of ~~our~~September ~~term~~30, ~~loan~~2019, ~~was~~the Company has a $56108,~~107~~000 payable due to Mr. Shrewsbury for warehouse rental space.

~~Mr.~~In ~~William~~November ~~Shrewsbury~~2012, ~~our~~we ~~Chairman~~obtained ~~and~~a ~~CEO,~~bank ~~has~~line ~~provided financing in the form~~ of acredit ~~consolidated promissory note in the amount~~ of $2250,000~~,000~~ ~~(“Consolidated~~which ~~Note”)~~was onsubsequently ~~which~~increased weto ~~have~~$750,000. ~~accrued~~The ~~interest~~line of ~~$459,726,~~credit ~~and~~was ~~the~~secured ~~principal~~by ~~and~~a ~~interest~~lien ~~under~~on ~~the~~our ~~Consolidated~~inventory ~~Note~~and isaccounts ~~due~~receivable ~~February~~and ~~24,~~guaranteed ~~2024~~by ~~The~~Mr. ~~principal~~Shrewsbury. ~~bears~~On ~~interest~~December at3, ~~the~~2015, ~~rate~~we ofentered 5%into ~~per~~a ~~annum~~new orloan ~~prime~~agreement ~~rate~~with ifa ~~higher~~bank ~~than~~under 5%which ~~per~~we ~~annum,~~obtained ~~and~~a isterm ~~subject~~loan toin ~~certain~~the ~~events~~amount of ~~default~~$711,376. ~~The~~We ~~Consolidated~~utilized ~~Note~~proceeds isof ~~secured~~the ornew ~~otherwise~~loan ~~payable~~to byrepay usour ~~out~~line of ~~the~~credit. ~~death~~The ~~benefit~~new ~~proceeds~~loan ofis ~~key~~for ~~man~~a ~~insurance~~term of $2five ~~million~~years ~~that~~and ~~has~~matures ~~been~~on ~~purchased~~December by3, us2020. onInterest under the ~~life~~new ofloan ~~Mr.~~is ~~Shrewsbury.~~variable Asand ofis ~~September~~based ~~30,~~upon ~~2018,~~the ~~Mr.~~Wall ~~Shrewsbury~~Street ~~had~~Journal ~~also~~Prime ~~provided~~rate, ~~non-interest-bearing~~currently ~~advances~~5.00 to% usper ~~of $92,487~~annum.

InOur ~~November,~~indebtedness ~~2012, we obtained a bank line of credit of $250,000 which was subsequently increased~~ to ~~$750,000. The line of credit was secured by a lien on our inventory and accounts receivable and guaranteed by~~ Mr. Shrewsbury. Onis ~~December~~subordinated 3,to ~~2015,~~the ~~we entered into a~~ new ~~loan agreement with a~~ bank ~~under which we obtained a term~~ loan. inDuring the ~~amount~~current ~~of $711~~year,~~376.~~ Wewe ~~utilized~~repaid ~~proceeds~~$54,680 ofleaving ~~the~~an ~~new~~outstanding ~~loan~~balance ~~to repay our line~~ of ~~credit. The new loan is for a term of five years and matures on December 3~~$494,370 ~~2020. Interest~~ under the new loan ~~is variable and is based upon the Wall Street Journal Prime rate, currently 5~~.~~25 % per annum.~~

Our ~~indebtedness~~success tois ~~Mr.~~dependent ~~Shrewsbury~~upon isour ~~subordinated~~ability to ~~the~~increase ~~new~~sales ~~bank~~of ~~loan.~~our ~~During~~rail ~~the~~products ~~current~~and ~~year,~~mining ~~we repaid $56~~supplies,~~955~~ ~~leaving an outstanding balance~~ of ~~$549,050~~which ~~under~~there ~~the~~can ~~new~~be ~~loan~~no assurance.

~~Our~~We ~~success~~were isincorporated ~~dependent~~in ~~upon~~the ~~our~~State ~~ability to increase sales~~ of ~~our~~Georgia ~~rail~~in ~~products and mining supplies~~May, ~~of which there can be no assurance~~2000.

WeResults ~~were incorporated in the State~~ of ~~Georgia in May, 2000.~~Operations

~~Results~~Year ofEnded ~~Operations~~September 30, 2019 Compared with Year Ended September 30, 2018

~~Year~~Revenues ~~Ended~~from ~~September 30, 2018 Compared with Year Ended September 30, 2017~~Operations

Revenues for 2019 and 2018 were $3,934,689 and $3,840,095, respectively, an increase for 2019 of $94,594 or approximately 2.5%. The increase in revenue in 2019 resulted from ~~Operations~~higher sales of our rail supplies related products, partially offset by lower sales of mining supplies related products.

~~Revenues~~Cost ~~for 2018 and 2017 were$3,840,095 and $3,006,599, respectively, an increase for 2018~~ of ~~$833,496~~Goods or approximately 27.7%. The increase in revenue in 2018 resulted from higher sales as U.S. coal mine operators continue ramping-up operations and opening new, or re-opening previously closed, mines to meet the higher demand for coal. Sales to new customers during 2018 account for incremental sales over the prior year.Sold

During 2019, cost of goods sold was $3,313,609 as compared to cost of goods sold of $3,184,900 for 2018, an increase of $128,709 or 4.0%. The increase in cost of goods is solely related to the increase in sales over the prior year. Cost of ~~Goods~~goods ~~Sold~~sold as a percentage of sales increased from 82.9% in 2018 to 84.2% in 2019.

~~During~~Gross 2018, cost of goods sold was $3,184,900 as compared to cost of goods sold of $2,273,214 for 2017, an increase of $911,686 or 40.1%. The increase in cost of goods is solely related to the increase in sales over the prior year and, the sale of higher cost products in the current year. Cost of goods sold as a percentage of sales increased from 75.6% in 2017 to 82.9% in 2018.Profit

Gross ~~Profit~~profit for 2019 was $621,080, a decrease of $34,115 or 5.26% when compared to 2018. The lower gross profit is the result of higher sales of lower margin products during 2019 as compared to 2018.

~~Gross~~Operating ~~profit for 2018 was $655,195, a decrease of $78,190 or 10.6% when compared to 2017. The lower gross profit is the result of higher sales of lower margin products during 2018 as compared to 2017.~~Expenses

~~Operating~~The ~~Expenses~~Company incurred operating expenses of $552,307 in 2019 as compared to $597,463 in 2018, a decrease of $45,156 or approximately 7.6%. As a percentage of revenue, operating expenses decreased from 15.5% in 2018 to 14.0% in 2019. The decrease is attributed to lower commission expense, professional fees and bad debt expense in the current fiscal year while generating higher revenue during 2019.

The Company incurred operating expenses of $597,463 in 2018 as compared to $742,941 in 2017, a decrease of $145,478 or approximately 19.6%. As a percentage of revenue, operating expenses decreased from 24.7% in 2017 to 15.6% in 2018. The decrease is attributed to the impact of our fixed operating expenses while generating higher revenue during 2018.18

18The following table details the components of operating expenses, as well as the dollar and percentage changes for the year end periods.

The following table details the components of operating expenses, as well as the dollar and percentage changes for the year end periods.

	Year Ended
	9/30/2019		9/30/2018		$ Change			%Change
Operating Expense

Commission expense	$	123,053	$	159,027	$	(35,974	)		(22.6	)
Professional fees		8,359		23,840		(15,481	)		(64.9	)
Bad debt expense		14,621		37,672		(23,051	)		(61.2	)
Depreciation expense		7,168		7,168		0			0.0
Other operating expense		399,106		369,756		29,350			7.9
Total	$	552,307	$	597,463	$	(45,156	)		(7.6	)

	Year Ended
	9/30/2018		9/30/2017		$ Change			%Change
Operating Expense
Commission expense	$	159,027	$	149,884	$	9,143			6.1
Professional fees		23,840		16,739		7,101			42.4
Bad debt expense		37,672		6,936		30,736			443.1
Depreciation expense		7,168		9,799		(2,631	)		(26.9	)
Other operating expense		369,756		559,583		(189,827	)		(33.9	)
Total	$	597,463	$	742,941	$	(145,478	)		(19.6	)

Commission expense for the year ended September 30, 2019 was $123,053 compared to $159,027 for the same period in 2018, a decrease of $35,974 or 22.6%. The lower commission, during the year ended September 30, 2019, is a direct result of lower margin sales and bad debt expense write-offs partially offset by higher sales resulting from operational increase in the domestic coal mining industry. As a percentage of revenue, commission expense decreased from 4.1% in 2018 to 3.1% in 2019.

~~Commission~~Professional ~~expense~~fees ~~for~~decrease ~~the year ended September 30, 2018 was~~ $~~159~~15,~~027~~481 ~~compared to $149,884 for the same period in 2017, an increase of $9.143~~ or 664.19%. ~~The~~for ~~higher commission, during~~ the year ended September 30, ~~2018~~2019, isas acompared ~~direct~~to ~~result of~~ the ~~increased~~prior ~~sales~~year. ~~resulting~~The ~~from~~lower ~~operational~~expenses ~~increase~~were in the ~~domestic~~result ~~coal~~of ~~mining~~lower ~~industry.~~legal ~~As a percentage of revenue~~expenses, ~~commission~~related ~~expense decreased from 5.0% in 2017~~ to ~~4.1%~~general incorporate ~~2018~~matters.

~~Professional~~Bad ~~fees~~debt ~~increased~~expense decreased $723,~~101~~051 or 4262.41% for the ~~year~~twelve months ended September 30, ~~2018~~2019, as compared to the prior year. ~~The~~Bad ~~higher~~debt ~~expenses~~expense ~~were~~recorded ~~the~~for ~~result~~one ofmajor ~~higher~~customer ~~legal~~filing ~~expenses,~~for ~~related~~bankruptcy toduring ~~general~~year ~~corporate~~ended ~~matters,~~2018 ofaccounted ~~$7,101~~for orthe 42higher expense.~~4%.~~

~~Bad~~Depreciation ~~debt~~expenses ~~expense~~remains ~~increased~~at $307,~~736~~168 ~~or 443.1%~~ for the ~~twelve~~year ~~months~~2019 ~~ended September 30, 2018,~~ as ~~compared~~in to the prior year. ~~Bad debt expense recorded for one customer filing for bankruptcy accounted for the higher expense.~~

~~Depreciation~~For the year ended September 30, 2019, other operating expenses ~~decreased~~were by$399,106, an increase of $229,~~631~~350 or 267.9% infrom ~~2018~~the as$369,756 ~~compared~~incurred toduring ~~2017~~2018. The ~~lower~~higher ~~depreciation~~operating expenses in the current year resulted from ahigher delivery truck’s ~~becoming~~repairs ~~fully~~and ~~depreciated~~maintenance expense of $23,898 and, an increase in ~~2017~~travel and entertainment expense of $7,998 over the prior year.

For the year ended September 30, 2018, other operating expenses were $369,756, a decrease of $189,827 or 33.9% from the $559,583 incurred during 2017. The lower operating expenses resulted from the write-off of the Bag Rack inventory Income/(~~$144,726~~Loss) ~~in 2017 and, lower compensation ($32,053) and lower Board Fees ($7,500) in 2018.The Bag rack inventory write-off resulted~~ from ~~management’s decision to exit the business as product sales did not materialize.~~Operations

~~Income/(~~For ~~Loss)~~2019, we had income from ~~Operations~~operations of $68,773 as compared to income from operations of $57,732 in 2018, an increase of $11,041 or 19.1%. The increase in income from operations resulted from lower operating expense of $45,156 in 2019 as compared to the prior year. Lower profit margins in 2019 from 2018 negatively impacted the income from operations by $34,115.

~~For~~Other ~~2018,~~Income weand ~~had income from operations of $57,732 as compared to a loss of $9,556 in 2017, an increase of $67,288. The increase in income from operations resulted from the write-off of the Bag Rack inventory~~ (~~$144,726~~Expense) ~~in 2017 partially offset by lower profit margins on sales ($78,190) in 2018.~~

Other ~~Income~~expense ~~and~~was ~~(Expense)~~$26,329 in 2019 as compared to $112,932 in 2018, a decrease of $86,603. The lower expense is the result of a vendor credit of $93,545 for inventory previously written-off, partially offset by a $7,000 loss on disposal of a fixed asset.

~~Other~~Net expense was $112,932 in 2018 as compared to $114,950 in 2017, a decrease of $2,018. The decrease resulted from higher scrap sales of $5,386 in 2018 offset by higher interest expense of $3,068 in 2018, associated with our term loan.Income/(loss)

~~Net~~During ~~Loss~~2019 the Company had a net income of $42,444 compared to a net loss of $55,200 for 2018, representing a net loss decrease of $97,644. The decrease resulted from a $93,545 vendor credit for inventory previously written-off and, higher income from operation of $11,041 due to lower operating expenses.

During 2018 the Company had a net loss of $55,200 compared to a net loss of $124,506 for 2017, representing a net loss decrease of $69,306. The decrease resulted from the inventory write-off of our Bag Rack operations in 2017 of $144,726 partially offset by an increase in bad debt expense of $30,736 in 2018 over the prior year.19

Net Loss Per Common Share

Net earnings per share (basic and diluted) as a result of the net ~~loss~~income remains a ~~negative~~positive $0.00 in ~~2018~~2019, compared to a negative $0.00 in the prior year.

19Net Operating Loss Carry Forward for Tax Purposes

~~Net~~As ~~Operating~~of ~~Loss~~September ~~Carry~~30, ~~Forward~~2019, ~~for~~the ~~Tax~~Company ~~Purposes~~had tax net operating loss carry forwards totaling approximately $8,070,000, which expire in 2019 through 2038. Approximately $1,200,000 of such 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.

AsThere ofcan ~~September~~be ~~30,~~no ~~2018,~~assurance ~~the~~that ~~Company~~these ~~had~~deferred tax ~~net~~assets ~~operating~~will ~~loss~~ever ~~carry~~be ~~forwards totaling approximately $8,199,000, which expire in 2018 through 2038~~used. ~~Approximately~~A ~~$1,200,000~~deferred oftax ~~such~~asset ~~net~~can ~~operating~~be ~~losses~~used ~~were~~only ~~incurred~~if ~~prior~~there tois ~~December~~future ~~12,~~taxable ~~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~~income, ~~due to the limitations and expiration dates, only $424,000~~ of ~~the~~which ~~net~~there ~~operating~~can ~~losses incurred prior to December 12, 2002 will~~ be ~~available~~no ~~to offset future taxable income~~assurance.

~~There~~Liquidity ~~can~~and beCapital ~~no assurance that these deferred tax assets will ever be used. A deferred tax asset can be used only if there is future taxable income, of which there can be no assurance.~~Resources

~~Liquidity~~The following table presents a summary of our net cash provided by/(used in) operating, investing and ~~Capital~~financing ~~Resources~~activities:

The following table presents a summary of our net cash provided by/(used in) operating, investing and financing activities:

	Year Ended
Liquidity and capital resources	9/30/2019			9/30/2018
Net cash used in operating activities	$	(64,331	)	$	(5,281	)
Net cash provided in investing activities		10,500			-
Net cash provided in financing activities		34,320			1,545
Net increase/(decrease) in cash equivalents	$	(19,511	)	$	(3,736	)

	Twelve Months Ended
Liquidity and capital resources	9/30/2018			9/30/2017
Net cash provided /(used) in operating activities	$	(5,281	)	$	258,040
Net cash provided/(used) in investing activities		—			—
Net cash provided/(used) in financing activities		1,545			(220,757	)
Net increase/(decrease) in cash equivalents	$	(3,736	)	$	37,283

At September 30, 2019, the Company had cash and cash equivalents of $17,098 compared to cash and cash equivalents of $36,609 at September 30, 2018 a decrease of $19,511. The decrease in cash is the direct result of the net cash used in operating activities of $64,331 partially offset by cash provided in investing activities of $10,500 and net cash from financing activities of $34,320.

AtCash ~~September~~Flows ~~30,~~Provided/(Used) ~~2018, the Company had cash and cash equivalents of $36,609 compared to cash and cash equivalents of $40,345 at September 30, 2017 a decrease of $3,736. The decrease~~ in ~~cash~~Operating ~~is the direct result of the net cash used in operating activities of $5,281 partially offset by net cash from financing activities of $1,545.~~Activities

Cash ~~Flows~~used ~~Provided/(Used)~~in operating activities during 2019 was $64,331 as compared to cash used in ~~Operating~~operating ~~Activities~~activities of $5,281 during 2018.

~~Cash~~During ~~used~~the inyear ~~operating~~ended ~~activities~~September ~~during~~30, ~~2018 was $5~~2019,~~281~~ asthe ~~compared~~Company toincurred ~~cash~~a ~~provided~~net byincome ~~operating activities~~ of $~~258~~42,~~040 during 2017~~444.

~~During~~In the current year ~~ended~~the ~~September~~Company 30increased its inventory by $33,089 ~~2018~~and, accounts receivable net by $15,662; accounts payable decreased by $208,868 and, the Company ~~incurred~~received a ~~net~~customer’s ~~loss~~sales advance of $5596,~~200~~000.

AnThe ~~increase~~increases in inventory ~~(current~~ and ~~non-current)~~accounts ofreceivables ~~$108,190~~is ~~and~~the adirect ~~decrease~~result ~~in accounts payable~~ of ~~$124,920~~higher ~~were~~sales ~~partially offset by a decrease~~ in ~~accounts~~the ~~receivable~~current ofyear ~~$160,877,~~as ait ~~decrease~~compares into ~~commission~~the ~~advances~~prior ofyear ~~$22~~and, ~~648~~the ~~and~~anticipation anof ~~increase~~future inhigher ~~accrued~~customers’ ~~liabilities~~sales ~~of $28,418~~demand.

~~Accounts~~Accrued ~~receivable~~liabilities ~~decreased~~as byof ~~$160~~September 30,~~877~~ ~~compared~~2019, toincreased anby ~~increase of~~ $~~229~~12,~~737 during 2017~~543. The ~~receivable~~increase ~~decrease~~results isprimarily ~~the~~from ~~result~~accrued interest of ~~managing~~$100,000 ~~the~~on ~~account~~a ~~receivable~~loan ~~balance~~due ~~commensurate~~to ~~with~~Mr. ~~sales~~Shrewsbury, ~~levels~~partially ~~and,~~offset ~~several~~by ~~customers~~a ~~payments~~reduction ~~received~~in ~~during~~accrued ~~the~~payroll ~~last~~and ~~week~~payroll oftaxes ~~the~~related ~~current~~expenses ~~year~~of ~~end~~$87,457 in 2019.

~~Accrued~~Accounts ~~liabilities~~payable asdecreased of$208,868 ~~September~~in ~~30,~~2019 ~~2018,~~compared ~~increased~~to bya decrease of $28124,~~418.~~920 ~~The~~in ~~increase~~the ~~results~~prior ~~primarily~~year. ~~from~~The ~~accrued~~current ~~interest~~year ofdecrease ~~$100,000~~in onpayable ais ~~loan~~the ~~due~~result toof ~~Mr.~~higher ~~Shrewsbury,~~payments ~~partially~~of ~~offset~~vendors’ byoutstanding apayables ~~reduction~~and ina ~~accrued~~$93,545 ~~payroll~~vendor ~~related~~credit ~~expenses~~for ofinventory ~~$68,000~~previously ~~in 2018~~written-off.

~~Accounts payable decreased $124,920 in 2018 compared to a $29,686 increase in the prior year. The decrease is the result of higher payments of vendors’ outstanding payables.~~20

Cash Flows ~~Used~~Provided in Investing Activities

The sale of a fixed asset generated a $10,500 cash flow for the current year. There were no investing activities during 2018 ~~or 2017~~.

Cash Flows Provided/(used) in Financing Activities

During ~~2018~~2019, cash provided by financing activities was $134,~~545~~320 as compared to cash ~~used~~provided in financing activities of $~~220~~1,~~757~~545 during ~~2017~~2018. During ~~2018~~2019, the Company repaid $5654,~~955~~680 on the outstanding term loan and received proceeds from stockholder/officer’s net advances of $5889,~~500~~000. In ~~2017~~2018 the Company repaid $56,~~107~~955 on the term loan and ~~repaid~~received net advances from our CEO of $~~164~~58,~~650~~500.

20The Company’s primary source of financing during 2019 was advances received from our CEO.

In November 2012, we obtained a $250,000 line of credit from a bank. On August 26, 2014, the bank increased the Company’s existing bank line of credit from $250,000 to $750,000 and extended the term of the loan. The loan which was refinanced in December 2015 was secured by a priority security interest in the Company’s ~~primary~~inventory ~~source~~and accounts receivable and matured on November 7, 2015. Interest on the loan was payable monthly and was calculated on the basis of ~~financing~~a ~~during~~variable ~~2018~~index. As of September 30, 2015, the Company had borrowed $712,449 under the loan. The rate of interest under the loan was ~~advances~~3.25% ~~received~~per annum. Principal, interest and collection costs under the loan were guaranteed by Mr. Shrewsbury. On December 3, 2015, we obtained a new term loan from the bank in the amount of $711,376. We utilized the proceeds of the new loan to repay the line of credit. The new loan is for a term of five years and matures on December 3, 2020. During the term of the loan we have agreed to make equal monthly repayments of principal and interest of $6, 967 commencing January 3, 2016 and a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due, estimated to be approximately $425,539. Interest under the new loan is variable and is based upon the Wall Street Journal Prime rate, currently 5.00% per annum. In the event of a default, interest under the loan may be increased by 2%. The new loan is secured by a priority security interest in our inventory and accounts receivable and guaranteed by our CEO. As of September 30, 2019, the term loan balance is $494,370.

InOn ~~November~~February ~~2012~~25, ~~we obtained a $250~~2014,~~000~~ ~~line~~the ofCompany ~~credit~~and ~~from a bank~~Mr. OnShrewsbury ~~August~~entered ~~26,~~into ~~2014,~~an ~~the~~agreement ~~bank~~to ~~increased~~consolidate ~~the~~an ~~Company’s~~aggregate ~~existing bank line~~ of ~~credit from~~ $~~250~~2,000 ~~to $750~~,000 ~~and~~of ~~extended~~ the ~~term~~amounts ofdue ~~the~~to ~~loan~~Mr. ~~The~~Shrewsbury ~~loan~~and ~~which~~issued ~~was refinanced~~ in ~~December~~replacement ~~2015 was secured by~~ a ~~priority~~Secured ~~security~~Consolidated ~~interest~~Note in(“Consolidated ~~the~~Note”) ~~Company’s~~for ~~inventory~~such ~~and accounts receivable and matured on November 7, 2015~~amount. ~~Interest~~The onConsolidated ~~the~~Note ~~loan~~bears ~~was~~interest ~~payable~~at ~~monthly~~5% ~~and~~per ~~was~~annum ~~calculated~~or onprime ~~the basis of a variable index. As of September 30, 2015, the Company had borrowed $712,449 under the loan. The~~ rate ofif ~~interest~~higher ~~under~~than ~~the loan was 3.25~~5% per annum~~. Principal~~, ~~interest~~principal and ~~collection~~interest ~~costs~~are ~~under~~repayable ~~the~~ten ~~loan~~years ~~were~~from ~~guaranteed~~February ~~by Mr. Shrewsbury. On December 3~~25, ~~2015~~2014, weand ~~obtained~~it ais ~~new~~subject ~~term~~to ~~loan~~customary ~~from~~events ~~the bank in the amount~~ of ~~$711,376~~default. WePayment ~~utilized the proceeds~~ of the ~~new~~Consolidated ~~loan~~Note ~~to repay the line of credit. The new loan~~ is ~~for~~to abe ~~term~~secured ofor ~~five~~otherwise ~~years~~payable ~~and~~by ~~matures on December 3, 2020. During~~ the ~~term~~Company out of the ~~loan~~death webenefit ~~have~~proceeds ~~agreed to make equal monthly repayments~~ of ~~principal~~key ~~and~~man ~~interest~~insurance of $6,2 ~~967~~million ~~commencing~~that ~~January~~has 3,been ~~2016~~purchased ~~and~~by athe ~~final~~Company ~~payment~~ on ~~December 3, 2020, of~~ the ~~outstanding~~life ~~balance~~ of ~~the interest and principal then due, estimated to be approximately $391, 896~~Mr. ~~Interest under the new loan is variable and is based upon the Wall Street Journal Prime rate, currently 5~~Shrewsbury.25% per annum. In the event of a default, interest under the loan may be increased by 2%. The new loan is secured by a priority security interest in our inventory and accounts receivable and guaranteed by our CEO. As of September 30, 2018 the term loan balance is $549,050.

OnDuring ~~February 25~~2019, ~~2014,~~ the Company ~~and~~received ~~Mr. Shrewsbury entered into an agreement to consolidate an aggregate of~~ $2219,~~000,000~~500 ofin ~~the~~cash ~~amounts~~advances ~~due~~from to Mr. Shrewsbury and ~~issued~~repaid in$130,500, ~~replacement~~bringing athe ~~Secured~~total ~~Consolidated~~outstanding ~~Note~~advance ~~(“Consolidated~~balance ~~Note”)~~to ~~for such amount~~$181,487. ~~The~~Cash ~~Consolidated~~advances ~~Note~~from ~~bears~~Mr. ~~interest~~Shrewsbury ~~at 5% per annum or prime rate if higher than 5% per annum, principal and interest~~ are repayable ~~ten~~upon ~~years~~demand ~~from February 25, 2014,~~ and itdo isnot ~~subject~~bear ~~to customary events of default~~interest. Payment of the Consolidated Note is to be secured or otherwise payable by the Company out of the death benefit proceeds of key man insurance of $2 million that has been purchased by the Company on the life of Mr. Shrewsbury.

~~During~~Property ~~2018~~and Equipment, ~~the~~net, ~~Company~~was ~~received~~ $~~256~~15,~~000~~144 inas ~~cash~~of ~~advances~~September ~~from~~30, ~~Mr.~~2019 ~~Shrewsbury~~compared ~~and~~to ~~repaid~~ $~~197~~39,~~500~~812 as of September 30, ~~bringing~~2018. During 2019 the ~~total~~Company ~~outstanding~~sold ~~advance~~a ~~balance~~brazing tomachine with a book value of $9217,~~487.~~500 ~~Cash~~resulting ~~advances~~in ~~from~~a Mr$7,000 loss. ~~Shrewsbury~~Delivery ~~are~~equipment ~~repayable~~depreciation ~~upon~~recorded ~~demand~~in ~~and~~the docurrent ~~not~~year ~~bear~~accounts ~~interest~~for a $7,168 net reduction in Property and Equipment.

~~Property~~As ~~and~~of ~~Equipment~~September 30, ~~net~~2019, ~~was~~the ~~$39,812~~Company ashad ofaccrued ~~September~~and ~~30,~~unpaid ~~2018~~an ~~compared~~amount toof $46304,~~980~~179 asdue ofto ~~September~~Jose 30Fuentes, ~~2017.~~CFO, ~~Delivery~~as ~~equipment~~payment ~~depreciation recorded in the current year accounts~~ for ~~the~~past ~~reduction in Property and Equipment~~services.

AsFinancial ofCondition ~~September 30, 2018, the Company had accrued~~ and ~~unpaid~~Going anConcern ~~amount of $358,179 due to Jose Fuentes, CFO, as payment for past services.~~Uncertainties

~~Financial~~Since ~~Condition~~inception, except for the six consecutive quarters ended June 30, 2014, and ~~Going~~the ~~Concern~~fiscal ~~Uncertainties~~year ended September 30, 2017 and September 30, 2019, we have not generated sufficient cash to fund operations and have incurred operating losses. Currently, the Company will continue to rely substantially upon financing provided by Mr. Shrewsbury, our CEO, and secured bank indebtedness to fund its operations. In view of these matters, realization of certain assets in the accompanying balance sheet is dependent upon continued operations, which in turn, is dependent on our ability to meet our financial requirements, upon the continued provision of financing by Mr. Shrewsbury and under the Company’s term loan, and the success of our future operations.

~~Since~~Our ~~inception,~~independent ~~except~~registered ~~for~~public ~~the~~accounting ~~six~~firm’s ~~consecutive~~report ~~quarters~~on ~~ended June 30, 2014, and~~ the ~~fiscal~~financial ~~year~~statements ~~ended~~included ~~September~~in ~~30,~~our ~~2017,~~Annual weReport ~~have~~on ~~not~~Form ~~generated~~10-K ~~sufficient~~for ~~cash to fund operations and have incurred operating losses. Currently,~~ the ~~Company~~year ~~will~~ended ~~continue~~September ~~to rely substantially upon financing provided by Mr. Shrewsbury~~30, ~~our CEO~~2019, ~~and~~contains ~~secured~~an ~~bank~~explanatory ~~indebtedness~~paragraph tothat ~~fund~~there ~~its operations. In view of these matters, realization of certain assets in the accompanying balance sheet~~ is ~~dependent~~substantial ~~upon~~doubt ~~continued~~about ~~operations, which in turn, is dependent on~~ our ability to ~~meet~~continue ~~our~~as ~~financial~~a ~~requirements,~~going ~~upon~~concern. ~~the~~Accordingly, ~~continued~~careful ~~provision~~consideration of ~~financing~~such byopinion ~~Mr.~~should ~~Shrewsbury~~be ~~and~~given ~~under~~in ~~the~~determining ~~Company’s~~whether ~~term~~to ~~loan,~~continue ~~and~~or ~~the~~to ~~success~~become of our ~~future operations~~stockholder.

Our independent registered public accounting firm’s report on the financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2018, contains an explanatory paragraph that there is substantial doubt about our ability to continue as a going concern. Accordingly, careful consideration of such opinion should be given in determining whether to continue or to become our stockholder. 21

As of September 30, ~~2018~~2019, the Company had cash and cash equivalents of $3617,~~609~~098 as compared to $4036,~~345~~609 as of September 30, ~~2017~~2018. The $319,~~736~~511 decrease in cash resulted primarily from an increase in inventory of ($~~108~~33,~~190~~089), ~~and~~a ($15,662) increase in accounts receivables (net of $14,621 bad debt write-off), a decrease in accounts payable of ($~~124~~208,~~920~~868) and a decrease in accrued liabilities of ($87,547); the negative cash variance was partially offset by cash generated from aan ~~decrease~~increase in ~~receivable~~accrued (interest to officers of $~~160~~100.000,~~877)~~ ~~and~~ net cash advances from our CEO (of $5889,~~500)~~000, a customer’s sales cash advance in the amount of $96,000, an increase in officers advances for operations of $24,000 and, an increase in other current liabilities of $5,191.

The Company’s accounts receivable was $~~259~~275,~~694~~356 as of September 30, ~~2018~~2019, as compared to $~~458~~259,~~203~~694 as of September 30, ~~2017~~2018, aan ~~decrease~~increase of $~~198~~15,~~509~~662 or 436.30%. The ~~decrease~~increase ~~from~~is the result of managing the receivable balance to appropriate sales related levels ~~and large payments from several customers received the last week of the current year~~.

Inventory was $1,~~798~~831,~~540~~629 as of September 30, ~~2018~~2019 as compared to $1,~~690~~798,~~350~~540 as of September 30, ~~2017~~2018, an increase of $~~108~~33,~~190~~089 or 61.48%. The inventory increase is attributable to the increase in sales (~~(27~~2.75%) in the current year over the prior year.

21During 2019, our stockholders’ deficit decreased from $15,611,136 in the prior year to $15,568,692, a decrease of $42,444 or 0.3%. The net income for the year ended September 30, 2019 accounts for the decrease in stockholders’ deficit.

During ~~2018~~the year ended September 30, ~~our~~2019, ~~stockholders~~the Company’s ~~deficit~~net ~~increased~~income ~~from~~was $1542,~~555,936~~444 incompared ~~the prior year~~ to ~~15,611,136,~~a annet ~~increase~~loss of $55,200 orfor 02018 representing a loss decrease of $97,644.~~3%.~~ The ~~net~~decrease ~~loss~~can ~~for~~be ~~the~~directly ~~year~~attributed ~~ended~~to ~~September~~a 30$93,545 ~~2018~~vendor ~~accounts~~credit ~~for~~received in the ~~increase~~current inyear ~~stockholders’~~for ~~deficit~~inventory previously written-off.

~~During~~Currently, ~~the~~in ~~year~~addition ~~ended~~to ~~September~~funds ~~30,~~utilized ~~2018~~to purchase inventory, the Company’s ~~net~~is ~~loss~~spending ~~was~~approximately $5560,~~200~~000 ~~compared~~per tomonth aon ~~net~~operations. ~~loss~~Management ofbelieves ~~$124~~that the Company’s cash flows from its operations,~~506~~ ~~for~~the ~~2017~~loans ~~representing~~and aadvances ~~loss~~provided ~~decrease~~by ofMr. ~~$69~~Shrewsbury,~~306.~~ and ~~The~~the ~~decrease~~loan ~~can~~provided beby ~~directly~~the ~~attributed~~bank to anbe ~~inventory~~sufficient ~~write-off~~to offund ~~$144,726~~the ~~recorded~~Company inoperations for the ~~prior~~next ~~year~~12 ~~partially~~months. ~~offset~~However, bythe ~~$78,190~~Company ~~lower~~will ~~sales~~require ~~margins~~additional infinancing ~~the~~to ~~current~~meet ~~year~~any aslarge ~~compared~~capital requirements or to ~~the~~meet ~~prior~~its ~~year~~current obligations if its business does not generate sufficient operational cash flow.

~~Currently,~~The inCompany ~~addition~~continues to ~~funds~~rely ~~utilized~~substantially toupon ~~purchase~~financings ~~inventory, the Company is spending approximately $60,000 per month on operations. Management believes that the Company’s cash flows from its operations, the loans and advances~~ provided by Mr. Shrewsbury, and the ~~loan provided by the~~ bank to ~~be sufficient to~~ fund ~~the~~its ~~Company~~ operations ~~for the next 12 months. However~~, ~~the~~discussed ~~Company will require additional financing to meet any large capital requirements or to meet its current obligations if its business does not generate sufficient operational cash flow~~below.

~~The~~Bank ~~Company continues to rely substantially upon financings provided by Mr. Shrewsbury and the bank to fund its operations, discussed below.~~Loan

Under the terms of a business loan agreement, originally entered into on November 7, 2012, and as amended through August 26, 2014, the Company obtained a secured revolving line of credit in the amount of $750,000 from Town Square Bank. ~~Loan~~Interest on the loan was payable monthly in arrears. Interest under the loan was variable and based upon Wall Street Journal Prime Rate.

~~Under~~On ~~the~~December ~~terms~~3, ~~of a business loan agreement~~2015, ~~originally~~we entered into ona ~~November~~new 7,loan ~~2012,~~agreement ~~and~~with asTown ~~amended~~Square ~~through~~Bank ~~August~~pursuant ~~26,~~to ~~2014,~~which ~~the~~we ~~Company~~ obtained a ~~secured~~term ~~revolving~~loan ~~line of credit~~ in the amount of $~~750~~711,~~000~~376. ~~from~~We ~~Town~~utilized ~~Square~~proceeds ~~Bank.~~of ~~Interest on~~ the new loan ~~was~~to ~~payable~~repay ~~monthly~~our inline ~~arrears~~of credit. ~~Interest~~The ~~under~~loan ~~the~~is ~~loan~~for ~~was~~a ~~variable~~term ~~and~~of ~~based~~five ~~upon~~years ~~Wall~~and ~~Street~~matures ~~Journal~~on ~~Prime~~December ~~Rate~~3, 2020.

OnDuring ~~December~~the 3,term ~~2015~~of the loan, we ~~entered~~have ~~into~~agreed ato ~~new~~make ~~loan~~equal ~~agreement~~monthly ~~with~~repayments ~~Town~~of ~~Square~~principal ~~Bank~~and ~~pursuant~~interest toof ~~which~~$6,967 wecommencing ~~obtained~~January a3, ~~term~~2016, ~~loan~~and into ~~the~~make ~~amount~~a offinal ~~$711~~payment on December 3,~~376.~~ We2020, ~~utilized~~of ~~proceeds~~the outstanding balance of the ~~new~~interest ~~loan~~and principal then due, estimated to ~~repay~~be ~~our~~approximately ~~line~~$425,539. Early repayment of ~~credit.~~amounts ~~The~~due under the loan iswill ~~for~~not aaffect ~~term~~the ofmonthly ~~five~~repayment ~~years~~amount, ~~and~~unless ~~matures~~otherwise onagreed ~~December~~to 3,by ~~2020~~the bank.

~~During~~An ~~the~~event ~~term~~ of ~~the~~default loan, we have agreed to make equal monthly repayments of principal and interest of $6,967 commencing January 3, 2016, and to make a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due, estimated to be approximately $391,896. Early repayment of amounts due under the loan will ~~not~~occur ~~affect~~upon the ~~monthly~~occurrence ~~repayment~~of ~~amount,~~any ~~unless~~of ~~otherwise agreed to by~~ the ~~bank.~~following events:

An● ~~event~~we offail to make any payment when due under the note; ● we fail to comply with any term, obligation, covenant or condition in the loan documents or any other agreement between the bank and the Company: ● we default under any loan, extension of credit, security agreement, purchase or sales agreement or other agreement with any creditor that materially affects the Company’s property or its ability to repay the loan ~~will~~or ~~occur~~perform ~~upon~~its obligation under the ~~occurrence~~loan documents; ● a warranty, representation or statement we made to the bank under the loan document is or becomes materially false or misleading; ● the dissolution or termination of our existence, our insolvency, the appointment of a receiver for any part of our property, any assignment for the ~~following~~benefit ~~events:~~of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against us;

~~● we fail to make any payment when due under the note;~~22

● wethe ~~fail~~commencement toof ~~comply~~foreclosure ~~with~~or forfeiture proceedings by any ~~term,~~creditor ~~obligation,~~of ~~covenant~~ours or ~~condition~~any ingovernmental agency against any collateral securing the loan; ~~documents~~● orany of the preceding events occurs with respect to any ~~other~~loan ~~agreement~~guarantor; ~~between~~● a 25% or more change in the ownership of our common stock; ● a material adverse change in our financial condition, or the bank ~~and~~believes the ~~Company:~~prospect of payment or performance of the loan is impaired; or ● the bank in good faith believes itself insecure.

●The weloan ~~default~~agreements ~~under~~contain ~~any~~certain ~~loan~~affirmative covenants, ~~extension~~including an obligation to: notify the bank of ~~credit,~~a ~~security~~material ~~agreement,~~adverse ~~purchase~~change orin ~~sales~~our ~~agreement~~financial condition and of any threatened litigation or ~~other~~claim ~~agreement~~or ~~with~~other ~~any~~proceeding ~~creditor~~which ~~that~~could materially ~~affects~~affect ~~the~~our ~~Company’s~~financial ~~property~~condition; ormaintain ~~its~~certain ~~ability~~liability toinsurance ~~repay~~in amounts acceptable to the ~~loan~~bank; ormaintain qualified executive and management personnel; comply with applicable environmental laws and perform ~~its~~environmental ~~obligation~~studies ~~under~~required by the bank; and certify annually to the bank compliance with the representations and warranties in the bank loan documents;. The loan agreements contain certain other customary covenants, terms and conditions.

●In ~~a warranty~~addition, ~~representation~~the orloan ~~statement~~agreements wecontain ~~made~~certain tonegative ~~the~~covenants, ~~bank~~including ~~under~~that ~~the~~we ~~loan~~will ~~document~~not, iswithout orthe ~~becomes~~bank’s ~~materially false or misleading;~~consent:

● incur any indebtedness other than to the ~~dissolution~~bank or ~~termination~~for oftrade ~~our~~debt ~~existence~~incurred in the ordinary course; ● sell, ~~our~~transfer, ~~insolvency~~mortgage, ~~the~~assign, ~~appointment~~pledge, oflease, grant a ~~receiver~~security ~~for~~interest ~~any~~in, ~~part~~or encumber any of our ~~property~~assets, ~~any~~except ~~assignment~~ for permitted liens; ● sell our accounts receivable, except to the ~~benefit~~bank; of● ~~creditors~~engage in business activities substantially different from our current activities; ● cease operations, ~~any~~liquidate, ~~type~~merge, oftransfer, ~~creditor~~acquire ~~workout~~or consolidate with another entity, change our name, dissolve, or sell the ~~commencement~~inventory ofor ~~any~~accounts ~~proceeding~~receivable secured under the loan; ● pay any ~~bankruptcy~~dividend other than in stock; ● lend money, invest or ~~insolvency~~advance ~~laws~~money byor assets to another person or ~~against~~entity; us● purchase, create or acquire an interest in any other entity; ● incur any obligation as a surety or guarantor other than in the ordinary course; or ● enter into any agreement containing any provision which would be violated or breached by the performance of our obligations under the loan agreements.

●Interest under the ~~commencement~~loan is variable and is based upon the Wall Street Journal Prime rate, currently 5.00% per annum. In the event of ~~foreclosure~~a ordefault, ~~forfeiture~~interest ~~proceedings~~under the loan may be increased by ~~any~~2%. ~~creditor~~The line of ~~ours~~credit oris ~~any~~secured ~~governmental~~by ~~agency~~a ~~against~~priority ~~any~~security ~~collateral~~interest ~~securing~~in the ~~loan;~~Company’s inventory and accounts receivable and has been guaranteed by our CEO.

●Advances ~~any~~and ofLoans ~~the~~from ~~preceding~~Our ~~events~~Chief ~~occurs~~Executive ~~with respect to any loan guarantor;~~Officer

●In aconnection ~~25%~~with orthe ~~more~~expansion ~~change~~of the Company’s business, Mr. Shrewsbury, our Chairman and CEO, provided financing to us in the ~~ownership~~form of ~~our~~demand ~~common~~notes ~~stock;~~and advances. On February 25, 2014, we entered into a Note Exchange Agreement (“Exchange Agreement”) with Mr. Shrewsbury pursuant to which an aggregate of $2,000,000 in indebtedness due to Mr. Shrewsbury was consolidated and restructured and issued in exchange for such indebtedness a Consolidated Secured Promissory Note (the “Consolidated Note) in the principal amount of $2,000,000.

●The aprincipal ~~material~~and ~~adverse~~interest ~~change~~under inthe ~~our~~Consolidated ~~financial~~Note ~~condition,~~is ordue and payable ten years from the ~~bank~~date ~~believes~~of issuance and is to be secured by the ~~prospect~~proceeds of ~~payment~~key orman ~~performance~~insurance purchased by the Company on the life of Mr. Shrewsbury. The Consolidated Note bears interest at the ~~loan~~rate isof ~~impaired;~~5% orper annum except that, if the prime rate reported by the Wall Street Journal (“WSJ Prime Rate”) exceeds 5%, then the Consolidated Note will bear interest at the WSJ Prime Rate. As of September 30, 2019, accrued interest on the note was $559,726

●An ~~the~~event ~~bank~~of indefault ~~good~~will ~~faith~~occur ~~believes~~under ~~itself~~the ~~insecure.~~Consolidated Note upon:

~~The~~● ~~loan~~the ~~agreements~~Company’s ~~contain~~failure ~~certain~~to ~~affirmative~~pay ~~covenants,~~when ~~including~~due anany ~~obligation~~principal ~~to:~~or ~~notify~~interest under the ~~bank~~Consolidated ofNote; a● ~~material~~the ~~adverse~~violation ~~change~~by inthe ~~our~~Company ~~financial condition and~~ of any ~~threatened~~covenant ~~litigation~~ or ~~claim~~agreement orcontained ~~other~~in ~~proceeding~~the ~~which~~Consolidated ~~could~~Note, ~~materially~~the ~~affect~~Exchange ~~our~~Agreement ~~financial~~or ~~condition~~related transaction documents; ~~maintain~~● ~~certain~~an ~~liability~~assignment ~~insurance~~for inthe ~~amounts~~benefit ~~acceptable~~of tocreditors by the ~~bank~~Company; ~~maintain~~● ~~qualified~~the ~~executive~~application ~~and~~for ~~management~~the ~~personnel;~~appointment ~~comply~~of ~~with~~a ~~applicable~~receiver ~~environmental~~or ~~laws~~liquidator ~~and~~for ~~perform~~the ~~environmental~~Company ~~studies~~or ~~required~~for byproperty of the ~~bank~~Company; ~~and~~● ~~certify~~the ~~annually~~filing toof ~~the~~a ~~bank~~petition ~~compliance~~in ~~with~~bankruptcy ~~the~~by ~~representations~~or ~~and~~against ~~warranties~~the inCompany; ● the ~~bank~~issuance ~~loan~~of ~~documents.~~an ~~The~~attachment ~~loan~~or ~~agreements~~the ~~contain~~entry ~~certain~~of ~~other~~a ~~customary~~judgment ~~covenants,~~against ~~terms~~the ~~and~~Company ~~conditions.~~in excess of $250,000;

2223

In● ~~addition,~~a default by the ~~loan~~Company ~~agreements~~with ~~contain~~respect ~~certain~~to ~~negative~~any ~~covenants,~~other ~~including~~indebtedness ~~that~~or wewith ~~will~~respect to any installment debt whether or not, ~~without~~owing to Mr. Shrewsbury; ● the ~~bank~~sale of all or substantially all of the Company’s ~~consent:~~assets or a transfer of more than 51% of the Company’s equity interests to a person not currently a holder of equity interests of the Company; ● the termination of existence or the dissolution of the Company; ● the death of Mr. Shrewsbury; or ● the failure to pay when due any premium under the key man policy required to be purchased on the life of Mr. Shrewsbury under the Exchange Agreement.

●In ~~incur~~addition, ~~any~~in consideration of Mr. Shrewsbury agreeing to consolidate the indebtedness, ~~other~~the ~~than~~Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the ~~bank~~Company’s orcommon ~~for~~stock ~~trade~~issued ~~debt~~February ~~incurred~~25, 2014. The options became exercisable on April 1, 2014 and expired on March 31, 2017. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the ~~ordinary~~event ~~course;~~of stock dividends, subdivisions, capital reorganizations, a consolidation or merger, or sale of all or substantially all of our assets.

●As ~~sell,~~of ~~transfer,~~September ~~mortgage~~30, ~~assign~~2019, ~~pledge,~~Mr. ~~lease~~Shrewsbury had advanced an aggregate of $181,487 ~~grant~~to athe ~~security~~Company. The advances do not bear interest inand are repayable upon demand. At September 30, or2019, ~~encumber~~the ~~any~~Company ofalso ~~our~~has ~~assets~~a payable of $108,000 ~~except~~to Mr. Shrewsbury for ~~permitted~~warehouse ~~liens;~~storage rental.

●The ~~sell~~Consolidated ~~our~~Note ~~accounts~~and ~~receivable,~~advances ~~except~~are subordinate to the Company’s bank; indebtedness.

●RECENTLY ~~engage~~ISSUED inACCOUNTING ~~business activities substantially different from our current activities;~~STANDARDS

●In ~~cease~~May ~~operations~~2014, ~~liquidate,~~the ~~merge,~~FASB ~~transfer~~issued ASU No.2014-09, ~~acquire~~Revenue orfrom ~~consolidate~~Contracts with ~~another~~Customers ~~entity~~(Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, ~~change~~2017. ~~our~~The ~~name~~standard permits early adoption, ~~dissolve~~but not before December 15, or2016, ~~sell~~and permits the ~~inventory~~use orof ~~accounts~~either ~~receivable~~a ~~secured~~retrospective ~~under~~or ~~the~~cumulative ~~loan;~~effect transition method.

●Based ~~pay~~on ~~any~~our ~~dividend~~assessment, ~~other~~we ~~than~~ascertained inthe ~~stock;~~new standard does not have a material impact on our financial position and results of operations, and the new standard was adopted commencing the first interim fiscal period of 2019. We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are delivered. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

●In ~~lend~~February ~~money~~2016, ~~invest~~the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or ~~advance~~a ~~money~~financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our annual periods, including interim periods therein, beginning on or ~~assets~~after January 1, 2019, and must be applied on a modified retrospective basis to ~~another~~leases ~~person~~existing at, or ~~entity;~~entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We currently have a one-year warehouse lease which we consider an operating lease. The new standard will have no impact on our financial statements and, the lease will continue to be recorded on a straight-line basis for the remaining lease term.

●ITEM ~~purchase,~~7A. ~~create~~QUANTITATIVE orAND ~~acquire~~QUALITATIVE anDISCLOSURES ~~interest~~ABOUT inMARKET ~~any other entity;~~RISK

●Disclosure ~~incur~~in ~~any~~response ~~obligation~~to asthis aitem ~~surety~~is ornot ~~guarantor~~required ~~other~~of ~~than~~a insmaller ~~the~~reporting ~~ordinary course; or~~company.

●ITEM ~~enter~~8. FINANCIAL ~~into~~STATEMENTS ~~any~~AND ~~agreement~~SUPPLEMENTARY ~~containing any provision which would be violated or breached by the performance of our obligations under the loan agreements.~~DATA

~~Interest~~The ~~under~~Company's balance sheets as of September 30, 2019 and 2018 and the ~~loan~~related isstatements ~~variable~~of operations, changes in stockholders’ deficit and iscash ~~based~~flows ~~upon~~for the ~~Wall~~years ~~Street~~then ~~Journal~~ended ~~Prime~~have ~~rate~~been audited by Turner, ~~currently~~Stone 5and Company, LLP.~~25%~~ ~~per~~Turner, ~~annum~~Stone and Company, LLP is an independent registered public accounting firm. InThese ~~the~~financial ~~event~~statements ofhave abeen ~~default,~~prepared ~~interest~~in ~~under~~accordance ~~the~~with ~~loan~~accounting ~~may~~principles begenerally ~~increased~~accepted byin ~~2%.~~the ~~The~~United ~~line~~States of ~~credit~~America isand ~~secured~~pursuant byto aRegulation ~~priority~~S-K ~~security~~as ~~interest~~promulgated inby the ~~Company’s~~Securities ~~inventory~~ and ~~accounts~~Exchange ~~receivable~~Commission and ~~has~~are included herein pursuant to Part II, Item 8 of this Form 10-K. The financial statements have been ~~guaranteed~~prepared byassuming ~~our~~the ~~CEO~~Company will continue as a going concern.

~~Advances and Loans from Our Chief Executive Officer~~24

In connection with the expansion of the Company’s business, Mr. Shrewsbury, our Chairman and CEO, provided financing to us in the form of demand notes and advances. On February 25, 2014, we entered into a Note Exchange Agreement (“Exchange Agreement”) with Mr. Shrewsbury pursuant to which an aggregate of $2,000,000 in indebtedness due to Mr. Shrewsbury was consolidated and restructured and issued in exchange for such indebtedness a Consolidated Secured Promissory Note (the “Consolidated Note) in the principal amount of $2,000,000.

FINANCIAL STATEMENTS - TABLE OF CONTENTS
For the Years Ended September 30, 2019 and 2018


		Page(s)

Report of Independent Registered Public Accounting Firm		26

Audited Financial Statements:

	Balance Sheets at September 30, 2019 and 2018	27

	Statements of Operations for the years ended September 30, 2019 and 2018	28

	Statements of Changes In Stockholders' Deficit for the years ended September 30, 2019 and 2018	29

	Statements of Cash Flows for the years ended September 30, 2019 and 2018	30

	Notes to Financial Statements	31

The principal and interest under the Consolidated Note is due and payable ten years from the date of issuance and is to be secured by the proceeds of key man insurance purchased by the Company on the life of Mr. Shrewsbury. The Consolidated Note bears interest at the rate of 5% per annum except that, if the prime rate reported by the Wall Street Journal (“WSJ Prime Rate”) exceeds 5%, then the Consolidated Note will bear interest at the WSJ Prime Rate. As of September 30, 2018, accrued interest on the note was $459,72625

AnREPORT ~~event~~OF ofINDEPENDENT ~~default~~REGISTERED ~~will~~PUBLIC ~~occur~~ACCOUNTING ~~under the Consolidated Note upon:~~FIRM

●To the ~~Company’s~~Board ~~failure~~of toDirectors ~~pay~~and ~~when~~Stockholders ~~due~~of ~~any~~TX ~~principal~~Holdings, ~~or interest under the Consolidated Note;~~Inc.

●Opinion ~~the~~on ~~violation by~~ the ~~Company~~Financial ~~of any covenant or agreement contained in the Consolidated Note, the Exchange Agreement or related transaction documents;~~Statements

●We anhave ~~assignment~~audited ~~for~~the accompanying balance sheets of TX Holdings, Inc. (the ~~benefit~~“Company”) at September 30, 2019 and 2018 and the related statements of ~~creditors~~operations, bychanges in stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company; as of September 30, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

●Explanatory ~~the~~Paragraph ~~application~~– ~~for~~Going ~~the appointment of a receiver or liquidator for the Company or for property of the Company;~~Concern

●The accompanying financial statements have been prepared assuming that the ~~filing~~Company ofwill continue as a ~~petition~~going concern. As discussed in ~~bankruptcy~~Note by1 orto ~~against~~the financial statements, the Company; has not generated sufficient cash to fund its operations, has significant losses form operations since inception, has stockholders’ deficit and relies substantially upon financing from a related party. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

●Basis ~~the~~for ~~issuance of an attachment or the entry of a judgment against the Company in excess of $250,000;~~Opinion

●These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a ~~default~~public byaccounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to ~~any~~the ~~other~~Company ~~indebtedness~~in oraccordance with ~~respect~~the toU.S. ~~any~~federal ~~installment~~securities ~~debt~~laws ~~whether~~and orthe ~~not~~applicable ~~owing~~rules toand ~~Mr.~~regulations ~~Shrewsbury;~~of the Securities and Exchange Commission and the PCAOB.

●We conducted our audits in accordance with the ~~sale~~standards of ~~all~~the orPCAOB. Those ~~substantially~~standards ~~all~~require ofthat we plan and perform the ~~Company’s~~audits ~~assets~~to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or afraud. ~~transfer~~The Company is not required to have, nor were we engaged to perform, an audit of ~~more~~its ~~than~~internal ~~51%~~control over financial reporting. As part of ~~the~~our ~~Company’s~~audits ~~equity~~we ~~interests~~are required to aobtain ~~person~~an understanding of internal control over financial reporting but not ~~currently~~for athe ~~holder~~purpose of ~~equity~~expressing ~~interests~~an opinion on the effectiveness of the Company;’s internal control over financial reporting. Accordingly, we express no such opinion.

●Our audits included performing procedures to assess the ~~termination~~risks of ~~existence~~material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the ~~dissolution~~amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the ~~Company;~~financial statements. We believe that our audits provide a reasonable basis for our opinion.

●/s/ ~~the~~Turner, ~~death~~Stone of& ~~Mr.~~Company, ~~Shrewsbury; or~~L.L.P.

●Dallas, ~~the failure to pay when due any premium under the key man policy required to be purchased on the life of Mr. Shrewsbury under the Exchange Agreement.~~Texas

InDecember ~~addition~~9, in consideration of Mr. Shrewsbury agreeing to consolidate the indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the Company’s common stock issued February 25, 2014. The options became exercisable on April 1, 2014, and expired on March 31, 2017. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation or merger, or sale of all or substantially all of our assets.2019

23We have served as the Company’s auditor since 2010.

As of September 30, 2018, Mr. Shrewsbury had advanced an aggregate of $92,487 to the Company. The advances do not bear interest and are repayable upon demand. At September 30, 2018, the Company also has a payable of $84,000 to Mr. Shrewsbury for warehouse storage rental.26

~~The~~PART ~~Consolidated~~1-FINANCIAL ~~Note and advances are subordinate to the Company’s bank indebtedness.~~INFORMATION

~~RECENTLY~~Item ~~ISSUED~~1-Financial ~~ACCOUNTING STANDARDS~~Statements

InTX ~~May 2014~~HOLDINGS, ~~the FASB issued ASU No~~INC.~~2014-09,~~ ~~Revenue~~BALANCE ~~from~~SHEETS ~~Contracts~~September with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 1530, ~~2017.~~2019 ~~The standard permits early adoption, but not before December 15, 2016,~~ and ~~permits the use of either a retrospective or cumulative effect transition method.~~2018

Based on our assessment, we ascertained the new standard does not have a material impact on our financial position and results of operations, and the new standard will be adopted commencing the first interim fiscal period of 2019. We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

	September 30,			September 30,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	17,098		$	36,609
Accounts receivable, net of allowance for doubtful accounts of $ 0 at September 30, 2019 and September 30, 2018		275,356			259,694
Inventory		1,481,629			1,798,540
Other current assets		2,158			1,100
Total current assets		1,776,241			2,095,943

Inventory, non-current		350,000			-
Property and equipment, net		15,144			39,812
Total Assets	$	2,141,385		$	2,135,755

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accrued expenses, primarily to officers, (Note 6)	$	329,179		$	416,636
Accounts payable		320,985			529,853
Accrued interest to officer		559,726			459,726
Advances from officer, (Note 6)		181,487			92,487
Deferred revenue		96,000			-
Stockholder/officers advances for operations-warehouse rent, (Note 6)		108,000			84,000
Bank-term loan-current portion		69,011			59,419
Other current liability		5,191			-
Total current liabilities		1,669,579			1,642,121

Bank-term loan,less current portion		425,359			489,631
Note payable to officer, (Note 6)		2,000,000			2,000,000
Total Liabilities		4,094,938			4,131,752

Commitments and contingencies, (Note 10)

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, 2019 and September 30, 2018		9,293,810			9,293,810
Additional paid-in capital		4,321,329			4,321,329
Accumulated deficit		(15,568,692	)		(15,611,136	)
Total stockholders' deficit		(1,953,553	)		(1,995,997	)
Total Liabilities and Stockholders' Deficit	$	2,141,385		$	2,135,755

~~In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).~~ The ~~standard~~accompanying ~~requires~~notes ~~all~~are leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an ~~operating~~integral orpart ~~a financing lease. Costs~~ of ~~an operating lease will continue to be recognized as a single operating expense on a straight-line basis over~~ the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our annual periods, including interim periods therein, beginning on or after January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We currently have a one-year warehouse lease which we consider an operating lease. The new standard will have no impact on our financial statements and, the lease will continue to be recorded on a straight-line basis for the remaining lease term.

~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~27

~~Disclosure~~TX inHOLDINGS, ~~response~~INC. toSTATEMENTS ~~this~~OF ~~item~~OPERATIONS isFor ~~not~~the ~~required~~Years ofEnded aSeptember ~~smaller~~30, ~~reporting~~2019 ~~company.~~and 2018

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	September 30,			September 30,
	2019			2018

Revenue	$	3,934,689		$	3,840,095

Cost of goods sold		(3,313,609	)		(3,184,900	)

Gross profit		621,080			655,195

Operating expenses, except items shown separately below		399,106			369,756
Commission expense		123,053			159,027
Professional fees		8,359			23,840
Bad debt expense		14,621			37,672
Depreciation expense		7,168			7,168
Total operating expenses		552,307			597,463

Income from operations		68,773			57,732

Other income and (expense):
Loss on disposal of property and equipment		(7,000	)		-
Other income		112,043			16,124
Interest expense		(131,372	)		(129,056	)

Total other income and (expense), net		(26,329	)		(112,932	)

Net income/(loss)	$	42,444		$	(55,200	)

Net loss per common share
Basic	$	0.00		$	0.00

Weighted average of common shares outstanding-
Basic		48,053,084			48,053,084

The ~~Company's~~accompanying ~~consolidated~~notes ~~balance~~are sheets as of September 30, 2018 and 2017 and the related consolidated statements of operations, consolidated changes in stockholders’ deficit and consolidated cash flows for the years then ended have been audited by Turner, Stone and Company, LLP. Turner, Stone and Company, LLP is an ~~independent~~integral ~~registered~~part ~~public accounting firm. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States~~ of ~~America and pursuant to Regulation S-K as promulgated by~~ the ~~Securities and Exchange Commission and are included herein pursuant to Part II, Item 8 of this Form 10-K. The~~ financial statements ~~have been prepared assuming the Company will continue as a going concern~~.

2428

TX HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS - TABLE OF CONTENTS
For the Years Ended September 30, 2018 and 2017
		Page(s)
Report of Independent Registered Public Accounting Firm		26
Audited Financial Statements:
	Consolidated Balance Sheets at September 30, 2018 and 2017	27
	Consolidated Statements of Operations for the years ended September 30, 2018 and 2017	28
	Consolidated Statements of Changes In Stockholders' Deficit for the years ended September 30, 2018 and 2017	29
	Consolidated Statements of Cash Flows for the years ended September 30, 2018 and 2017	30
	Notes to Consolidated Financial Statements	31

TX HOLDINGS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT

For the Years Ended September 30, 2019 and 2018

									Additional
	Preferred Stock				Common Stock				Paid in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total

Balance at September 30, 2017		-	$	-		48,053,084	$	9,293,810	$	4,321,329	$	(15,555,936	)	$	(1,940,797	)

Net loss		-		-		-		-		-		(55,200	)		(55,200	)

Balance at September 30, 2018		-	$	-		48,053,084	$	9,293,810	$	4,321,329	$	(15,611,136	)	$	(1,995,997	)

Net income		-		-		-		-		-		42,444			42,444

Balance at September 30, 2019		-	$	-		48,053,084	$	9,293,810	$	4,321,329	$	(15,568,692	)	$	(1,953,553	)

~~REPORT~~The OFaccompanying ~~INDEPENDENT~~notes ~~REGISTERED~~are ~~PUBLIC~~an ~~ACCOUNTING~~integral ~~FIRM~~part of the financial statements.

~~To the Board of Directors and Stockholders of TX Holdings, Inc.~~29

~~Opinion~~TX onHOLDINGS, INC. STATEMENTS OF CASH FLOWS For the ~~Financial~~Years ~~Statements~~Ended September 30, 2019 and 2018

We have audited the accompanying consolidated balance sheets of TX Holdings, Inc. (the “Company”) at September 30, 2018 and 2017 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2018 and 2017, and the results of its consolidated operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

	September 30, 2019			September 30, 2018
Cash flows provided/(used) in operating activities:
Net income/(loss)	$	42,444		$	(55,200	)
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Depreciation expense		7,168			7,168
Bad debt expense		14,621			37,632
Loss on sale of fixed asset		7,000			-
Changes in operating assets and liabilities:
Accounts receivable, net		(30,283	)		160,877
Inventory		(33,089	)		(108,190	)
Commission advances		-			22,648
Other current assets		(1,058	)		1,786
Other assets		-			500
Accrued liabilities, primarily to officer, (Note 6)		(87,457	)		(21,719	)
Accounts payable		(208,868	)		(124,920	)
Accrued interest to officers		100,000			50,137
Stockholder/officers advances for operations-warehouse rent		24,000			24,000
Deferred revenue		96,000			-
Other current liabilities		5,191			-
Net cash used in operating activities		(64,331	)		(5,281	)

Cash flows provided in investing activities:
Proceeds from sale of fixed asset		10,500			-
Net cash provided/(used) in investing activities		10,500			-

Cash flows provided/(used ) in financing activities:
Repayment of bank term loan		(54,680	)		(56,955	)
Proceeds from officer advances		219,500			305,900
Repayment of officer advances		(130,500	)		(247,400	)
Net cash provided in financing activities		34,320			1,545

Decrease in cash and cash equivalents		(19,511	)		(3,736	)
Cash and cash equivalents at beginning of period		36,609			40,345

Cash and cash equivalents at end of period	$	17,098		$	36,609

Supplemental Disclosure of Cash Flow Information

Cash paid during the year for interest	$	28,928		$	27,262
Cash paid during the year for taxes	$	-		$	-

~~Explanatory~~The ~~Paragraph~~accompanying –notes ~~Going~~are ~~Concern~~an integral part of the financial statements.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not generated sufficient cash to fund its operations and relies substantially upon financing from a related party. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.30

~~Basis~~TX ~~for~~HOLDINGS, ~~Opinion~~INC. NOTES TO FINANCIAL STATEMENTS

~~These~~NOTE ~~consolidated~~1- ~~financial~~SUMMARY ~~statements~~OF ~~are~~SIGNIFICANT ~~the~~ACCOUNTING ~~responsibility~~POLICIES ofAND the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.ACTIVITIES

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.BUSINESS

~~Our~~TX ~~audits~~Holdings, ~~included~~Inc, ~~performing~~a ~~procedures~~Georgia tocorporation ~~assess~~ (the ~~risks~~"Company", of“we”, ~~material~~‘us” ~~misstatement~~or of“our” ), is in the ~~consolidated~~business ~~financial~~of ~~statements~~supplying, ~~whether~~distributing ~~due~~and toselling ~~error~~drill orbits, ~~fraud~~related tools, and ~~performing~~other ~~procedures~~mining ~~that~~supplies ~~respond~~and torail ~~those~~products ~~risks.~~to ~~Such~~United ~~procedures~~States’ ~~included~~coal ~~examining,~~mining oncompanies aand ~~test~~operators ~~basis,~~for ~~evidence~~use ~~regarding~~in ~~the~~their ~~amounts~~extraction and ~~disclosures~~transportation inprocesses. ~~the~~Our ~~financial~~products ~~statements.~~are ~~Our~~either ~~audits~~shipped ~~also~~to ~~included~~our ~~evaluating~~warehouse ~~the~~in ~~accounting~~Ashland, ~~principles~~Kentucky, ~~used~~for ~~and~~distribution ~~significant~~to ~~estimates~~our ~~made~~customers byor ~~management~~shipped directly to our customers, asincluding ~~well~~products aswe ~~evaluating~~import ~~the~~once ~~overall~~they ~~presentation~~have ofbeen ~~the~~received ~~consolidated~~by ~~financial~~us ~~statements~~at a port and cleared customs. WeOur ~~believe~~products ~~that~~are transported primarily by ground transportation to our ~~audits~~customers. ~~provide~~Shipping acosts ~~reasonable~~are ~~basis~~born ~~for~~by our ~~opinion~~customers.

~~/s/~~The ~~Turner,~~Company ~~Stone~~was &incorporated ~~Company~~in the State of Georgia on May 15, L2000.~~L.P.~~

~~Dallas,~~Rail ~~Texas~~and Mining Supplies Distribution Business

Commencing in December 192011, ~~2018~~the Company expanded and began focusing its business on the distribution of rail material and mining supplies consumed by the United States’ coal mining industry in its production and transportation processes. This includes rail and its various components and mining supplies, such as steel and tungsten carbide miner bits and augurs and related tools and material.

WeIn ~~have~~connection ~~served~~with asthe Company’s business expansion, Mr. Shrewsbury, the Company’s ~~auditor~~Chairman ~~since~~and ~~2010~~CEO, has provided us with financing in the form of loans and advances and has guaranteed our bank term loan.

26On February 25, 2014, the Company and Mr. Shrewsbury entered into an agreement to consolidate certain indebtedness due to Mr. Shrewsbury in the aggregate amount of $2,000,000, including the principal due under a Revolving Demand Note (“Revolving Note”) in the principal amount of $1,062,000 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $168,905, the principal due under a 10% Promissory Note (“10% Note”) in the amount of $289,997 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $93,252; and $385,846 of non-interest bearing advances previously made by Mr. Shrewsbury and outstanding as of January 31, 2014. The Company issued in exchange and in replacement therefor a Consolidated Secured Promissory Note (the “Consolidated Note”) in the principal amount of $2,000,000. Upon issuance of the Consolidated Note, the Revolving Note and 10% Note were cancelled, and Mr. Shrewsbury agreed to waive any prior defaults under the terms of such notes and to release the Company from any claims related thereto. In addition, in consideration of Mr. Shrewsbury agreeing to consolidate and restructure the foregoing indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the Company’s common stock pursuant to the terms of a Non-Qualified Stock Option Agreement, issued February 25, 2014. The options were exercisable for a period of three years commencing April 1, 2014. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation, merger, or sale of all or substantially all of the assets. The options expired on March 31, 2017.

~~PART~~The ~~1-FINANCIAL~~Consolidated ~~INFORMATION~~Note ~~Item~~bears ~~1-Financial~~interest ~~Statements~~at TXthe ~~HOLDINGS~~rate of 5% per annum or prime rate if higher than 5% per annum, ~~INC~~is repayable in full ten years from the date of issuance and is subject to certain events of default. ~~CONSOLIDATED~~Payment ~~BALANCE~~of ~~SHEETS~~the Consolidated Note is to be secured or otherwise payable by the Company out of the death benefit proceeds of key man insurance of $2 million that has been purchased by the Company on the life of Mr. Shrewsbury. The terms and conditions of the foregoing debt consolidation and restructuring were submitted to and unanimously approved by the disinterested members of the Board of Directors of the Company who are also “qualified directors” within the definition set forth in Section 14-2-862 of the Georgia Corporation Code. Mr. Shrewsbury has also advanced the Company an additional $181,487 at September 30, ~~2018~~2019, which is not interest bearing. The notes and ~~2017~~advances due to Mr. Shrewsbury are subordinate to the Company’s bank indebtedness.

	September 30,			September 30,
	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	36,609		$	40,345
Accounts receivable, net of allowance for doubtful accounts of $ 0 at September 30, 2018 and September 30, 2017		259,694			458,203
Inventory		1,798,540			1,690,350
Commission advances		—			22,648
Other current assets		1,100			2,886
Total current assets		2,095,943			2,214,432
Property and equipment, net		39,812			46,980
Note receivable		—			—
Other		—			500
Total Assets	$	2,135,755		$	2,261,912
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued expenses, primarily to officers, (Note 6)	$	416,636		$	488,218
Accounts payable		529,853			654,773
Accrued interest to officer		459,726			359,726
Advances from officer, (Note 6)		92,487			33,987
Stockholder/officers advances for operations-warehouse rent, (Note 6)		84,000			60,000
Bank-term loan-current portion		59,419			606,005
Total current liabilities		1,642,121			2,202,709
Bank-term loan,less current portion		489,631			—
Note payable to officer, (Note 6)		2,000,000			2,000,000
Total Liabilities		4,131,752			4,202,709
Commitments and contingencies, (Note 10)
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, 2018 and September 30, 2017		9,293,810			9,293,810
Additional paid-in capital		4,321,329			4,321,329
Accumulated deficit		(15,611,136	)		(15,555,936	)
Total stockholders' deficit		(1,995,997	)		(1,940,797	)
Total Liabilities and Stockholders' Deficit	$	2,135,755		$	2,261,912

~~The~~TX ~~accompanying~~HOLDINGS, ~~notes~~INC. ~~are~~NOTES anTO ~~integral~~FINANCIAL ~~part of the consolidated financial statements.~~STATEMENTS

27NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES-Continued

TXFINANCIAL ~~HOLDINGS,~~CONDITION ~~INC.~~AND ~~CONSOLIDATED~~GOING ~~STATEMENTS~~CONCERN ~~OF OPERATIONS For the Years Ended September 30, 2018 and 2017~~CONSIDERATIONS

	September 30,			September 30,
	2018			2017
Revenue	$	3,840,095		$	3,006,599
Cost of goods sold		(3,184,900	)		(2,273,214	)
Gross profit		655,195			733,385
Operating expenses, except items shown separately below		369,756			559,583
Commission expense		159,027			149,884
Professional fees		23,840			16,739
Bad debt expense		37,672			6,936
Depreciation expense		7,168			9,799
Total operating expenses		597,463			742,941
Income/(loss) from operations		57,732			(9,556	)
Other income and (expense):
Other income		16,124			11,038
Interest expense		(129,056	)		(125,988	)
Total other income and (expense), net		(112,932	)		(114,950	)
Net loss	$	(55,200	)	$	(124,506	)
Net loss per common share
Basic	$	0.00		$	0.00
Weighted average of common shares outstanding-
Basic		48,053,084			48,053,084

Although the Company had positive cash flows during earlier years, the Company has not generated sufficient cash during recent years to fund its operations and relies substantially upon financing provided by Mr. Shrewsbury, the Company’s Chief Executive Officer, and a term loan that is guaranteed by Mr. Shrewsbury.

~~The~~In view of these matters, realization of certain assets in the accompanying ~~notes~~balance ~~are~~sheet anis ~~integral~~dependent ~~part~~upon continued operations, which, in turn, is dependent upon our ability to meet our financial requirements, upon the continued availability of financing from Mr. Shrewsbury and under the ~~consolidated~~Company’s ~~financial~~bank ~~statements~~term loan, and the success of our future operations.

28The Company has incurred significant losses from operations since inception and has a stockholders’ deficit, both of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company will continue its on-going efforts to increase our customer base and seek lower cost suppliers to generate future operating profits.

TXThe ~~HOLDINGS~~accompanying financial statements have been prepared on a going concern basis, ~~INC.~~which ~~CONSOLIDATED~~contemplates ~~STATEMENTS~~continuing OFoperations ~~CHANGES~~and INrealization ~~STOCKHOLDERS'~~of ~~DEFICIT~~assets ~~For~~and liquidation of liabilities in the ~~Years~~ordinary ~~Ended~~course ~~September~~of ~~30,~~business. ~~2018~~The Company's ability to continue as a going concern is dependent upon its ability to implement successfully its business plan and ~~2017~~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.

	Unaudited
									Additional
	Preferred Stock				Common Stock				Paid in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at September 30, 2016		—	$	—		48,053,084	$	9,293,810	$	4,321,329	$	(15,431,430	)	$	(1,816,291	)
Net loss		—		—		—		—		—		(124,506	)		(124,506	)
Balance at September 30, 2017		—	$	—		48,053,084	$	9,293,810	$	4,321,329	$	(15,555,936	)	$	(1,940,797	)
Net loss		—		—		—		—		—		(55,200	)		(55,200	)
Balance at September 30, 2018		—	$	—		48,053,084	$	9,293,810	$	4,321,329	$	(15,611,136	)	$	(1,995,997	)

The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and U. S. generally accepted accounting principles.

~~The~~USE ~~accompanying~~OF ~~notes~~ESTIMATES ~~are~~AND ~~an integral part of the consolidated financial statements.~~ASSUMPTIONS

29The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions and calculated estimates that affect (a) the reported amounts of assets and liabilities, (b) disclosure of contingent assets and liabilities at the date of the financial statements, and (c) the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

TXCASH ~~HOLDINGS,~~AND ~~INC. CONSOLIDATED STATEMENTS OF~~ CASH FLOWS ~~For the Years Ended September 30, 2018 and 2017~~

	September 30,			September 30,
	2018			2017
Cash flows provided by/(used in) operating activities:
Net loss	$	(55,200	)	$	(124,506	)
Adjustments to reconcile loss to net cash provided by/(used in) operating activities:
Depreciation expense		7,168			9,799
Bad debt expense		37,632			6,936
Write-off of note receivable		—			29,983
Changes in operating assets and liabilities:
Accounts receivable, net		160,877			(229,737	)
Inventory		(108,190	)		415,668
Commission advances		22,648			46,070
Other current assets		1,786			(2,750	)
Other assets		500			—
Accrued liabilities, primarily to officer, (Note 6)		28,418			46,891
Accounts payable		(124,920	)		29,686
Stockholder/officers advances for operations-warehouse rent		24,000			30,000
Net cash provided by/(used in) operating activities		(5,281	)		258,040
Cash flows provided by/(used in) investing activities:
Net cash provided by/(used in) investing activities		—			—
Cash flows provided by/(used in) financing activities:
Repayment of bank term loan		(56,955	)		(56,107	)
Proceeds from officer advances		305,900			111,150
Repayment of officer advances		(247,400	)		(275,800	)
Net cash provided by/(used in) financing activities		1,545			(220,757	)
Increase/(decrease) in cash and cash equivalents		(3,736	)		37,283
Cash and cash equivalents at beginning of period		40,345			3,062
Cash and cash equivalents at end of period	$	36,609		$	40,345
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest	$	27,262		$	25,988
Cash paid during the year for taxes	$	—		$	—

For purposes of the statements of cash flows, cash includes demand deposits, time deposits, certificates of deposit and short-term liquid investments in government securities with original maturities of three months or less when purchased. The Company maintains deposits in two financial institutions. The Federal Deposit Insurance Corporation provides coverage up to $250,000 per depositor, per bank. At September 30, 2019, none of the Company’s cash was in excess of federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks from these deposits.

~~The~~ACCOUNTS ~~accompanying~~RECEIVABLE ~~notes~~AND ~~are~~ALLOWANCE anFOR ~~integral~~DOUBTFUL ~~part of the consolidated financial statements.~~ACCOUNTS

The Company’s practice is to record an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The estimate is based on management’s assessment of the collectability of customer accounts and includes consideration for credit worthiness and financial condition of those customers. The Company reviews historical experience with its customers, the general economic environment and the aging of receivables to determine the adequacy of the allowance. The Company records an allowance to reduce receivables to the amount that can be reasonably expected to be collectible. The allowance for doubtful accounts is $0 at September 30, 2019 and 2018.

TXCompany ~~HOLDINGS,~~records ~~INC~~an allowance to reduce receivables to the amount that can be reasonably expected to be collectible. ~~NOTES~~The TOallowance ~~CONSOLIDATED~~for ~~FINANCIAL~~doubtful ~~STATEMENTS~~accounts is $0 at September 30, 2019 and 2018.

~~NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES~~32

~~BUSINESS~~TX HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS

TXNOTE ~~Holdings,~~1- ~~Inc,~~SUMMARY aOF ~~Georgia~~SIGNIFICANT ~~corporation~~ACCOUNTING ~~(the~~POLICIES ~~"Company"),~~AND is in the business of supplying, distributing and selling drill bits, related tools, and other mining supplies and rail products to United States’ coal mining companies and operators for use in their extraction and transportation processes. Our products are either shipped to our warehouse in Ashland, Kentucky, for distribution to our customers or shipped directly to our customers, including products we import once they have been received by us at a port and cleared customs. Our products are transported primarily by ground transportation to our customers. Shipping costs are born by our customers.ACTIVITIES-Continued

~~The~~ACCOUNTS ~~Company~~RECEIVABLE ~~was~~AND ~~incorporated~~ALLOWANCE inFOR ~~the~~DOUBTFUL ~~State of Georgia on May 15, 2000.~~ACCOUNTS-Continued

~~Rail~~The Company wrote-off two uncollectable customer’s account, due to bankruptcy and ~~Mining~~uncollectable ~~Supplies~~balance ~~Distribution~~in ~~Business~~the amount of $14,621, during the current year. During fiscal year 2018 the Company wrote-off one uncollectable customer’s account due to bankruptcy in the amount of $38,920.

Commencing in December 2011, the Company expanded and began focusing its business on the distribution of rail material and mining supplies consumed by the United States’ coal mining industry in its production and transportation processes. This includes rail and its various components and mining supplies, such as steel and tungsten carbide miner bits and augurs and related tools and material.INVENTORY

InThe ~~connection with the~~ Company’s ~~business~~inventory ~~expansion,~~consists ~~Mr.~~of ~~Shrewsbury,~~mine ~~the Company’s Chairman~~ and ~~CEO,~~rail ~~has~~inventory. ~~provided~~Inventory usis ~~with~~stated ~~financing~~at in the ~~form~~lower of ~~loans~~cost ~~and~~(first-in, ~~advances~~first-out) ~~and~~or ~~has~~net ~~guaranteed~~realizable ~~our bank term loan~~value.

On February 25, 2014, the Company and Mr. Shrewsbury entered into an agreement to consolidate certain indebtedness due to Mr. Shrewsbury in the aggregate amount of $2,000,000, including the principal due under a Revolving Demand Note (“Revolving Note”) in the principal amount of $1,062,000 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $168,905, the principal due under a 10% Promissory Note (“10% Note”) in the amount of $289,997 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $93,252; and $385,846 of non-interest bearing advances previously made by Mr. Shrewsbury and outstanding as of January 31, 2014. The ~~Company~~following ~~issued~~table indetails ~~exchange and in replacement therefor a Consolidated Secured Promissory Note (~~the ~~“Consolidated~~inventory Note”) in the principal amount of $2,000,000. Upon issuance of the Consolidated Note, the Revolving Note and 10% Note were cancelled, and Mr. Shrewsbury agreed to waive any prior defaults under the terms of such notes and to release the Company from any claims related thereto. In addition, in consideration of Mr. Shrewsbury agreeing to consolidate and restructure the foregoing indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the Company’s common stock pursuant to the terms of a Non-Qualified Stock Option Agreement, issued February 25, 2014. The options were exercisable for a period of three years commencing April 1, 2014. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation, merger, or sale of all or substantially all of the assets. The options expired on March 31, 2017.components:

The Consolidated Note bears interest at the rate of 5% per annum or prime rate if higher than 5% per annum, is repayable in full ten years from the date of issuance and is subject to certain events of default. Payment of the Consolidated Note is to be secured or otherwise payable by the Company out of the death benefit proceeds of key man insurance of $2 million that has been purchased by the Company on the life of Mr. Shrewsbury. The terms and conditions of the foregoing debt consolidation and restructuring were submitted to and unanimously approved by the disinterested members of the Board of Directors of the Company who are also “qualified directors” within the definition set forth in Section 14-2-862 of the Georgia Corporation Code. Mr. Shrewsbury has also advanced the Company an additional $92,487 at September 30, 2018, which is not interest bearing. The notes and advances due to Mr. Shrewsbury are subordinate to the Company’s bank indebtedness.

	Year Ended
	9/30/2019		9/30/2018
Inventory
Mining	$	650,043	$	729,169
Rail		1,181,586		1,069,371
Total	$	1,831,629	$	1,798,540

~~FINANCIAL~~PROPERTY ~~CONDITION~~ AND ~~GOING CONCERN CONSIDERATIONS~~EQUIPMENT

~~Although~~Property ~~the~~and ~~Company~~equipment ~~had~~are ~~positive~~stated ~~cash~~at ~~flows~~cost ~~during~~less ~~fiscal~~depreciation. ~~2014~~Major renewals and ~~2013~~betterments are capitalized, ~~the~~while ~~Company~~maintenance ~~has~~and repairs that do not ~~generated~~materially ~~sufficient~~improve ~~cash~~or ~~during~~extend ~~succeeding~~the ~~years~~useful lives of the assets are charged to ~~fund~~expense ~~its~~as ~~operations~~incurred. A depreciable life of seven (7) years and ~~relies~~five ~~substantially~~(5) ~~upon~~years ~~financing~~are ~~provided~~assigned byto ~~Mr.~~delivery ~~Shrewsbury~~trucks and equipment, respectively. Assets are depreciated over their estimated useful lives using the straight-line method. The Company’s ~~Chief~~records ~~Executive~~impairment ~~Officer,~~losses ~~and~~on along-lived ~~term~~assets ~~loan~~used in operations when events and circumstances indicate that isthe ~~guaranteed~~assets might be impaired and the undiscounted cash flows estimated to be generated by ~~Mr.~~those ~~Shrewsbury~~assets are less than the carrying amounts of those assets (Note 2).

31REVENUE RECOGNITION

TXOn ~~HOLDINGS~~January 1, ~~INC~~2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (ASC 606),” using the modified retrospective method. ~~NOTES~~Adoption TOof ~~CONSOLIDATED~~the ~~FINANCIAL~~new ~~STATEMENTS~~revenue standard had no impact on the Company’s consolidated balance sheet, results of operations, equity or cash flows as of the adoption date.

~~NOTE~~We 1-recognize ~~SUMMARY~~revenue OFon ~~SIGNIFICANT~~sales ~~ACCOUNTING~~to ~~POLICIES~~customers ~~AND~~and ~~ACTIVITIES-Continued~~distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

~~FINANCIAL~~The ~~CONDITION~~Company’s ~~AND~~revenue ~~GOING~~stream ~~CONCERN~~is ~~CONSIDERATIONS-Continued~~generated from sales of mine and rail related products. Sales are initiated directly from customers' orders or through a sales agent. Revenue is recognized generally upon shipment or delivery to our customers, depending upon the terms of the sales order. Control is considered transferred when title and risk of loss pass, when the customer is obligated to pay and, where required, when the customer has accepted the products.

InWe ~~view~~recognize ofshipping ~~these~~fees, ~~matters~~if any, ~~realization~~received offrom ~~certain~~our ~~assets~~customers in ~~the~~revenue. ~~accompanying~~We ~~balance~~expense ~~sheet~~shipping isand ~~dependent~~handling ~~upon~~costs ~~continued~~as ~~operations,~~incurred which, inare ~~turn,~~included isin ~~dependent~~cost ~~upon our ability to meet our financial requirements, upon the continued availability~~ of ~~financing~~goods ~~from~~sold ~~Mr.~~on ~~Shrewsbury and under~~ the ~~Company’s~~statements ~~bank term loan, and the success~~ of ~~our future~~ operations.

The Company has incurred significant losses from operations since inception and has a stockholders’ deficit, both of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company will continue its on-going efforts to increase our customer base and seek lower cost suppliers to generate future operating profits.33

~~The~~TX ~~accompanying financial statements have been prepared on a going concern basis~~HOLDINGS, ~~which contemplates continuing operations and realization of assets and liquidation of liabilities in the ordinary course of business~~INC. ~~The~~NOTES ~~Company's~~TO ~~ability~~FINANCIAL to continue as a going concern is dependent upon its ability to implement successfully its business plan and 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.STATEMENTS

~~The~~NOTE ~~financial~~1- ~~statements~~SUMMARY ~~have~~OF ~~been~~SIGNIFICANT ~~prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and U. S. generally accepted accounting principles.~~ACCOUNTING

~~USE~~POLICIES ~~OF ESTIMATES~~ AND ~~ASSUMPTIONS~~ACTIVITIES-Continued

~~The~~REVENUE preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions and calculated estimates that affect (a) certain reported amounts of assets and liabilities, (b) disclosure of contingent assets and liabilities at the date of the financial statements, and (c) the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include recoverability of long-lived and deferred tax assets. The Company bases its estimates on historical experience and various other common assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.CLASSES

~~CASH~~Selected ~~AND~~financial ~~CASH~~information ~~FLOWS~~for the Company’s operating revenue classes are as follows:

For purposes of the statements of cash flows, cash includes demand deposits, time deposits, certificates of deposit and short-term liquid investments in government securities with original maturities of three months or less when purchased. The Company maintains deposits in two financial institutions. The Federal Deposit Insurance Corporation provides coverage up to $250,000 per depositor, per bank. At September 30, 2018, none of the Company’s cash was in excess of federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks from these deposits.

	Year Ended
	September 30, 2019		September 30, 2018
Revenue
Rail Products	$	3,744,447	$	3,419,970
Mining Products		190,242		420,125
Total	$	3,934,689	$	3,840,095

Direct cost of revenue
Rail Products	$	3,140,413	$	2,817,698
Mining Products		173,196		367,202
Total	$	3,313,609	$	3,184,900

~~ACCOUNTS~~STOCK ~~RECEIVABLE~~BASED ~~AND ALLOWANCE FOR DOUBTFUL ACCOUNTS~~COMPENSATION

The Company’s ~~practice is to record an allowance for doubtful~~ accounts for ~~estimated losses resulting from the inability of customers to make required payments. The estimate is~~ share-based onexpense ~~management’s assessment of the collectability of customer accounts~~ and ~~includes~~activity ~~consideration~~in ~~for~~accordance ~~credit worthiness and financial condition of those customers. The Company reviews historical experience~~ with ~~its~~Financial ~~customers,~~Accounting ~~the~~Standard ~~general~~Board ~~economic~~(FASB) ~~environment~~ASC ~~and~~Topic ~~the~~718 ~~aging~~which ofestablishes ~~receivables~~accounting tofor ~~determine~~equity ~~the~~instruments ~~adequacy~~exchanged offor ~~the allowance~~services. ~~The Company~~Under ~~records~~this anprovision ~~allowance~~share-based ~~to reduce receivables to the amount that can be reasonably expected to be collectible. The allowance for doubtful accounts is $0 at September 30, 2018 and 2017.~~compensation

32costs are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over employee’s requisite service period, generally the vesting period of the equity grant.

TXThe ~~HOLDINGS~~Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, ~~INC~~expected option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term and the expected annual dividend yield. ~~NOTES~~The TOCompany ~~CONSOLIDATED~~believes ~~FINANCIAL~~that ~~STATEMENTS~~the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of the stock options granted.

~~NOTE~~POTENTIALLY 1-DILUTIVE ~~SUMMARY~~OPTIONS ~~OF SIGNIFICANT ACCOUNTING POLICIES~~ AND ~~ACTIVITIES-Continued~~WARRANTS

~~ACCOUNTS~~As ~~RECEIVABLE~~of ~~AND~~September ~~ALLOWANCE~~30, ~~FOR~~2019, ~~DOUBTFUL~~and ~~ACCOUNTS-Continued~~2018 there were no outstanding options and warrants.

The Company wrote-off one uncollectable customer’s account, due to bankruptcy, in the amount of $38,920, during the current year. During fiscal year 2017 the Company wrote-off two uncollectable customer’s accounts in the amount of $1,115 and, also wrote-off a note receivable in the amount of $29,983, The note receivable had been issued in connection with the sale of an oil lease previously owned by the Company.34

~~INVENTORY~~TX HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS

~~The~~NOTE ~~Company’s~~1- ~~inventory~~SUMMARY ~~consists~~OF ofSIGNIFICANT ~~mine~~ACCOUNTING ~~and~~POLICIES ~~rail~~AND ~~inventory. Inventory is stated at the lower of cost (first~~ACTIVITIES-~~in, first-out) or net realizable value.~~ Continued

~~The~~INCOME ~~following table details the inventory components:~~TAXES

	Year Ended
	9/30/2018		9/30/2017
Inventory
Mining	$	729,169	$	878,628
Rail		1,069,371		811,722
Total	$	1,798,540	$	1,690,350

Income taxes are estimated for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the financial reporting basis and income tax basis of assets and liabilities. Deferred tax assets and liabilities represent future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.

~~PROPERTY~~Deferred ~~AND~~taxes ~~EQUIPMENT~~may also be recognized for operating losses that are available to offset future taxable income. Deferred taxes are adjusted for changes in tax laws and tax rates when those changes are enacted.

~~Property~~In ~~and~~assessing ~~equipment~~the ~~are~~deferred ~~stated~~tax atassets, ~~cost~~management ~~less~~considers ~~depreciation.~~whether ~~Major~~it ~~renewals~~is ~~and~~more ~~betterments~~likely ~~are~~than ~~capitalized,~~not ~~while maintenance and repairs~~ that dosome ~~not~~portion ~~materially improve~~ or ~~extend~~all ~~the useful lives~~ of the ~~assets~~deferred ~~are~~tax ~~charged~~assets towill ~~expense~~be ~~as incurred~~realized. AThe ~~depreciable~~ultimate ~~life~~realization of ~~three~~deferred ~~(3)~~tax ~~years~~assets ~~and~~is ~~five~~dependent ~~(5)~~upon ~~years~~the ~~are~~generation ~~assigned~~of tofuture ~~delivery~~taxable ~~trucks~~income ~~and~~during ~~equipment,~~periods ~~respectively.~~in ~~Assets~~which ~~are~~temporary ~~depreciated~~differences ~~over~~become ~~their~~deductible. ~~estimated~~Management ~~useful~~considers ~~lives using~~ the ~~straight-line~~reversal ~~method.~~of ~~The~~any ~~Company~~deferred ~~records~~tax ~~impairment~~liabilities, ~~losses~~projected onfuture ~~long-lived~~taxable ~~assets~~income ~~used in operations when events~~ and ~~circumstances~~tax ~~indicate~~planning ~~that~~strategies ~~the~~in ~~assets~~making ~~might~~this beassessment. ~~impaired~~Valuation ~~and~~allowances ~~the~~are ~~undiscounted~~established, ~~cash~~when ~~flows~~necessary, ~~estimated~~ to bereduce ~~generated~~deferred bytax ~~those~~ assets ~~are~~to ~~less than~~ the ~~carrying~~amount ~~amounts~~expected ofto ~~those~~be ~~assets (Note 2)~~realized.

~~REVENUE~~FINANCIAL ~~RECOGNITION~~INSTRUMENTS

The Company ~~recognizes~~includes ~~revenue~~fair ~~from~~value ~~direct~~information ~~sales~~in ofthe ~~our~~notes ~~products~~ to ~~our~~the ~~customers,~~financial ~~including~~statements ~~shipping~~when ~~fees,~~the ~~when~~fair ~~title~~value ~~passes~~of toits financial instruments is different from the ~~customer,~~book ~~which~~value. ~~usually~~When ~~occurs~~the ~~upon~~book ~~shipment~~value orapproximates ~~delivery~~fair value, ~~depending~~no ~~upon~~additional ~~the~~disclosure ~~terms~~is ofmade, which is the ~~sales~~case ~~order,~~for ~~when~~financial ~~persuasive~~instruments ~~evidence~~outstanding as of anSeptember ~~arrangement~~30, ~~exists;~~2019 ~~when~~and ~~sales~~2018. ~~amounts~~The book value of those financial instruments that are ~~fixed~~classified as current assets or ~~determinable;~~liabilities ~~and~~approximates ~~when~~fair ~~collectability~~value isbecause ~~reasonably~~of ~~assured~~the short maturity of these instruments. ~~The~~For non-current financial instruments, the Company ~~expenses~~uses ~~shipping~~quoted ~~and~~market ~~handling~~prices ~~costs~~or, asto ~~incurred~~the ~~which~~extent ~~are~~that ~~included~~there inare ~~cost~~no ofquoted ~~sales~~market onprices, ~~the~~market ~~consolidated~~prices ~~statements~~for ofsimilar ~~operations~~instruments.

~~STOCK~~FAIR ~~BASED~~VALUE ~~COMPENSATION~~MEASUREMENT

~~The Company accounts for share-based expense and activity in accordance with Financial Accounting Standard Board (FASB)~~ ASC Topic ~~718~~820, ~~which~~Fair ~~establishes~~Value ~~accounting for equity instruments exchanged for services. Under this provision share-based compensation costs are measured at the grant date~~Measurement, ~~based~~defines ~~on the calculated~~ fair value ~~of the award~~, ~~and~~establishes ~~are~~a ~~recognized~~framework asfor anmeasuring ~~expense~~fair ~~over~~value ~~employee’s~~in ~~requisite~~accordance ~~service period, generally the vesting period of the equity grant.~~with

33U. S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation

TXadjustments ~~HOLDINGS~~may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, ~~INC~~among other things, as well as unobservable parameters. ~~NOTES~~Any TOsuch ~~CONSOLIDATED~~valuation ~~FINANCIAL~~adjustments ~~STATEMENTS~~are applied consistently over time.

~~NOTE~~NET 1-INCOME ~~SUMMARY~~(LOSS) OFPER ~~SIGNIFICANT~~COMMON ~~ACCOUNTING POLICIES AND ACTIVITIES-Continued~~SHARE

~~STOCK~~Net ~~BASED~~income ~~COMPENSATION-Continued~~or loss per share is computed based on current accounting guidance requiring companies to report both basic net income or loss per common share, which is computed using the weighted average number of common shares outstanding during the period, and diluted net income per common share, which is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method.

~~The~~As ~~Company estimates the fair value~~ of ~~stock~~September ~~options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award~~30, ~~expected~~2019 ~~option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term~~ and ~~the~~2018 ~~expected~~there ~~annual~~were ~~dividend~~no ~~yield.~~unissued ~~The~~securities ~~Company~~which ~~believes~~were ~~that~~not ~~the~~included ~~valuation technique and approach utilized to develop the underlying assumptions are appropriate~~ in ~~calculating~~ the ~~fair~~calculation ~~value~~ of ~~the~~diluted ~~stock~~net ~~options~~earnings ~~granted~~per share.

~~POTENTIALLY DILUTIVE OPTIONS AND WARRANTS~~35

AsTX ~~of September 30~~HOLDINGS, ~~2018 there were no outstanding options and warrants~~INC. AtNOTES ~~September~~TO ~~30,~~FINANCIAL 2017, the Company had 50,000 outstanding warrants which represented the remaining balance of 400,000 warrants issued to a sales agent, the warrants were not included in the twelve months ended September 30, 2017 calculation of diluted net loss per share since their inclusion will be antidilutive.STATEMENTS

~~INCOME~~NOTE ~~TAXES~~1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES-Continued

~~Income~~RECENTLY ~~taxes~~ISSUED ~~are~~ACCOUNTING estimated for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the financial reporting basis and income tax basis of assets and liabilities. Deferred tax assets and liabilities represent future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.STANDARDS

~~Deferred~~In ~~taxes~~May ~~may~~2014, ~~also~~the FASB issued ASU No.2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be ~~recognized~~used across all industries and requires additional disclosures. It is effective for ~~operating~~annual ~~losses~~reporting ~~that~~periods ~~are~~beginning ~~available~~after toDecember ~~offset~~15, ~~future~~2017, ~~taxable~~including ~~income~~interim reporting periods within those periods. ~~Deferred~~The ~~taxes~~standard ~~are~~permits ~~adjusted~~early ~~for~~adoption, ~~changes~~but innot ~~tax~~before ~~laws~~December 15, 2016, and ~~tax~~permits ~~rates~~the ~~when~~use ~~those~~of ~~changes~~either ~~are~~a ~~enacted~~retrospective or cumulative effect transition method.

InOn ~~assessing~~January ~~the~~1, ~~deferred tax assets~~2018, ~~management considers whether it is more likely than not that some portion or all of~~ the ~~deferred~~Company ~~tax~~adopted ~~assets~~ASU will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which temporary differences become deductible. Management considers the reversal of any deferred tax liabilities2014-09, ~~projected~~“Revenue ~~future~~from ~~taxable~~Contracts ~~income~~with ~~and~~Customers ~~tax~~(ASC ~~planning strategies in making this assessment. Valuation allowances are established~~606),” ~~when~~using ~~necessary, to reduce deferred tax assets to~~ the ~~amount expected to be realized.~~modified

~~FINANCIAL~~retrospective ~~INSTRUMENTS~~method. Adoption of the new revenue standard had no impact on the Company’s balance sheet, results of

The Company includes fair value information in the notes to the financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair valueoperations, noequity ~~additional~~or ~~disclosure~~cash isflows ~~made, which is the case for financial instruments outstanding~~ as of ~~September 30, 2018 and 2017. The book value of those financial instruments that are classified as current assets or liabilities approximates fair value because of~~ the ~~short~~adoption ~~maturity of these instruments~~date. ~~For non-current financial instruments, the Company uses quoted market prices or, to the extent that there are no quoted market prices, market prices for similar instruments.~~

~~FAIR~~We ~~VALUE~~recognize ~~MEASUREMENT~~revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are

~~ASC Topic 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value in accordance with U~~shipped. S.For ~~generally~~consignment ~~accepted accounting principles~~sales, ~~and~~we ~~requires~~recognize ~~certain~~revenue ~~disclosures~~when about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the ~~customer’s~~goods ~~creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments~~ are ~~applied~~pulled ~~consistently~~from ~~over~~consignment ~~time~~inventory.

34.

TXIn ~~HOLDINGS~~February 2016, ~~INC~~the FASB issued ASU No. ~~NOTES~~2016-02, TOLeases ~~CONSOLIDATED~~(Topic ~~FINANCIAL~~842). ~~STATEMENTS~~The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning on or after January1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We implemented the standard on October 1, 2019 and the new standard did not have an impact on our financial statements.

NOTE 12 - ~~SUMMARY~~PROPERTY ~~OF SIGNIFICANT ACCOUNTING POLICIES~~ AND ~~ACTIVITIES-Continued~~EQUIPMENT

~~BASIC~~Property ~~NET~~and ~~INCOME~~equipment ~~(LOSS)~~consist ~~PER~~of ~~COMMON~~the ~~SHARE~~following at September 30, 2019 and 2018:

Net income or loss per share is computed based on current accounting guidance requiring companies to report both basic net income or loss per common share, which is computed using the weighted average number of common shares outstanding during the period, and diluted net income per common share, which is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method.

	2019			2018

Delivery truck/trailer	$	69,164		$	69,164
Other warehouse equipment		13,144			38,144

Less accumulated depreciation		(67,164	)		(67,496	)
	$	15,144		$	39,812

~~The~~Depreciation ~~following~~expense ~~table summarizes securities unissued at each~~ of ~~the~~$7,168 ~~periods~~per ~~presented~~year ~~which~~ were ~~not~~recognized ~~included~~during in the ~~calculation~~years ofended ~~diluted~~September ~~net~~30, ~~earnings~~2019 ~~per share in 2018~~ and ~~2017~~2018.

	2018		2017
Unissued options and warrants		0		50,000
Total		0		50,000

~~RECENTLY~~TX ~~ISSUED~~HOLDINGS, ~~ACCOUNTING~~INC. ~~STANDARDS~~NOTES TO FINANCIAL STATEMENTS

InNOTE ~~May~~3 ~~2014, the FASB issued ASU No.2014~~-~~09,~~ ~~Revenue~~INCOME ~~from~~TAXES Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those periods. The standard permits early adoption, but not before December 15, 2016, and permits the use of either a retrospective or cumulative effect transition method.

~~Based~~The ontax ~~our~~effects ~~assessment,~~of wetemporary ~~ascertained~~differences ~~the~~that ~~new~~give ~~standard~~rise ~~does~~to ~~not~~deferred ~~have~~taxes aare ~~material~~as ~~impact~~follows onat ~~our~~September ~~financial position and results of operations~~30, ~~and the new standard will be adopted commencing the first interim fiscal period of~~ 2019. ~~We recognize revenue on sales to customers~~ and ~~distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.~~2018:

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning on or after January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We currently have a one-year warehouse lease which we consider an operating lease. The new standard will not have an impact on our financial statements as the current lease has a one year term and therefore, the lease will continue to be recorded on a straight-line basis for the remaining lease term.

	2019			2018
Deferred tax assets:
Net operating losses	$	1,532,000		$	1,559,000
Accrued expenses		85,000			81,000
Valuation allowance		(1,617,000	)		(1,640,000	)

Total deferred tax assets		-			-

Deferred tax liabilities:
Basis of property and equipment		-			-

Net deferred tax asset	$	-		$	-

35Net operating losses after December 12, 2002 through September 30, 2019 were approximately $8,070,000. The Company has total net operating losses available to the Company to offset future taxable income of approximately $7,294,000. Following is a reconciliation of the tax benefit at the federal statutory rate to the amount reported in the statement of operations:

TX HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2019						2018
	Amount			Percent			Amount			Percent
Income tax expense/(benefit) at federal statutory rate	$	9,000			21	%	$	(36,000	)		(24	)%

Change in estimate		13,000			31	%		1,025,000			-

Non-deductible expenses		1,000			2	%		23,000			-	%

Increase/(decrease) in valuation allowance		(23,000	)		(54	)%		(1,012,000	)		24	%

Provision for income taxes, net	$	-			-	%	$	-			-	%

~~NOTE~~The 2Company’s -valuation ~~PROPERTY~~allowance ~~AND~~attributable ~~EQUIPMENT~~to its deferred tax assets decreased by $23,000 at September 30, 2019 and, decreased by $1,012,000 at September 30, 2018.

~~Property~~The Company has tax net operating loss carry forwards totaling approximately $8,070,000, expiring in 2019 through 2038. Approximately $1,200,000 of net operating losses was incurred prior to December 12, 2002 at which date MA&N acquired 51% of the Company and ~~equipment~~are ~~consist~~consequently subject to certain limitation described in section 382 of the ~~following~~Internal atRevenue ~~September~~Code. 30The Company estimates that, ~~2018~~due to the limitations and ~~2017:~~expiration dates, only $424,000 of the net operating losses incurred prior to December 12, 2002 will be available to offset future taxable income.

	2018			2017
Delivery truck/trailer	$	69,164		$	69,164
Other warehouse equipment		38,144			38,144
Less accumulated depreciation		(67,496	)		(60,328	)
	$	39,812		$	46,980

~~Depreciation~~TX ~~expense of $7~~HOLDINGS,~~168~~ ~~and~~INC. ~~$9,799~~NOTES ~~were~~TO ~~recognized~~FINANCIAL ~~during the years ended September 30, 2018 and 2017, respectively~~STATEMENTS

NOTE 3 4- ~~INCOME~~STOCKHOLDERS' ~~TAXES~~ DEFICIT

~~The~~PREFERRED ~~tax effects of temporary differences that give rise to deferred taxes are as follows at September 30, 2018 and 2017:~~STOCK

	2018			2017
Deferred tax assets:
Net operating losses	$	1,559,000		$	2,497,000
Accrued expenses		81,000			155,000
Valuation allowance		(1,640,000	)		(2,652,000	)
Total deferred tax assets		-			-
Deferred tax liabilities:
Basis of property and equipment		-			-
Net deferred tax asset	$	-		$	-

The Company is authorized to issue up to 1,000,000 shares of preferred stock, no par value. As of September 30, 2019 and 2018, there were no preferred shares issued and outstanding.

~~Net~~COMMON operating losses after December 12, 2002 through September 30, 2018 were approximately $8,199,000. The Company has total net operating losses available to the Company to offset future taxable income of approximately $7,423,000. Following is a reconciliation of the tax benefit at the federal statutory rate to the amount reported in the statement of operations:STOCK

36Of the 250,000,000 shares of common stock, no par value, authorized for issuance by the Company, 48,053,084 shares were issued and outstanding as of September 30, 2019 and 2018.

TXSTOCK ~~HOLDINGS,~~WARRANTS ~~INC.~~AND ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~OPTIONS

~~NOTE~~As 3of -September ~~INCOME~~30, ~~TAXES~~2019 and 2018 there were no warrants outstanding with the last 50,000 tranche of an unexercised issue expiring on January 1, 2018. The warrants were not included in the calculation of diluted net earnings per share in 2018 since their inclusion would be anti-~~Continued~~dilutive.

	2018						2017
	Amount			Percent			Amount			Percent
Income tax expense/(benefit) at federal statutory rate	$	(36,000	)		(24	)%	$	(57,000	)		(34	)%
Change in estimate		1,025,000			-			(101,000	)		-
Non-deductible expenses		23,000			-			15,000			(2	)%
Increase/(decrease) in valuation allowance		(1,012,000	)		24	%		143,000			36	%
Provision for income taxes, net	$	-			-	%	$	-			-	%

NOTE 5 – LEGAL PROCEEDINGS

The Company’s ~~valuation~~is ~~allowance~~not ~~attributable~~a party to ~~its~~any ~~deferred~~pending ~~tax~~legal ~~assets decreased by $1,640,000 at September 30,2018 and, increased by $143,000 at September 30, 2017~~proceeding.

~~The~~NOTE ~~Company~~6– ~~has~~RELATED ~~tax~~PARTY net operating loss carry forwards totaling approximately $8,199,000, expiring in 2018 through 2038. Approximately $1,200,000 of net operating losses was 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.TRANSACTIONS

~~NOTE~~ADVANCES 4-FROM ~~STOCKHOLDERS' DEFICIT~~OFFICER

~~PREFERRED~~As ~~STOCK~~of September 30, 2019 and 2018, Mr. Shrewsbury had advanced an aggregate of $181,487 and $92,487, respectively, to the Company. The advances do not bear interest and are repayable upon demand. The advances are subordinate to the Company’s bank indebtedness.

~~The~~NOTES ~~Company~~PAYABLE isTO ~~authorized to issue up to 1,000,000 shares of preferred stock, no par value. As of September 30, 2018 and 2017, there were no preferred shares issued and outstanding.~~OFFICER

~~COMMON~~On ~~STOCK~~February 25, 2014, the Company and Mr. Shrewsbury entered into an agreement to consolidate certain indebtedness due to Mr. Shrewsbury in the aggregate amount of $2,000,000, including the principal due under a Revolving Demand Note (“Revolving Note”) in the principal amount of $1,062,000 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $168,905, the principal due under a 10% Promissory Note (“10% Note”) in the amount of $289,997 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $93,252; and $385,846 of non-interest bearing advances previously made by Mr. Shrewsbury and outstanding as of January 31, 2014. The Company issued a Consolidated Secured Promissory Note (the “Consolidated Note”) in the principal amount of $2,000,000 to reflect the consolidated indebtedness. Upon issuance of the Consolidated Note, the Revolving Note and 10% Note were cancelled and Mr. Shrewsbury agreed to waive any prior defaults under the terms of such notes and to release the Company from any claims related thereto. The Consolidated Note bears interest at the rate of

Of5% ~~the~~per ~~250,000,000~~annum ~~shares~~or ofprime ~~common~~rate ~~stock,~~if nohigher ~~par~~than ~~value~~5% per annum, ~~authorized~~is ~~for~~repayable in full ten years from the date of issuance and is subject to certain events of default. Payment of the Consolidated Note has been secured by the Company by the death benefit proceeds of a $2 million key man term life insurance policy purchased by the Company on the life of Mr. Shrewsbury and that has been assigned to Mr. Shrewsbury. The terms and conditions of the foregoing debt consolidation and restructuring were submitted to and unanimously approved by the disinterested members of the Board of Directors of the Company. Accrued interest of $100,000 48per-year due on the Promissory Note was recorded for the years ended September 30,~~053~~ 2019 and 2018. Interest accrues at a rate of $100,~~084~~000 ~~shares~~per ~~were~~year ~~issued~~on the promissory note. Accrued interest on the promissory note totaled $559,726 and ~~outstanding~~$459,726 as of September 30, ~~2018~~2019 and ~~2017~~2018, respectively.

~~STOCK WARRANTS AND OPTIONS~~38

OnTX ~~May 16~~HOLDINGS, ~~2012, the Board of Directors authorized the issuance of an aggregate of 400,000 common stock purchase warrants to a sales agent, over a period of four years~~INC. ~~The~~NOTES ~~agent~~TO ~~was~~FINANCIAL entitled to receive 50,000 warrants every six months for an aggregate of 400,000 warrants. The issuances are exercisable at a price of $0.10 per share, become exercisable upon issuance, and expire two years after the date issuable, the first tranche of 50,000 warrants were issuable effective July 1, 2012, and additional tranches of 50,000 were issuable every six months thereafter. As of September 30, 2018 there were no warrants outstanding with the last 50,000 tranche expiring on January 1, 2018. The warrants were not included in the calculation of diluted net earnings per share in 2017 since their inclusion would be anti-dilutive.STATEMENTS

37NOTE 6– RELATED PARTY TRANSACTIONS-Continued

TXFor ~~HOLDINGS~~the year ended September 30, ~~INC~~2019 and 2018, interest expense of $131,372 and $129,056, respectively, in the accompanying statements of operations, relates to the Consolidated Note, bank charges and the term loan arrangement. ~~NOTES~~Unpaid TOinterest ~~CONSOLIDATED~~on ~~FINANCIAL~~the ~~STATEMENTS~~Consolidated Note payable for the amount of $559,726 and $459,726 has been accrued as of September 30, 2019 and 2018, respectively.

~~NOTE~~LEASE 4AGREEMENT -WITH ~~STOCKHOLDERS'~~STOCKHOLDER ~~DEFICIT-Continued~~AND OFFICER

~~STOCK~~We ~~WARRANTS~~lease ~~AND~~approximately ~~OPTIONS~~4,800 square feet of office and warehouse space and certain land located at 12080 Virginia Blvd, Ashland, Kentucky, from Mr. Shrewsbury, our CEO, and Mrs. Shrewsbury pursuant to the terms of a lease we entered into with them on November 19, 2012, for a monthly lease payment of $2,000. The lease had a two-~~Continued~~year term starting October 1, 2012 and ending August 31, 2014. On September 1, 2014 the lease was extended for an additional two years, and on September 1, 2016 and subsequently September 1, 2019 and 2018, the parties agreed to extend the lease for an additional one-year term, respectively, upon the same terms and conditions. As of September 30, 2019, the Company had accrued but unpaid lease payments due to Mr. and Mrs. Shrewsbury in the amount of $108,000; accordingly, the Company may be deemed to be in default under the terms of the lease agreement with Mr. and Mrs. Shrewsbury. However, the Company has not received a notice of default or termination under the lease agreement as of the date of the financial statements. The Company believes that such office, warehouse and land space will be sufficient for its current needs. A $24,000 lease expense was recorded during the current year as well as the prior year.

OnFREIGHT ~~February~~PAID ~~25,~~TO ~~2014,~~COMPANY ~~the~~CONTROLLED ~~Company~~BY issued 500,000 common stock purchase options to Mr. Shrewsbury. Commencing April 1, 2014, the options became exercisable at a price of $.0924 per share, the fair market value of the Company’s shares of Common Stock on the date of authorization by the Board of Directors, February 21, 2014. The options expired on March 31, 2017. The options were not included in the calculation of diluted earnings per share for the year ended September 30, 2017 since their inclusion would be anti-dilutive.OFFICER/STOCKHOLDER

~~Following~~The isCompany autilizes ~~summary~~the services of ~~stock~~a ~~warrants~~trucking company owned and ~~options~~controlled atby Mr. Shrewsbury, our Chief Executive Officer, to transport certain of the Company’s products to its customers. During the years ended September 30, ~~2018~~2019 and ~~2017~~2018, such trucking company was paid $69,346 and ~~activity~~$73,385, ~~during~~respectively, ~~the~~for ~~years~~such ~~then~~trucking ~~ended:~~services, which were included in our cost of sales amount.

	Number of			Exercise				Weighted
	Shares			Price				Average Price
Warrants/Options at September 30, 2016		650,000			$0.092	-	0.10	$	0.095
New Issue		0				-			-
Forfeited		(600,000	)		0.092	-	0.10		0.093
Warrants/Options at September 30, 2017		50,000				$0.10		$	0.10
New Issue		0				-			-
Forfeited		(50,000	)			0.10			0.10
Warrants/Options at September 30, 2018		0				$-		$	-

COMMISSIONS PAID TO COMPANY CONTROLLED BY OFFICER/STOCKHOLDER

~~There~~In ~~were~~connection nowith ~~outstanding~~the ~~warrants~~transportation and ~~options~~delivery atof certain of the Company’s products, the Company utilizes the services of a national transportation company. The chief executive officer and a principal stockholder of the Company owns and controls a company that is an agent of such transportation company. Such controlled company places orders for such transportation services on behalf of the Company and is paid a commission for such transportation services. During the years ended September 30, 2019 and 2018 the amounts of such commission were $13,193 and $10,975, respectively.

38ACCRUED OFFICER’S SALARY

TXAs ~~HOLDINGS~~of September 30, ~~INC~~2019 and 2018, the Company had accrued and unpaid amounts of $304,179 and $358,479, respectively, due to Jose Fuentes, CFO, as payment for past services, which are included in our accrued liabilities amount. ~~NOTES~~Payment TOof ~~CONSOLIDATED~~the ~~FINANCIAL~~accrued ~~STATEMENTS~~salary has been secured by the Company by the death benefit proceeds of a $500 thousand key man term life insurance policy purchased by the Company on the life of Mr. Fuentes and that has been assigned to Mr. Fuentes.

~~NOTE~~ADVANCES 5FROM –STOCKHOLDER ~~LEGAL~~AND ~~PROCEEDINGS~~OFFICER

~~The~~Included ~~Company~~in isthe ~~not~~financial astatements ~~party~~as toof ~~any~~September ~~pending~~30, ~~legal~~2019 ~~proceeding~~and 2018 are advances from stockholder and officer of $181,487 and $92,487, respectively.

~~NOTE 6– RELATED PARTY TRANSACTIONS~~39

~~ADVANCES~~TX ~~FROM~~HOLDINGS, ~~OFFICER~~INC. NOTES TO FINANCIAL STATEMENTS

AsNOTE of6– ~~September~~RELATED ~~30,~~PARTY 2018 and 2017, Mr. Shrewsbury had advanced an aggregate of $92,487 and $33.987, respectively, to the Company. The advances do not bear interest and are repayable upon demand. The advances are subordinate to the Company’s bank indebtedness.TRANSACTIONS-Continued

PARK’S LEASE

	September 2019			September 2018

Beginning Balance	$	92,487		$	33,987
Proceeds from Stockholder/Officer advances		219,500			256,000
Repayment of stockholder/officer advances		(130,500	)		(197,500	)
Ending Balance	$	181,487		$	92,487

InNOTE ~~November~~7 ~~2006,~~– the Company entered into a Purchase and Sale Agreement with Masada Oil & Gas, Inc. ("Masada”). Mr. Bobby S. Feller, a former director, is the owner of Masada and a prior member of the Company’s board. The Parks lease purchased from Masada covered 320 acres in which the company previously owned a 75% working interest and Masada owned the remaining 25%.On January 28, 2011, TX Holdings, Inc. entered into an agreement with Masada Oil & Gas Inc. to acquire the remaining 25% working interest in the Park’s lease. As part of the agreement, the Company also acquired a storage building and approximately two acres of land. In return, the Company agreed to relinquish an 8.5% working interest which it had in a different lease, pay the sum of $10,400 and, assume the current 25% lease owners’ liability in the amount of $17,000. On May 30, 2012, the Company sold 100% of the interest in the Parks lease for $80,000. The Company received a down payment of $40,000 and a note for the balance of $40,000. The note is secured by Park’s lease future production. On March 25, 2014, the storage building was sold for $18,000. The note receivable balance of $29,983 was writtenNON-~~off~~CASH onINVESTING ~~September~~AND ~~30,~~FINANCING ~~2017, as the amount was deemed uncollectible.~~ACTIVITIES

~~NOTES PAYABLE TO OFFICER~~None

OnNOTE ~~February~~8 ~~25,~~– ~~2014,~~BANK the Company and Mr. Shrewsbury entered into an agreement to consolidate certain indebtedness due to Mr. Shrewsbury in the aggregate amount of $2,000,000, including the principal due under a Revolving Demand Note (“Revolving Note”) in the principal amount of $1,062,000 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $168,905, the principal due under a 10% Promissory Note (“10% Note”) in the amount of $289,997 and accrued but unpaid interest due thereunder as of January 31, 2014 in the amount of $93,252; and $385,846 of non-interest bearing advances previously made by Mr. Shrewsbury and outstanding as of January 31, 2014. The Company issued a Consolidated Secured Promissory Note (the “Consolidated Note”) in the principal amount of $2,000,000 to reflect the consolidated indebtedness. Upon issuance of the Consolidated Note, the Revolving Note and 10% Note were cancelled and Mr. Shrewsbury agreed to waive any prior defaults under the terms of such notes and to release the Company from any claims related thereto. The Consolidated Note bears interest at the rate ofLOAN

5%In ~~per~~November ~~annum~~2012, orthe ~~prime~~Company ~~rate~~obtained ifa ~~higher~~$250,000 ~~than~~line 5%of ~~per~~credit ~~annum,~~from isa ~~repayable~~bank. inOn ~~full~~August ~~ten~~26, ~~years~~2014, ~~from~~the bank increased the ~~date~~Company’s ofexisting ~~issuance~~bank ~~and~~line isof ~~subject~~credit from $250,000 to ~~certain~~$750,000 ~~events~~and ofextended ~~default.~~the ~~Payment~~term of the ~~Consolidated~~line ~~Note~~of ~~has~~credit. ~~been~~The line of credit was secured by ~~the~~a ~~Company~~priority bysecurity interest in the ~~death~~Company’s ~~benefit~~inventory ~~proceeds~~and ofaccounts areceivable $2and ~~million~~matured ~~key~~on ~~man~~November ~~term~~7, ~~life~~2015. ~~insurance~~On ~~policy~~December ~~purchased~~3, by2015, the Company onentered into a new loan agreement with the ~~life~~Bank ofunder ~~Mr.~~which ~~Shrewsbury~~it ~~and~~obtained ~~that~~a ~~has~~term ~~been~~loan ~~assigned~~in tothe ~~Mr.~~amount ~~Shrewsbury~~of $711,376. The ~~terms~~Company ~~and~~utilized ~~conditions~~proceeds of the ~~foregoing~~new ~~debt~~loan ~~consolidation~~to ~~and~~repay ~~restructuring~~its ~~were~~line ~~submitted~~of tocredit. ~~and~~The ~~unanimously~~loan ~~approved~~is byfor ~~the~~a ~~disinterested~~term ~~members~~ of ~~the~~five ~~Board~~years ofand ~~Directors~~matures on December 3, 2020. As of September 30, 2019, the ~~Company~~loan balance was $494,370.

~~For~~During the ~~year~~term ~~ended~~of ~~September~~the 30loan, ~~2018~~the ~~and~~Company ~~2017,~~has ~~interest~~agreed ~~expense~~to make equal monthly repayments of ~~$129,056~~principal and interest of $~~125~~6,~~988~~967 commencing January 3, ~~respectively~~2016, inand ~~the~~to ~~accompanying~~make ~~statements~~a offinal ~~operations~~payment on December 3, ~~relates~~2020, toof the ~~Consolidated~~outstanding ~~Note~~balance ~~and~~of the ~~term~~interest ~~loan~~and ~~arrangement.~~principal ~~Unpaid~~then ~~interest~~due, onestimated ~~the~~to ~~Consolidated~~be ~~Note~~approximately ~~payable~~$425,539. ~~for~~Early ~~the~~repayment ~~amount~~ of ~~$459,726~~amounts ~~and~~due ~~$359,726~~under ~~has~~the ~~been~~loan ~~accrued~~will asnot ofaffect ~~September~~the 30monthly repayment amount, ~~2018~~unless ~~and~~otherwise ~~2017,~~agreed ~~respectively~~to by the bank.

39An event of default under the loan will occur upon the occurrence of any of the following events:

TX● ~~HOLDINGS,~~the ~~INC.~~Company ~~NOTES~~fails TOto ~~CONSOLIDATED~~make ~~FINANCIAL~~any ~~STATEMENTS~~payment when due under the loan;

~~NOTE~~● 6the –Company ~~RELATED~~fails ~~PARTY~~to ~~TRANSACTIONS-Continued~~comply with any term, obligation, covenant or condition in the loan documents or any other agreement between the bank and the Company:

~~LEASE~~● ~~AGREEMENT~~the ~~WITH~~Company ~~STOCKHOLDER~~defaults ~~AND~~under ~~OFFICER~~any loan, extension of credit, security agreement, purchase or sales agreement or other agreement with any creditor that materially affects the Company’s property or its ability to repay the note or perform its obligation under the note or related documents;

We● lease approximately 4,800 square feet of office and warehouse space and certain land located at 12080 Virginia Blvd, Ashland, Kentucky, from Mr. Shrewsbury, our CEO, and Mrs. Shrewsbury pursuant to the terms of a ~~lease we entered into with them on November 19~~warranty, ~~2012,~~representation ~~for~~or astatement ~~monthly~~made lease payment of $2,000. The lease had a two year term starting October 1, 2012 and ending August 31, 2014. On September 1, 2014 the lease was extended for an additional two years, and on September 1, 2016 and subsequently September 1, 2018, the parties agreed to ~~extend~~ the ~~lease~~bank for an additional two years term, respectively, upon the same terms and conditions. As of September 30, 2018, the Company had accrued but unpaid lease payments due to Mr. and Mrs. Shrewsbury in the amount of $84,000; accordingly, the Company may be deemed to be in default under the ~~terms~~loan ofdocument ~~the~~is ~~lease~~or ~~agreement~~becomes ~~with~~materially ~~Mr.~~false ~~and Mrs. Shrewsbury. However, the Company has not received a notice of default~~ or ~~termination under the lease agreement as of the date of the financial statements. The Company believes that such office, warehouse and land space will be sufficient for its current needs.~~misleading;

~~FREIGHT~~● ~~PAID~~the TOdissolution ~~COMPANY~~or ~~CONTROLLED~~termination BYof ~~OFFICER/STOCKHOLDER~~the Company’s existence, or its insolvency, the appointment of a receiver for any part of its property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding

The Company utilizes the services of a trucking company owned and controlled by Mr. Shrewsbury, our Chief Executive Officer, to transport certain of the Company’s products to its customers. During the years ended September 30, 2018 and 2017, such trucking company was paid $73,385 and $57,773, respectively, for such trucking services, which were included in our cost of sales amount.40

~~COMMISSIONS~~TX ~~PAID~~HOLDINGS, TOINC. ~~COMPANY~~NOTES ~~CONTROLLED~~TO BYFINANCIAL ~~OFFICER/STOCKHOLDER~~STATEMENTS

InNOTE ~~connection~~8 ~~with~~– ~~the~~BANK ~~transportation~~LOAN- ~~and~~Continued delivery of certain of the Company’s products, the Company utilizes the services of a national transportation company. The chief executive officer and a principal stockholder of the Company owns and controls a company that is an agent of such transportation company. Such controlled company places orders for such transportation services on behalf of the Company and is paid a commission for such transportation services. During the years ended September 30, 2018 and 2017 the amounts of such commission were $10,975 and $9,640, respectively, which are included in our commission expense amount.

~~ACCRUED~~● ~~OFFICER’S~~the ~~SALARY~~commencement of foreclosure or forfeiture proceedings by any creditor or any governmental agency against any collateral securing the loan;

As● any of ~~September 30, 2018 and 2017,~~ the ~~Company~~preceding ~~had~~events ~~accrued~~occurs ~~and~~with ~~unpaid~~respect ~~amounts of $358,479 and $416,179, respectively, due~~ to ~~Jose~~any ~~Fuentes,~~loan ~~CFO, as payment for past services, which are included in our accrued liabilities amount.~~guarantor;

~~ADVANCES~~● ~~FROM~~a ~~STOCKHOLDER~~25% ~~AND~~or ~~OFFICER~~more change in the ownership of the Company’s common stock;

~~Included~~● ina ~~the~~material ~~financial~~adverse ~~statements~~change asin ofthe ~~September~~Company’s 30financial condition, ~~2018~~or ~~and~~the ~~2017~~bank ~~are~~believes ~~advances~~the ~~from~~prospect ~~stockholder~~of ~~and~~payment ~~officer~~or performance of ~~$92,487~~the ~~and~~loan ~~$33,987,~~is ~~respectively.~~impaired; or

	September			September
	2018			2017
Beginning Balance	$	33.987		$	198,637
Proceeds from Stockholder/Officer advances		256,000			111,150
Repayment of stockholder/officer advances		(197,500	)		(275,800	)
Ending Balance	$	92,487		$	33,987

●

the bank in good faith believes itself insecure.

40The loan agreements contain certain affirmative covenants, including an obligation to: notify the bank of a material adverse change in the Company’s financial condition and of any threatened litigation or claim or other proceeding which could materially affect the Company’s financial condition; maintain certain liability insurance in amounts acceptable to the bank; maintain qualified executive and management personnel; comply with applicable environmental laws and perform environmental studies required by the bank; and certify annually to the bank compliance with the representations and warranties in the bank loan documents. The loan agreements contain certain other customary covenants and conditions.

TXIn ~~HOLDINGS~~addition, ~~INC.~~the ~~NOTES~~loan TOagreements ~~CONSOLIDATED~~contain ~~FINANCIAL~~certain ~~STATEMENTS~~negative covenants, including that the Company will not, without the bank’s consent:

~~NOTE~~● 7incur -any ~~NON~~indebtedness ~~CASH~~other ~~INVESTING~~than ~~AND~~to ~~FINANCING~~the ~~ACTIVITIES~~bank or for trade debt incurred in the ordinary course;

~~None~~● sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of its assets, except for permitted liens;

~~NOTE~~● 8sell –its ~~BANK~~accounts ~~LOAN~~receivable, except to the bank;

In● ~~November~~engage ~~2012,~~in ~~the~~business ~~Company~~activities ~~obtained~~substantially adifferent ~~$250,000 line of credit~~ from ~~a bank. On August 26, 2014,~~ the ~~bank increased the~~ Company’s ~~existing~~current bank line of credit from $250,000 to $750,000 and extended the term of the line of credit. The line of credit was secured by a priority security interest in the Company’s inventory and accounts receivable and matured on November 7, 2015. On December 3, 2015, the Company entered into a new loan agreement with the Bank under which it obtained a term loan in the amount of $711,376. The Company utilized proceeds of the new loan to repay its line of credit. The loan is for a term of five years and matures on December 3, 2020. As of September 30, 2018, the loan balance was $549,050.activities;

~~During~~● ~~the~~cease ~~term of the loan~~operations, ~~the Company has agreed to make equal monthly repayments of principal and interest of $6~~liquidate,~~967~~ ~~commencing January 3~~merge, ~~2016~~transfer, ~~and~~acquire toor ~~make~~consolidate awith ~~final~~another ~~payment on December 3~~entity, ~~2020,~~change of the ~~outstanding~~Company’s ~~balance of the interest and principal then due~~name, ~~estimated to be approximately $391~~dissolve,~~896.~~ ~~Early~~or ~~repayment~~sell ~~of amounts due under~~ the ~~loan~~inventory ~~will~~or ~~not~~accounts ~~affect~~receivable ~~the~~secured ~~monthly~~under ~~repayment amount, unless otherwise agreed to by~~ the ~~bank.~~loan;

An● ~~event~~pay ~~of default under the loan will occur upon the occurrence of~~ any ofdividend ~~the~~other ~~following~~than ~~events:~~in stock;

● ~~the~~lend ~~Company~~money, ~~fails~~invest toor ~~make~~advance ~~any~~money ~~payment~~or ~~when~~assets ~~due~~to ~~under~~another ~~the~~person ~~loan~~or entity;

● ~~the Company fails to comply with any term~~purchase, ~~obligation,~~create ~~covenant~~ or ~~condition~~acquire inan ~~the~~interest ~~loan~~in ~~documents or~~ any other ~~agreement between the bank and the Company:~~entity;

● ~~the~~incur ~~Company defaults under~~ any ~~loan,~~obligation ~~extension~~as ofa ~~credit,~~surety ~~security agreement, purchase~~ or ~~sales~~guarantor ~~agreement or~~ other ~~agreement~~than ~~with~~in ~~any creditor that materially affects~~ the ~~Company’s~~ordinary ~~property~~course; or ~~its ability to repay the note or perform its obligation under the note or related documents;~~

● aenter ~~warranty,~~into ~~representation~~any oragreement ~~statement~~containing ~~made~~any toprovision ~~the~~which ~~bank~~would ~~under~~be violated or breached by the ~~loan~~performance ~~document~~of isthe orCompany’s ~~becomes~~obligations ~~materially~~under ~~false~~the orloan ~~misleading;~~agreements.

●Interest under the ~~dissolution~~loan oris ~~termination~~variable ofand is based upon the ~~Company’s~~Wall ~~existence,~~Street orJournal ~~its~~Prime ~~insolvency~~rate, currently 5.25% per annum. In the ~~appointment~~event of a ~~receiver~~default, interest under the loan may be increased by 2%. The loan is for ~~any~~a ~~part~~term of ~~its~~five ~~property~~years and matures on December 3, ~~any~~2020.The ~~assignment~~term ~~for~~loan is secured by a priority security interest in the ~~benefit~~Company’s ofinventory ~~creditors~~and accounts receivable and has been guaranteed by our CEO. Also, ~~any~~all ~~type~~claims ofdue ~~creditor~~from ~~workout~~the Company to Mr. Shrewsbury are subordinate to the bank’s indebtedness, orincluding under the ~~commencement~~Consolidated ofNote and any ~~proceeding~~advances due to Mr. Shrewsbury. Interest paid on the loan for the years ended September 30, 2019 and 2018 were $28,928 and $27,262, respectively.

~~● the commencement of foreclosure or forfeiture proceedings by any creditor or any governmental agency against any collateral securing the loan;~~41

●TX ~~any~~HOLDINGS, ofINC. ~~the~~NOTES ~~preceding~~TO ~~events~~FINANCIAL ~~occurs with respect to any loan guarantor;~~STATEMENTS

●NOTE a9 ~~25%~~– orCONCENTRATION ~~more~~OF ~~change in the ownership of the Company’s common stock;~~RISKS

●Significant ~~a material adverse change in the Company’s financial condition, or the bank believes the prospect of payment or performance of the loan is impaired; or~~Customers

●At ~~the~~September ~~bank~~30, in2019 ~~good~~and ~~faith~~2018, ~~believes~~the ~~itself~~Company ~~insecure.~~had the following customer concentration:

Percentage of

Accounts Receivable

Percentage of Sales (%)

trade, net (%)

September 30,

2019

2018

2019

2018

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

Customer G

TX* ~~HOLDINGS,~~Represent ~~INC.~~less ~~NOTES~~than ~~TO CONSOLIDATED FINANCIAL STATEMENTS~~10%

NOTE 810- –COMMITMENTS ~~BANK~~AND ~~LOAN-~~CONTINGENCIES ~~Continued~~

The loan agreements contain certain affirmative covenants, including an obligation to: notify the bank of a material adverse change in the Company’s financial condition and of any threatened litigation or claim or other proceeding which could materially affect the Company’s financial condition; maintain certain liability insurance in amounts acceptable to the bank; maintain qualified executive and management personnel; comply with applicable environmental laws and perform environmental studies required by the bank; and certify annually to the bank compliance with the representations and warranties in the bank loan documents. The loan agreements contain certain other customary covenants and conditions.None

~~In addition, the loan agreements contain certain negative covenants, including that the Company will not, without the bank’s consent:~~42

●ITEM ~~incur~~9. CHANGES ~~any~~IN ~~indebtedness~~AND ~~other~~DISAGREEMENTS ~~than~~WITH toACCOUNTANTS ~~the~~ON ~~bank~~ACCOUNTING orAND ~~for~~FINANCIAL ~~trade debt incurred in the ordinary course;~~DISCLOSURE

●There ~~sell,~~have ~~transfer,~~been ~~mortgage,~~no ~~assign,~~changes ~~pledge, lease, grant a security interest~~ in, or ~~encumber~~disagreements ~~any~~with ofaccountants ~~its~~on ~~assets,~~accounting ~~except~~and ~~for~~financial ~~permitted liens;~~disclosure.

●ITEM ~~sell~~9A. CONTROLS ~~its~~AND ~~accounts~~PROCEDURES ~~receivable, except to the bank;~~

●As ~~engage~~of inthe ~~business~~end ~~activities~~of ~~substantially~~the ~~different~~period ~~from~~covered by this Report, the Chief Executive Officer and Chief Financial Officer of the Company (the “Certifying Officers”) conducted evaluations of the Company’s ~~current~~disclosure ~~activities;~~controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure the information required to be disclosed by the issuer in the reports that it files or submits under Section 13(a) or 15(d) of the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under Section 13(a) or 15(d) of the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosure.

●Based ~~cease~~on ~~operations,~~this ~~liquidate~~evaluation, ~~merge~~the Certifying Officers determined that, ~~transfer~~as of the end of the period covered by this Report, ~~acquire~~the Company’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports that it files or ~~consolidate~~submits ~~with~~under ~~another~~the ~~entity~~Exchange Act is recorded, ~~change~~processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under Section 13(a) or 15(d) of the Exchange Act is accumulated and communicated to the Company’s ~~name~~management, ~~dissolve~~including the Company’s principal executive and principal financial officers, or ~~sell~~persons ~~the~~performing ~~inventory~~similar orfunctions, ~~accounts~~as ~~receivable~~appropriate, ~~secured~~to ~~under~~allow ~~the~~timely ~~loan;~~decisions regarding disclosure.

●Management’s ~~pay~~Report ~~any~~on ~~dividend~~Internal ~~other~~Control ~~than~~Over inFinancial ~~stock;~~Reporting

●Management ~~lend~~of ~~money,~~TX ~~invest~~Holdings oris ~~advance~~responsible ~~money~~for orestablishing ~~assets~~and tomaintaining ~~another~~adequate ~~person~~internal orcontrol ~~entity;~~over financial reporting as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, as amended.

●The ~~purchase,~~Company’s ~~create~~internal orcontrol ~~acquire~~over anfinancial ~~interest~~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 ~~any~~accordance ~~other~~with ~~entity;~~generally accepted accounting principles in the United States of America. The Company’s internal controls over financial reporting include those policies and procedures that:

● ~~incur~~pertain ~~any~~to ~~obligation~~the asmaintenance aof ~~surety~~records orthat ~~guarantor~~in ~~other~~reasonable ~~than~~detail inaccurately and fairly reflect the ~~ordinary~~transactions ~~course;~~and ordispositions of the assets of the Company;

● ~~enter~~provide ~~into~~reasonable ~~any~~assurance ~~agreement~~that ~~containing~~transactions ~~any~~are ~~provision~~recorded ~~which~~as ~~would~~necessary beto ~~violated~~permit orpreparation ~~breached~~of byfinancial ~~the~~statements ~~performance~~in ofaccordance ~~the~~with ~~Company’s~~U.S. ~~obligations~~generally ~~under~~accepted ~~the~~accounting ~~loan agreements.~~principles;

~~Interest~~● ~~under~~provide ~~the~~reasonable ~~loan~~assurance isthat ~~variable~~receipts and isexpenditures ~~based upon the Wall Street Journal Prime rate, currently 5.25% per annum. In the event~~ of ~~a default, interest under~~ the ~~loan~~Company ~~may~~are bebeing ~~increased~~made byonly ~~2%. The term loan is secured by a priority security interest~~ in ~~the~~accordance ~~Company’s~~with ~~inventory~~authorization ~~and~~of ~~accounts~~management ~~receivable~~ and ~~has~~directors ~~been~~of ~~guaranteed by our CEO. Also, all claims due from~~ the Company to; ~~Mr. Shrewsbury are subordinate to the bank’s indebtedness, including under the Consolidated Note~~ and ~~any advances due to Mr. Shrewsbury.~~

42● provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

TXBecause ~~HOLDINGS~~of its inherent limitations, ~~INC~~internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. ~~NOTES~~Accordingly, TOeven ~~CONSOLIDATED~~effective ~~FINANCIAL~~internal ~~STATEMENTS~~control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, the assessment of the effectiveness of internal control over financial reporting was made as of a specific date. 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.

~~NOTE~~Under 9the –supervision ~~CONCENTRATION~~of OFand ~~RISKS~~with the participation of the Chief Executive Officer and the Chief Financial Officer, the Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on criteria for effective internal control over financial reporting described in the 2013 “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, the Company’s management has concluded that, as of September 30, 2019, the Company’s internal control over financial reporting was effective.

~~Significant Customers~~43

AtThis ~~September~~annual ~~30,~~report ~~2018~~does ~~and~~not ~~2017,~~include an attestation report of the Company’s ~~had~~registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the ~~following~~Company’s ~~customer~~registered ~~concentration:~~independent

Percentage of

Accounts Receivable

Percentage of Sales (%)

trade, net (%)

September 30,

2018

2017

2018

2017

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

Customer G

public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

*Changes ~~Represent~~in ~~less~~Internal ~~than~~Control ~~10%~~Over Financial Reporting

~~NOTE~~There 10were no changes in the Company’s internal control over financial reporting ( as such term is defined in Rules 13a-15(f) ~~COMMITMENTS~~and ~~AND~~15d-15 ~~CONTINGENCIES~~(f) under the Exchange Act) during the period covered by the Report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~None~~ITEM 9B. OTHER INFORMATION

43None.

~~ITEM~~PART ~~9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~III

~~There~~ITEM ~~have~~10. DIRECTORS, ~~been~~EXECUTIVE noOFFICERS ~~changes~~AND inCORPORATE orGOVERNANCE ~~disagreements with accountants on accounting and financial disclosure.~~

~~ITEM~~The ~~9A.~~following ~~CONTROLS~~table ~~AND~~sets ~~PROCEDURES~~forth our current executive officers and directors:

As of the end of the period covered by this Report, the Chief Executive Officer and Chief Financial Officer of the Company (the “Certifying Officers”) conducted evaluations of the Company’s disclosure controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure the information required to be disclosed by the issuer in the reports that it files or submits under Section 13(a) or 15(d) of the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under Section 13(a) or 15(d) of the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosure.

*Name*	*Age*	*Title*
William L. Shrewsbury	75	Chairman of the Board, Chief Executive Officer, and Director
Jose Fuentes	72	Chief Financial Officer and Director
James Graneto	66	Director

~~Based~~Biographical oninformation ~~this~~with ~~evaluation,~~respect ~~the~~to ~~Certifying~~our ~~Officers~~current ~~determined~~executive ~~that,~~officers ~~as of the end of the period covered by this Report, the Company’s disclosure controls~~ and ~~procedures~~directors ~~were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act~~ is ~~recorded,~~set ~~processed,~~forth ~~summarized~~below. ~~and~~There ~~reported,~~are ~~within~~no ~~the~~family ~~time~~relationships ~~periods~~between ~~specified~~any inexecutive ~~the~~officer ~~SEC’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files~~ or ~~submits~~director ~~under Section 13(a) or 15(d) of the Exchange Act is accumulated~~ and ~~communicated~~any toother ~~the Company’s management, including the Company’s principal~~ executive ~~and~~officer ~~principal financial officers,~~ or ~~persons performing similar functions, as appropriate, to allow timely decisions regarding disclosure~~director.

~~Management~~William “Buck” Shrewsbury, Chairman and CEO. Mr. Shrewsbury has been a director and our Chairman and CEO since December 24, 2007. Since 1988, Mr. Shrewsbury has been the President and owner of Lee’s ~~Report~~Services onand ~~Internal~~Storage, ~~Control~~LLC, ~~Over~~a ~~Financial~~trucking ~~Reporting~~agency and, the President and owner of Buck’s Truck Inc., a trucking company. Prior to 1988, Mr. Shrewsbury served as the IT manager with a large steel mill for 19 years. Mr. Shrewsbury attended the University of Kentucky 1962 -1965 with a major in Civil Engineering.

~~Management~~Dr. ofJames TXGraneto. ~~Holdings~~Dr. Graneto is ~~responsible~~a ~~for~~Board ~~establishing~~Certified Chiropractic Orthopedist. Dr. Graneto graduated from Ohio State University with a Bachelor of Science in Psychology and ~~maintaining~~has ~~adequate~~a ~~internal~~doctorate ~~control~~in ~~over~~chiropractic ~~financial~~medicine ~~reporting~~from National University of Health and Science. He is a former president of Eastern Ohio Chiropractic Association as ~~defined~~well inas ~~Rules~~a ~~13a-15(f)~~former ~~under~~president of the ~~Securities~~Good ~~Exchange~~Food ~~Act~~Co-op and the Rotary Club of ~~1934~~Canfield. Dr. Graneto has had a private practice in Chropractic Orthopedics in Youngstown, asOhio ~~amended~~since 1979.

~~The~~ Jose ~~Company’s~~Fuentes, ~~internal~~Chief ~~control~~Financial ~~over~~Officer ~~financial~~and ~~reporting~~Director. isMr. aFuentes ~~process~~has ~~designed~~been toChief ~~provide~~Financial ~~reasonable~~Officer ~~assurance~~since ~~regarding~~May 12, 2008, a director of the ~~reliability~~Company since October 1, 2017. Commencing in 2006 and through 2007, Mr. Fuentes was our VP of Finance. Mr. Fuentes has over forty years of financial ~~reporting~~related ~~and~~experience including the ~~preparation~~energy sector. The majority of his early career, after leaving public accounting, was spent at Atlantic Richfield Co., where he held several progressively responsible financial ~~statements~~roles ~~for~~including ~~external~~his ~~purposes~~most inrecent ~~accordance~~position ~~with~~as ~~generally~~Vice ~~accepted~~President ~~accounting~~of ~~principles~~Finance, inPlanning ~~the~~and ~~United~~Control ~~States~~for Arco Indonesia. From there, Mr. Fuentes served as Vice President of ~~America~~Finance and CFO at PJM Interconnection, LLC. ~~The~~Mr. ~~Company’s~~Fuentes ~~internal~~received ~~controls~~a ~~over~~Bachelor ~~financial~~of ~~reporting~~Science ~~include~~degree ~~those~~in ~~policies~~accounting from Saint John’s University in New York and ~~procedures~~is ~~that:~~a Certified Public Accountant.

●All ~~pertain~~directors towere appointed by the ~~maintenance~~board of ~~records~~directors ~~that~~as ina ~~reasonable~~result ~~detail~~of ~~accurately~~vacancies ~~and~~on ~~fairly~~the ~~reflect~~board. They hold office until the ~~transactions~~next ~~and~~annual ~~dispositions~~meeting of shareholders and until their successors have been duly elected and qualified or until their earlier resignation, removal or death. Directors are elected at the ~~assets~~annual meetings to serve for one-year terms. Any non-employee director of the Company; is reimbursed for expenses incurred for attendance at meetings of the board and any committee of the board of directors although no such committee has been established.

●Each ~~provide~~officer ~~reasonable~~is ~~assurance~~appointed ~~that~~by ~~transactions~~the ~~are~~board ~~recorded~~of asdirectors ~~necessary~~and toholds ~~permit~~his ~~preparation~~office at the pleasure and discretion of ~~financial~~the ~~statements~~board inof ~~accordance~~directors ~~with~~or ~~U.S.~~until ~~generally~~his ~~accepted~~earlier ~~accounting~~resignation, ~~principles;~~removal or death.

~~● provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company ; and~~44

●There ~~provide~~are ~~reasonable~~no ~~assurance~~material ~~regarding~~proceedings ~~prevention~~to ofwhich ~~timely~~any ~~detection~~director, officer or affiliate of ~~unauthorized~~the ~~acquisition~~Company, ~~use~~any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or ~~disposition~~any associate of any such director, officer, affiliate of the Company’s ~~assets~~or ~~that~~security ~~could~~holder ~~have~~is a ~~material~~party ~~effect~~adverse onto the ~~consolidated~~Company ~~financial~~or ~~statements~~has a material interest adverse to the Company.

~~Because of its inherent limitations~~Audit, ~~internal control over financial reporting~~Nominating, noCompensation ~~matter~~and ~~how~~Other ~~well~~Board designed, may not prevent or detect misstatements. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, the assessment of the effectiveness of internal control over financial reporting was made as of a specific date. 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.Committees

44The board of directors of the Company has not established an audit, nominating, compensation or other board committee although it may do so in the future. Also, the Company has not appointed an “audit committee financial expert” although it may do so in the future.

~~Under~~The ~~the~~Board ~~supervision~~ of and with the participation of the Chief Executive Officer and the Chief Financial Officer, the Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on criteria for effective internal control over financial reporting described in the 2013 “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, the Company’s management has concluded that, as of September 30, 2018, the Company’s internal control over financial reporting was effective.Directors

~~This~~The ~~annual~~board ~~report~~oversees ~~does~~our ~~not~~business ~~include~~affairs anand ~~attestation~~monitors ~~report of~~ the ~~Company’s~~performance ~~registered~~of ~~independent public accounting firm regarding internal control over financial reporting~~management. ~~Management’s~~During ~~report~~the ~~was~~year ~~not~~ended ~~subject~~September to30, ~~attestation~~2018, by the ~~Company’s~~board ~~registered~~held ~~independent~~no board meeting.

~~public~~Stockholders ~~accounting~~wishing ~~firm~~to ~~pursuant~~communicate with any non-employee director may do so by writing to ~~rules~~our ofChief ~~the~~Executive ~~Securities~~Officer, ~~and~~TX ~~Exchange~~Holdings, ~~Commission~~Inc., ~~that~~PO ~~permit~~Box ~~the~~1425, ~~Company~~Ashland toKentucky ~~provide~~41102. ~~only~~Our ~~management’s~~CEO ~~report~~will inforward ~~this~~the ~~Annual~~communication ~~Report~~as ondirected ~~Form~~by ~~10-K~~the stockholder.

~~Changes~~Independence inof ~~Internal Control Over Financial Reporting~~ Directors

~~There~~Our ~~were~~shares noof ~~changes~~common instock are quoted on the ~~Company~~OTC Markets Group, Inc.’s ~~internal~~Pink ~~control~~marketplace. ~~over~~As ~~financial~~such ~~reporting~~we (are asnot ~~such~~subject ~~term~~to certain corporate governance requirements applicable to companies listed on a national securities exchange. For purposes of determining the “independence” of our directors, we have adopted the definition in the NYSE American Company Guide. We have determined that we have one director that is ~~defined~~“independent” within the meaning set forth in ~~Rules~~the ~~13a-15(f)~~NYSE American’s Company Guide. Mr. Shrewsbury is our CEO and ~~15d-15~~Chairman. ~~(f)~~For ~~under~~a company of our size and management resources, we believe that the ~~Exchange~~CEO ~~Act)~~is ~~during~~in the ~~period~~best ~~covered~~position byto focus the ~~Report~~independent directors’ attention on the issues of greatest importance to the Company and its stockholders and we believe that splitting the roles of CEO and Chairman may have ~~materially~~the ~~affected,~~consequence orof making our management and governance processes less effective than they are ~~reasonably~~today ~~likely~~through toduplication ~~materially~~of ~~affect~~the lines of accountability and responsibility for matters. Periodically, ~~the~~our ~~Company’s~~board ~~internal~~of ~~control~~directors ~~over~~intends ~~financial~~to ~~reporting~~review such policy.

~~ITEM~~Risk ~~9B.~~Assessment ~~OTHER~~and ~~INFORMATION~~Management

~~None~~Our senior management is responsible for overseeing, assessing and managing our exposure to risk on a day-to-day basis, including the creation of appropriate management programs and policies. We do not maintain a separate committee of our board responsible for managing and overseeing our exposure to risk. Our board is responsible for overseeing management in the execution of this responsibility and for assessing our approach to risk management. Our board exercises this responsibility at its periodic board meetings. Our board’s role in risk management is consistent with our leadership structure, with our CEO having responsibility for assessing and managing our risk exposure and the board providing oversight in connection with those efforts.

~~PART~~Section ~~III~~16(a) Beneficial Ownership Compliance and Reporting

~~ITEM~~Section 1016(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of our common stock, to file reports of ownership and changes in ownership of our common stock with the SEC. ~~DIRECTORS~~Officers, ~~EXECUTIVE~~directors, ~~OFFICERS~~and ~~AND~~greater-than-ten-percent ~~CORPORATE~~stockholders ~~GOVERNANCE~~are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

~~The~~Based ~~following~~solely ~~table~~upon ~~sets~~our review of Forms 3, 4 and 5 submitted to us pursuant to Rule 16a-3 under the Exchange Act, we believe that except as set forth ~~our~~below, ~~current~~all such forms required to be filed were timely filed by our executive officers, directors, and ~~directors:~~security holders required to file the forms during the fiscal year ended September 30, 2018.

Name	Age	Title
William L. Shrewsbury	74	Chairman of the Board, Chief Executive Officer, and Director
Jose Fuentes	71	Chief Financial Officer and Director
Martin Lipper	84	Director

On June 18, 2015, Mr. Shrewsbury filed a Form 4 that was not filed timely to report an aggregate of four transactions not previously reported. On October 10, 2015, Mr. Shrewsbury filed a Form 4 that was not filed timely to report an aggregate of six transactions not previously reported. All of such reported transactions in our shares would have been eligible for deferred reporting by Mr. Shrewsbury on Form 5 in accordance with Section 16(a) and the rules promulgated thereunder.

Biographical information with respect to our current executive officers and directors is set forth below. There are no family relationships between any executive officer or director and any other executive officer or director.45

~~William~~Code ~~“Buck” Shrewsbury, Chairman and CEO. Mr. Shrewsbury has been a director and our Chairman and CEO since December 24, 2007. Since 1988, Mr. Shrewsbury has been the President and owner~~ of Lee’s Services and Storage, LLC, a trucking agency and, the President and owner of Buck’s Truck Inc., a trucking company. Prior to 1988, Mr. Shrewsbury served as the IT manager with a large steel mill for 19 years. Mr. Shrewsbury attended the University of Kentucky 1962 -1965 with a major in Civil Engineering.Ethics

~~Martin~~The ~~Lipper,~~Company ~~Director. Mr.~~has ~~Lipper~~adopted ~~became~~ a ~~director~~Code ~~on December 24, 2007. Mr. Lipper was a former Managing Director~~ of ~~Greenstone~~Ethics ~~Holdings~~that ~~Group~~applies ~~LLC from 2010~~ to ~~2017.~~our ~~From~~principal ~~November~~executive ~~2006~~officer, toprincipal ~~March~~financial ~~2009~~officer, ~~Mr.~~principal ~~Lipper~~accounting ~~served~~officer asor ~~Senior~~controller, ~~Vice~~or ~~President~~persons ~~and~~performing ~~Research~~similar ~~Director of Baron Group U~~functions.S. A. ~~Mr.~~copy ~~Lipper also serves as a director~~ of ~~Polydex Pharmaceutical, Inc., a publicly traded chemical manufacturing company for~~ the ~~drug~~Code ~~industry.~~of ~~Mr.~~Ethics ~~Lipper~~has ~~began~~been ~~his~~filed ~~career on Wall Street~~ as aan ~~securities~~exhibit ~~analyst.~~to ~~He joined~~ the ~~Bank~~Company’s ofAnnual ~~New~~Report ~~York~~on ~~and~~Form ~~was the senior bank insurance and finance analyst. Subsequently, he became co~~10-~~director of research at Eastman Dillon Union Securities and later Purcell Graham~~K. ~~In 1973, Mr. Lipper became V.P. and treasurer of APF Electronics. Mr. Lipper is a Korean War Veteran who graduated from N.Y.U. in 1958 with a Bachelor of Science degree in Finance and Economics.~~

~~Jose~~ITEM ~~Fuentes, Chief Financial Officer and Director~~11. EXECUTIVE Mr. Fuentes has been Chief Financial Officer since May 12, 2008, a director of the Company since October 1, 2017. Commencing in 2006 and through 2007, Mr. Fuentes was our VP of Finance. Mr. Fuentes has over forty years of financial related experience including the energy sector. The majority of his early career, after leaving public accounting, was spent at Atlantic Richfield Co., where he held several progressively responsible financial roles including his most recent position as Vice President of Finance, Planning and Control for Arco Indonesia. From there, Mr. Fuentes served as Vice President of Finance and CFO at PJM Interconnection, LLC. Mr. Fuentes received a Bachelor of Science degree in accounting from Saint John’s University in New York and is a Certified Public Accountant.COMPENSATION

45The following table provides information concerning the compensation of our Chief Executive Officer, Chief Financial Officer and one former “named executive officer” for our last two completed fiscal years:

All directors were appointed by the board of directors as a result of vacancies on the board. They hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified or until their earlier resignation, removal or death. Directors are elected at the annual meetings to serve for one-year terms. Any non-employee director of the Company is reimbursed for expenses incurred for attendance at meetings of the board and any committee of the board of directors although no such committee has been established.

Name and Principal Position	Year	Salary ($)(1)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings		All Other Compensation ($)(2)		Total ($)

William L. Shrewsbury	2018		-		-		-		-		-		-	$	24,000	$	24,000
CEO and Chairman	2019		-		-		-		-		-		-	$	24,000	$	24,000

Jose Fuentes	2018		104,000		-		-		-		-		-		-		104,000
Chief Financial Officer	2019		104,000		-		-		-		-		-		-		104,000

~~Each~~(1) ~~officer~~Represents issalaries ~~appointed~~paid byduring the ~~board~~years ofended ~~directors~~September 30, 2098, and ~~holds~~2018. ~~his~~Mr. ~~office~~Shrewsbury athas ~~the~~elected ~~pleasure~~not ~~and~~to ~~discretion~~receive ofsalary ~~the~~in ~~board~~2019 ofand ~~directors~~2018. orMr. ~~until~~Fuentes ~~his~~receives ~~earlier~~an ~~resignation,~~annual ~~removal~~salary orof ~~death~~$104,000.

~~There~~(2) ~~are~~Represent nolease ~~material~~payments ~~proceedings~~payable pursuant to ~~which~~a ~~any~~lease ~~director,~~agreement ~~officer~~between ~~or affiliate of~~ the Company, ~~any~~and ~~owner~~Mr. ofShrewsbury ~~record~~and orMrs. ~~beneficially~~Shrewsbury. ofManagement ~~more~~believes ~~than~~that ~~five percent of any class of voting securities of~~ the ~~Company,~~current orrental ~~any associate of any such director, officer, affiliate of the Company or security holder~~ is abelow ~~party~~market ~~adverse~~value tofor ~~the~~similar ~~Company~~warehouse orand ~~has~~land ~~a material interest adverse to the Company~~space.

~~Audit,~~The ~~Nominating,~~Company ~~Compensation~~does not have an employment agreement with either Mr. Shrewsbury or Mr. Fuentes. The salaries of our officers are recommended by the CEO to the board of directors and ~~Other~~subject ~~Board~~to ~~Committees~~their periodic review and approval and are determined on the basis of current market and other conditions and the cash resources available to us. We do not provide any employee benefit programs to our employees other than a periodic grant of options and warrants. The grant of options or warrants to our officers and directors and the terms of such warrants are recommended by the CEO to the board of directors and subject to their review and approval.

~~The~~Outstanding ~~board~~Equity ofAwards ~~directors~~at ofFiscal the Company has not established an audit, nominating, compensation or other board committee although it may do so in the future. Also, the Company has not appointed an “audit committee financial expert” although it may do so in the future.Year-End

~~The~~There ~~Board~~were ofno ~~Directors~~Outstanding Equity Awards at fiscal year-end September 30, 2019

~~The~~Director ~~board oversees our business affairs and monitors the performance of management. During the year ended September 30, 2018, the board held no board meeting.~~Compensation

~~Stockholders~~The ~~wishing~~following totable ~~communicate~~sets ~~with~~forth ~~any~~the ~~non-employee~~compensation ~~director~~paid ~~may do so by writing~~ to our ~~Chief~~directors ~~Executive~~who ~~Officer,~~are TXnot ~~Holdings,~~also ~~Inc.,~~named POexecutive ~~Box~~officers ~~1425,~~during ~~Ashland Kentucky 41102. Our CEO will forward~~ the ~~communication~~years asended ~~directed~~December by31, ~~the~~2018, ~~stockholder~~and 2017.

~~Independence~~DIRECTOR ~~of Directors~~COMPENSATION

Our shares of common stock are quoted on the OTC Markets Group, Inc.’s Pink marketplace. As such we are not subject to certain corporate governance requirements applicable to companies listed on a national securities exchange. For purposes of determining the “independence” of our directors, we have adopted the definition in the NYSE American Company Guide. We have determined that we have one director that is “independent” within the meaning set forth in the NYSE American’s Company Guide. Mr. Shrewsbury is our CEO and Chairman. For a company of our size and management resources, we believe that the CEO is in the best position to focus the independent directors’ attention on the issues of greatest importance to the Company and its stockholders and we believe that splitting the roles of CEO and Chairman may have the consequence of making our management and governance processes less effective than they are today through duplication of the lines of accountability and responsibility for matters. Periodically, our board of directors intends to review such policy.

		Fees Earned
		or		Options		All Other
		Paid in Cash		Awards		Compensation		Total
Name and Position	Year	$		$		$		$

James Graneto	2019		3,000		0		0		3000
	2018		0		0		0		0

~~Risk Assessment and Management~~46

~~Our~~ITEM ~~senior management is responsible for overseeing, assessing and managing our exposure to risk on a day-to-day basis, including the creation of appropriate management programs and policies~~12. WeSECURITY doOWNERSHIP ~~not~~OF ~~maintain~~CERTAIN aBENEFICIAL ~~separate~~OWNERS ~~committee~~AND ofMANAGEMENT ~~our~~AND ~~board~~RELATED ~~responsible~~STOCKHOLDER for managing and overseeing our exposure to risk. Our board is responsible for overseeing management in the execution of this responsibility and for assessing our approach to risk management. Our board exercises this responsibility at its periodic board meetings. Our board’s role in risk management is consistent with our leadership structure, with our CEO having responsibility for assessing and managing our risk exposure and the board providing oversight in connection with those efforts.MATTERS

~~Section~~The 16following table sets forth, as of December 19, 2018, beneficial ownership of our common stock by: (ai) ~~Beneficial~~each ~~Ownership~~person ~~Compliance~~we know who is the beneficial owner of more than 5% of our common stock, (ii) each of our directors and ~~Reporting~~our named executive officers, and (iii) all of our directors and named executive officers as a group. As of December 19, 2018, 48,053,084 shares of our common stock were issued and outstanding.

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of our common stock, to file reports of ownership and changes in ownership of our common stock with the SEC. Officers, directors, and greater-than-ten-percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Name of Beneficial Owner(1)	Number of Shares Beneficially Owned (1)		Percentage of Common Stock Beneficially Owned
William L. Shrewsbury		12,750,000		26.53	%
Chairman, CEO and director
Jose Fuentes		500,000		1.04	%
Chief Financial Officer
James Graneto		237,980		0.50	%
Director

All executive officers and directors as a group (3 persons)		13,487,980		28.07	%

46(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and is generally determined by “voting power” and/or “investment power” with respect to securities. Unless otherwise noted, all shares of our common stock listed above are owned of record by each individual named as beneficial owner and such individual has sole voting and dispositive power with respect to the shares owned by each of them. Such person or entity’s percentage of ownership is determined by assuming that any options, warrants or convertible securities held by such person or entity that are exercisable or convertible within 60 days from the date hereof have been exercised or converted as the case may be. All addresses, except as noted, are c/o TX Holdings, Inc., 12080 Virginia Boulevard, Ashland, Kentucky 41102.

~~Based~~ITEM ~~solely~~13. CERTAIN ~~upon~~RELATIONSHIPS ~~our~~AND ~~review~~RELATED ~~of Forms 3~~TRANSACTIONS, 4DIRECTOR and 5 submitted to us pursuant to Rule 16a-3 under the Exchange Act, we believe that except as set forth below, all such forms required to be filed were timely filed by our executive officers, directors, and security holders required to file the forms during the fiscal year ended September 30, 2018.INDEPENDENCE

OnExcept ~~June~~as ~~18,~~set ~~2015~~forth below, ~~Mr.~~we ~~Shrewsbury~~have ~~filed~~not been a ~~Form~~party 4to ~~that~~any ~~was~~transaction ~~not~~in ~~filed~~which ~~timely~~the toamount ~~report~~involved anin ~~aggregate~~the oftransaction ~~four~~exceeded ~~transactions~~or ~~not~~will ~~previously~~exceed ~~reported.~~the Onlesser ~~October~~of 10$120,000 ~~2015,~~or ~~Mr.~~one ~~Shrewsbury~~percent ~~filed~~of athe ~~Form~~average 4of ~~that~~our ~~was~~total ~~not~~assets ~~filed~~as ~~timely~~at tothe ~~report~~year-end anfor ~~aggregate~~the oflast ~~six~~two ~~transactions~~completed ~~not~~fiscal ~~previously~~years ~~reported.~~and ~~All~~in ofwhich ~~such~~any ~~reported~~of ~~transactions in~~ our ~~shares~~directors, ~~would~~executive ~~have~~officers ~~been~~or ~~eligible~~beneficial ~~for~~holders ~~deferred~~of ~~reporting~~more bythan ~~Mr. Shrewsbury on Form~~ 5% inof ~~accordance~~our ~~with~~capital ~~Section~~stock, ~~16(a)~~or ~~and~~any ~~the~~immediate ~~rules~~family ~~promulgated~~member ~~thereunder.~~of, ~~Mr.~~or ~~Bobby~~person ~~Fellers~~sharing ~~(Board~~the ~~Member-~~household ~~Resigned October 1~~with, ~~2017)~~any ~~has~~of ~~not~~these ~~filed~~individuals, anhad ~~initial~~or ~~report~~will onhave ~~Form 3 and has not filed~~ a ~~Form~~direct 4 or ~~Form~~indirect 5material ~~to report one transaction~~interest.

~~Code~~Bank ofLoan ~~Ethics~~Guarantee by Our CEO

~~The~~Under ~~Company~~the ~~has~~terms ~~adopted~~of a ~~Code~~business ofloan ~~Ethics~~agreement, ~~that~~originally ~~applies~~entered tointo ~~our~~on ~~principal~~November ~~executive~~7, ~~officer~~2012, ~~principal~~and ~~financial~~as ~~officer,~~amended ~~principal~~through ~~accounting~~August ~~officer~~26, ~~or controller~~2014, orwe ~~persons~~obtained ~~performing~~a ~~similar~~secured ~~functions.~~revolving Aline ~~copy~~ of credit in the ~~Code~~amount of ~~Ethics~~$750,000 ~~has~~from ~~been~~Town ~~filed~~Square asBank. anInterest ~~exhibit~~on tothe loan was payable monthly in arrears. Interest under the ~~Company’s~~loan ~~Annual~~is ~~Report~~variable onand ~~Form~~was ~~10-K~~based upon Wall Street Journal Prime Rate.

~~ITEM~~The 11line of credit was secured by a priority security interest in our inventory and accounts receivable and matured on November 7, 2015. ~~EXECUTIVE~~The ~~COMPENSATION~~loan was guaranteed as to principal, interest and all collection costs and legal fees by Mr. Shrewsbury. All notes and other indebtedness due to Mr. Shrewsbury by us were subordinated to the bank loan including with regard to our inventory and assets. The loan agreement contained other customary covenants and provisions, and contained certain events of default.

~~The~~On ~~following~~December ~~table~~3, ~~provides~~2015, ~~information~~we ~~concerning~~entered into a new loan agreement with Town Square Bank under which we obtained a term loan in the ~~compensation~~amount of ~~our~~$711,376. ~~Chief~~We ~~Executive~~utilized ~~Officer,~~proceeds ~~Chief~~of ~~Financial~~the ~~Officer~~new ~~and~~loan ~~one~~to ~~former~~repay ~~“named~~our ~~executive~~line ~~officer”~~of ~~for~~credit. ~~our~~The ~~last~~loan ~~two~~is ~~completed~~for ~~fiscal~~a term of five years: and matures on December 3, 2020.

Name and Principal Position	Year	Salary ($) (1)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings		All Other Compensation ($) (2)		Total ($)
William L. Shrewsbury	2017		--		--		--		--	--			--	$	24,000	$	24,000
CEO and Chairman	2018		--		--		--		--		--		--	$	24,000	$	24,000
Jose Fuentes	2017		104,000		--		--		--		--		--		--		104,000
Chief Financial Officer	2018		104,000		--		--		--		--		--		--		104,000

During the term of the loan, we have agreed to make equal monthly repayments of principal and interest of $6,967 commencing January 3, 2016, and to make a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due,

~~(1)~~estimated ~~Represents~~to ~~salaries~~be ~~paid~~approximately ~~during~~$425,539. ~~the~~Early ~~years~~repayment ~~ended~~of ~~September~~amounts ~~30,~~due ~~2018,~~under ~~and~~the ~~2017.~~loan ~~Mr.~~will ~~Shrewsbury has elected~~ not toaffect ~~receive~~the ~~salary~~monthly inrepayment ~~2018~~amount, ~~and~~unless ~~2017.~~otherwise ~~Mr.~~agreed ~~Fuentes~~to ~~receives~~by anthe ~~annual salary of $104,000~~bank.

(2) Represent lease payments payable pursuant to a lease agreement between the Company and Mr. Shrewsbury and Mrs. Shrewsbury. Management believes that the current rental is below market value for similar warehouse and land space.47

~~The~~An ~~Company~~event ~~does not have an employment agreement with either Mr. Shrewsbury or Mr. Fuentes. The salaries~~ of ~~our~~default ~~officers~~under ~~are recommended by~~ the ~~CEO~~loan towill ~~the~~occur ~~board~~upon ~~of directors and subject to their periodic review and approval and are determined on~~ the ~~basis~~occurrence of ~~current market and other conditions and the cash resources available to us. We do not provide~~ any ~~employee benefit programs to our employees other than a periodic grant~~ of ~~options and warrants. The grant of options or warrants to our officers and directors and~~ the ~~terms~~following ~~of such warrants are recommended by the CEO to the board of directors and subject to their review and approval.~~events:

~~Outstanding~~● ~~Equity~~we ~~Awards~~fail atto ~~Fiscal~~make ~~Year-End~~any payment when due under the loan;

~~There~~● ~~were~~we nofail ~~Outstanding~~to ~~Equity~~comply ~~Awards~~with atany ~~fiscal~~term, ~~year-end~~obligation, ~~September~~covenant ~~30,~~or ~~2018~~condition in the loan documents or any other agreement between the bank and the Company:

47● we default under any loan, extension of credit, security agreement, purchase or sales agreement or other agreement with any creditor that materially affects the Company’s property or its ability to repay the loan or perform its obligation under the loan note or related documents;

~~Director~~● ~~Compensation~~a warranty, representation or statement we made to the bank under the loan document is or becomes materially false or misleading;

~~The~~● ~~following~~the ~~table~~dissolution ~~sets~~or ~~forth~~termination of our existence, our insolvency, the ~~compensation~~appointment ~~paid~~of toa ~~our~~receiver ~~directors~~for ~~who~~any ~~are~~part ~~not~~of ~~also~~our ~~named~~property, ~~executive~~any ~~officers~~assignment ~~during~~for the ~~years~~benefit ~~ended~~of ~~December 31~~creditors, ~~2018~~any type of creditor workout, ~~and~~or ~~2017.~~the commencement of any proceeding under any bankruptcy or insolvency laws by or against us;

~~DIRECTOR~~● ~~COMPENSATION~~the commencement of foreclosure or forfeiture proceedings by any creditor of ours or any governmental agency against any collateral securing the loan;

		Fees Earned
		or	Options	All Other
		Paid in Cash	Awards	Compensation	Total
Name and Position	Year	$	$	$	$
Martin Lipper	2018	0	0	0	0
	2017	7,500	0	0	0

●

any of the preceding events occurs with respect to any loan guarantor;

~~During~~● ~~fiscal~~a ~~2018,~~25% ~~Mr.~~or ~~Lipper~~more ~~received~~change noin ~~compensation ($7,500 for 2017), for attending quarterly meetings at~~ the ~~Company’s~~ownership ~~principal offices related to its business and operations and, on behalf~~ of ~~the~~our ~~board~~common ~~of directors, for oversight of the appointment, compensation, and work of the Company’s independent registered public accountant.~~stock;

~~ITEM~~● ~~12.~~a ~~SECURITY~~material ~~OWNERSHIP~~adverse OFchange ~~CERTAIN~~in ~~BENEFICIAL~~our ~~OWNERS~~financial ~~AND~~condition, ~~MANAGEMENT~~or ~~AND~~the ~~RELATED~~bank ~~STOCKHOLDER~~believes ~~MATTERS~~the prospect of payment or performance of the loan is impaired ; or

~~The~~● ~~following table sets forth, as of December 19, 2018, beneficial ownership of our common stock by: (i) each person we know who is~~ the ~~beneficial~~bank ~~owner~~in ofgood ~~more~~faith ~~than~~believes 5%itself ~~of our common stock, (ii) each of our directors and our named executive officers, and (iii) all of our directors and named executive officers as a group~~insecure. ~~As of December 19, 2018, 48,053,084 shares of our common stock were issued and outstanding.~~

Name of Beneficial Owner(1)	Number of Shares Beneficially Owned (1)			Percentage of Common Stock Beneficially Owned
William L. Shrewsbury Chairman, CEO and director		12,750,000			26.53%
Jose Fuentes Chief Financial Officer		500,000			1.04%
Martin Lipper Director		561,666	(2)		1.17%
All executive officers and directors as a group (3 persons)		13,811,666	(2)		24.14%

The loan agreements contain certain affirmative covenants, including an obligation to: notify the bank of a material adverse change in our financial condition and of any threatened litigation or claim or other proceeding which could materially affect our financial condition; maintain certain liability insurance in amounts acceptable to the bank; maintain qualified executive and management personnel; comply with applicable environmental laws and perform environmental studies required by the bank; and certify annually to the bank compliance with the representations and warranties in the bank loan documents. The loan agreements contain certain other customary covenants and conditions.

	(1)	Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and is generally determined by “voting power” and/or “investment power” with respect to securities. Unless otherwise noted, all shares of our common stock listed above are owned of record by each individual named as beneficial owner and such individual has sole voting and dispositive power with respect to the shares owned by each of them. Such person or entity’s percentage of ownership is determined by assuming that any options, warrants or convertible securities held by such person or entity that are exercisable or convertible within 60 days from the date hereof have been exercised or converted as the case may be. All addresses, except as noted, are c/o TX Holdings, Inc., 12080 Virginia Boulevard, Ashland, Kentucky 41102.
	(2)	Includes 175,000 shares owned beneficially and of record by Mr. Lipper’s spouse.

In addition, the loan agreements contain certain negative covenants, including that we will not, without the bank’s consent:

48● incur any indebtedness other than to the bank or for trade debt incurred in the ordinary course;

~~ITEM~~● ~~13.~~sell, ~~CERTAIN~~transfer, ~~RELATIONSHIPS~~mortgage, ~~AND~~assign, ~~RELATED~~pledge, ~~TRANSACTIONS~~lease, ~~DIRECTOR~~grant ~~INDEPENDENCE~~a security interest in, or encumber any of our assets, except for permitted liens;

~~Except~~● assell ~~set~~our ~~forth~~accounts ~~below~~receivable, weexcept ~~have not been a party~~ to ~~any transaction in which~~ the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years and in which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.bank;

~~Bank~~● ~~Loan~~engage ~~Guarantee~~in bybusiness ~~Our~~activities ~~CEO~~substantially different from our current activities;

~~Under~~● ~~the~~cease ~~terms~~operations, ~~of a business loan agreement~~liquidate, ~~originally entered into on November 7~~merge, ~~2012~~transfer, ~~and~~acquire asor ~~amended~~consolidate ~~through~~with ~~August~~another 26entity, ~~2014,~~change weour ~~obtained~~name, ~~a secured revolving line of credit in the amount of $750~~dissolve,~~000~~ ~~from~~or ~~Town~~sell ~~Square Bank. Interest on~~ the ~~loan~~inventory ~~was~~or ~~payable~~accounts ~~monthly~~receivable insecured ~~arrears. Interest~~ under the loan ~~is variable and was based upon Wall Street Journal Prime Rate.~~;

~~The~~● ~~line~~pay ofany ~~credit~~dividend ~~was~~other ~~secured~~than ~~by a priority security interest~~ in our inventory and accounts receivable and matured on November 7, 2015. The loan was guaranteed as to principal, interest and all collection costs and legal fees by Mr. Shrewsbury. All notes and other indebtedness due to Mr. Shrewsbury by us were subordinated to the bank loan including with regard to our inventory and assets. The loan agreement contained other customary covenants and provisions, and contained certain events of default.stock;

On● ~~December~~lend 3money, ~~2015,~~invest weor ~~entered~~advance ~~into~~money aor ~~new~~assets ~~loan agreement with Town Square Bank under which we obtained a term loan in the amount of $711,376. We utilized proceeds of the new loan~~ to ~~repay~~another ~~our~~person ~~line~~or ~~of credit. The loan is for a term of five years and matures on December 3, 2020.~~entity;

~~During~~● ~~the term of the loan~~purchase, wecreate ~~have~~or ~~agreed~~acquire toan ~~make equal monthly repayments of principal and~~ interest ofin ~~$6,967~~any ~~commencing~~other January 3, 2016, and to make a final payment on December 3, 2020, of the outstanding balance of the interest and principal then due, estimated to be approximately $391,896. Early repayment of amounts due under the loan will not affect the monthly repayment amount, unless otherwise agreed to by the bank.entity;

An● ~~event~~incur ofany ~~default~~obligation ~~under~~as ~~the~~a ~~loan~~surety ~~will~~or ~~occur~~guarantor ~~upon~~other ~~the~~than ~~occurrence~~in ~~of any of~~ the ~~following~~ordinary ~~events:~~course; or

● weenter ~~fail~~into toany ~~make~~agreement containing any ~~payment~~provision ~~when~~which ~~due~~would be violated or breached by the performance of our obligations under the loan; agreements.

●Interest weunder ~~fail~~the toloan ~~comply~~is ~~with~~variable ~~any~~and ~~term,~~is ~~obligation~~based upon the Wall Street Journal Prime rate, ~~covenant~~currently or5.00% ~~condition~~per inannum. In the event of a default, interest under the loan ~~documents~~may orbe ~~any~~increased ~~other~~by ~~agreement~~2%. ~~between~~The ~~the~~line ~~bank~~of ~~and~~credit is secured by a priority security interest in the Company:’s inventory and accounts receivable and has been guaranteed by our CEO.

● we default under any loan, extension of credit, security agreement, purchase or sales agreement or other agreement with any creditor that materially affects the Company’s property or its ability to repay the loan or perform its obligation under the loan note or related documents;48

●Loans aand ~~warranty,~~Advances ~~representation~~from orour ~~statement we made to the bank under the loan document is or becomes materially false or misleading;~~CEO

●Loans ~~the~~– ~~dissolution~~Consolidated or termination of our existence, our insolvency, the appointment of a receiver for any part of our property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against us;Note

●On February 25, 2014, the ~~commencement~~Company ofentered ~~foreclosure~~into ora ~~forfeiture~~Note ~~proceedings~~Exchange byAgreement ~~any~~(“Exchange ~~creditor~~Agreement”) with Mr. Shrewsbury pursuant to which an aggregate of ~~ours~~$2,000,000 orin ~~any~~certain ~~governmental~~outstanding ~~agency~~indebtedness ~~against~~and ~~any~~interest ~~collateral~~due ~~securing~~to Mr. Shrewsbury was consolidated and the ~~loan;~~Company issued in exchange for such indebtedness a Consolidated Secured Promissory Note (the “Consolidated Note) in the principal amount of $2,000,000.

●Principal ~~any~~and ofinterest under the ~~preceding~~Consolidated ~~events~~Note ~~occurs~~is ~~with~~due ~~respect~~and payable ten years from the date of issuance and is to ~~any~~be ~~loan~~secured ~~guarantor;~~by the proceeds of key man insurance purchased by the Company on the life of Mr. Shrewsbury. The Consolidated Note bears interest at the rate of 5% per annum except that, if the prime rate reported by the Wall Street Journal (“WSJ Prime Rate”) exceeds 5%, then the Consolidated Note will bear interest at the WSJ Prime Rate. As of September 30, 2019 interest accrued under the Consolidated Note was $559,726.

●An aevent ~~25%~~of ordefault ~~more~~will ~~change~~occur inunder the ~~ownership~~Consolidated ofNote ~~our common stock;~~upon:

● athe ~~material~~Company’s ~~adverse~~failure ~~change~~to inpay ~~our~~when ~~financial~~due ~~condition,~~any orprincipal ~~the bank believes the prospect of payment~~ or ~~performance~~interest ofunder the ~~loan~~Consolidated ~~is impaired~~ Note; or

● the ~~bank~~violation by the Company of any covenant or agreement contained in ~~good~~the ~~faith~~Consolidated ~~believes~~Note, ~~itself~~the ~~insecure.~~Exchange Agreement or related transaction documents;

49● an assignment for the benefit of creditors by the Company;

~~The~~● ~~loan~~the ~~agreements~~application ~~contain~~for ~~certain affirmative covenants, including an obligation to: notify~~ the ~~bank~~appointment of a ~~material~~receiver ~~adverse change in our financial condition and of any threatened litigation~~ or ~~claim~~liquidator orfor ~~other proceeding which could materially affect our financial condition; maintain certain liability insurance in amounts acceptable to~~ the ~~bank;~~Company ~~maintain~~or ~~qualified~~for ~~executive~~property ~~and~~of ~~management personnel; comply with applicable environmental laws and perform environmental studies required by~~ the ~~bank~~Company; ~~and certify annually to the bank compliance with the representations and warranties in the bank loan documents. The loan agreements contain certain other customary covenants and conditions.~~

In● ~~addition,~~ the ~~loan~~filing ~~agreements~~of ~~contain~~a ~~certain~~petition ~~negative~~in ~~covenants,~~bankruptcy ~~including~~by ~~that~~or weagainst ~~will not, without~~ the ~~bank’s consent:~~Company;

● ~~incur~~the ~~any~~issuance ~~indebtedness~~of ~~other~~an ~~than~~attachment toor the ~~bank~~entry orof ~~for~~a ~~trade~~judgment ~~debt~~against ~~incurred~~the Company in ~~the~~excess ~~ordinary~~of ~~course~~$250,000;

● ~~sell,~~a ~~transfer,~~default ~~mortgage,~~by ~~assign,~~the ~~pledge,~~Company ~~lease,~~with ~~grant~~respect ato ~~security~~any ~~interest~~other ~~in,~~indebtedness or ~~encumber~~with respect to any ofinstallment ~~our~~debt ~~assets,~~whether ~~except~~or ~~for~~not ~~permitted~~owing ~~liens~~to Mr. Shrewsbury;

● ~~sell~~the ~~our~~sale ~~accounts~~of ~~receivable,~~all ~~except~~or substantially all of the Company’s assets or a transfer of more than 51% of the Company’s equity interests to a person not currently a holder of equity interests of the ~~bank~~Company;

● ~~engage~~the intermination ~~business~~of ~~activities~~existence ~~substantially~~or ~~different~~the ~~from~~dissolution ~~our~~of ~~current~~the ~~activities~~Company;

● ~~cease~~the ~~operations,~~death ~~liquidate,~~of ~~merge,~~Mr. ~~transfer,~~Shrewsbury; ~~acquire~~ or ~~consolidate~~the ~~with~~failure ~~another~~to ~~entity,~~pay ~~change~~when ~~our~~due ~~name,~~any ~~dissolve,~~premium orunder ~~sell~~ the ~~inventory~~key orman ~~accounts~~policy ~~receivable~~required ~~secured~~to be purchased on the life of Mr. Shrewsbury under the ~~loan;~~Exchange Agreement.

●In ~~pay~~addition, ~~any~~in ~~dividend~~consideration ~~other~~of ~~than~~Mr. Shrewsbury agreeing to consolidate and restructure the indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the Company’s common stock pursuant to the terms of a Non-Qualified Stock Option Agreement, issued February 25, 2014. The options were exercisable commencing April 1, 2014, and for a period of three years thereafter. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock; dividends, subdivisions, capital reorganizations, a consolidation or merger, or sale of all or substantially all of our assets. The options expired on March 31, 2017.

~~● lend money, invest or advance money or assets to another person or entity;~~Advances

●As ~~purchase~~of September 30, ~~create~~2018, orMr. ~~acquire~~Shrewsbury had advanced an aggregate of $181,487 to the Company. The advances do not bear interest inand ~~any~~are ~~other~~repayable ~~entity;~~upon demand. At September 30, 2019, the Company also has a payable of $108,000 to Mr. Shrewsbury for warehouse storage rental.

●Mr. ~~incur~~Shrewsbury ~~any~~has ~~obligation~~agreed asthat athe ~~surety~~Consolidated orNote ~~guarantor~~and advances and other ~~than~~claims indue from the ~~ordinary~~Company ~~course;~~to orMr. Shrewsbury are subordinate to the Company’s bank indebtedness.

~~● enter into any agreement containing any provision which would be violated or breached by the performance of our obligations under the loan agreements.~~49

~~Interest~~Lease under the loan is variable and is based upon the Wall Street Journal Prime rate, currently 5.00% per annum. In the event of a default, interest under the loan may be increased by 2%. The line of credit is secured by a priority security interest in the Company’s inventory and accounts receivable and has been guaranteed by our CEO.Agreement

~~Loans~~On November 2012, the Company entered into a lease agreement with Mr. Shrewsbury and ~~Advances~~Mrs. ~~from~~Shrewsbury, Mr. Shrewsbury’s wife, pursuant to which they agreed to lease to the Company certain office space and certain warehouse space and land to store the Company’s inventory. The lease commenced on October 1, 2012 had a two year term and the option to extend the lease on the same terms for up to an additional 24 months upon written notice at least 30 days prior to the end of the lease. On September 1, 2014, the parties agreed to extend the lease for an additional two years and on September 1, 2016 and subsequently on September 1, 2018 an September 1, 2019 the lease was again extended for an additional one years respectively, to August 31, 2020. The lease rental is $2,000 per month payable on the first of each month. As of September 30, 2018, the Company had accrued and unpaid lease payments due to Mr. and Mrs. Shrewsbury in the amount of $108,000. Accordingly, our ~~CEO~~lease with Mr. and Mrs. Shrewsbury may be deemed to be in default. As of the date of this report, we have not received a notice of termination of the lease

~~Loans~~Freight ~~– Consolidated Note~~Charges

OnThe ~~February~~Company ~~25,~~utilizes ~~2014,~~ the ~~Company~~services ~~entered~~of ~~into~~ a ~~Note~~trucking ~~Exchange~~company ~~Agreement~~owned ~~(“Exchange~~and ~~Agreement”)~~controlled ~~with~~by Mr. Shrewsbury, ~~pursuant~~our toChief ~~which~~Executive anOfficer, ~~aggregate~~to transport certain of ~~$2,000,000~~the inCompany’s ~~certain~~products ~~outstanding~~to ~~indebtedness~~its ~~and~~customers. ~~interest~~During ~~due~~the toyears ~~Mr.~~ended ~~Shrewsbury~~September ~~was~~30, ~~consolidated~~2019 and ~~the~~2018, ~~Company~~such ~~issued~~trucking incompany ~~exchange~~was ~~for~~paid ~~such~~$69,346 ~~indebtedness~~and a$73,385, ~~Consolidated~~respectively, ~~Secured~~for ~~Promissory~~such ~~Note~~trucking ~~(the~~services. ~~“Consolidated~~Management ~~Note)~~believes inthat the ~~principal~~freight ~~amount~~charges of ~~$2,000,000~~such trucking company are at or below market rates for such services.

~~Principal~~Commission and interest under the Consolidated Note is due and payable ten years from the date of issuance and is to be secured by the proceeds of key man insurance purchased by the Company on the life of Mr. Shrewsbury. The Consolidated Note bears interest at the rate of 5% per annum except that, if the prime rate reported by the Wall Street Journal (“WSJ Prime Rate”) exceeds 5%, then the Consolidated Note will bear interest at the WSJ Prime Rate. As of September 30, 2018 interest accrued under the Consolidated Note was $459,726.Charges

AnIn ~~event~~connection with the transportation and delivery of ~~default~~certain ~~will~~of ~~occur~~the ~~under~~Company’s products, the ~~Consolidated~~Company ~~Note~~utilizes ~~upon:~~the services of a national transportation company. The chief executive officer and a principal stockholder of the Company owns and controls a company that is an agent of such transportation company. Such controlled company places orders for such transportation services on behalf of the Company and is paid a commission for such transportation services. During the years ended September 30, 2019 and 2018 the amounts of such commission were $13,192 and $10,975, respectively.

●Accrued ~~the Company~~Officer’s ~~failure~~salary ~~to pay when due any principal or interest under the Consolidated Note;~~

●As ~~the~~of ~~violation~~September by30, 2019, the Company had an accrued and unpaid amount of ~~any~~$304,179 ~~covenant~~due orto ~~agreement~~Jose ~~contained~~Fuentes, CFO as payment for past services, which are included in our accrued liabilities amount. Payment of the ~~Consolidated~~accrued ~~Note~~salary is to be secured or otherwise payable by the Company out of the death benefit proceeds of key man insurance of $500,000 that has been purchased by the ~~Exchange~~Company ~~Agreement~~on orthe ~~related~~life ~~transaction~~of ~~documents;~~Mr. Fuentes.

●ITEM an14. PRINCIPAL ~~assignment~~ACCOUNTING ~~for~~FEES ~~the~~AND ~~benefit of creditors by the Company;~~SERVICES

●Audit ~~the application for the appointment of a receiver or liquidator for the Company or for property of the Company;~~Fees

●The following table sets forth the ~~filing~~aggregate offees abilled ~~petition~~to inthe ~~bankruptcy~~Company by orits ~~against~~independent ~~the~~registered public accounting firm, Turner, Stone & Company;, L.L.P., for each of the last two fiscal years.

● the issuance of an attachment or the entry of a judgment against the Company in excess of $250,000;

ACCOUNTING FEES AND SERVICES	2019		2018

Audit fees	$	44,056	$	42,264
Audit-related fees		-		-
Tax fees		-		-
All other fees		-		-

Total	$	44,056	$	42,264

●Audit ~~a default by the Company with respect to any other indebtedness or with respect to any installment debt whether or not owing to Mr. Shrewsbury;~~Fees

50“Audit fees” represent the aggregate fees billed for professional services for the audit of our annual consolidated financial statements, reviews of our financial statements included in our quarterly reports services that are normally provided in connection with statutory and regulatory filings or engagements.

● the sale of all or substantially all of the Company’s assets or a transfer of more than 51% of the Company’s equity interests to a person not currently a holder of equity interests of the Company;50

●Audit ~~the~~Related ~~termination of existence or the dissolution of the Company;~~Fees

●“Audit-related ~~the~~fees” ~~death~~represent ofthe ~~Mr.~~aggregate ~~Shrewsbury;~~fees orbilled ~~the~~for ~~failure~~assurance toand ~~pay~~related ~~when~~services ~~due~~that ~~any~~are ~~premium~~reasonably ~~under~~related to the ~~key~~performance ~~man~~of ~~policy~~the ~~required~~audit toor bereview ~~purchased~~of onour ~~the~~consolidated ~~life~~financial ofstatements ~~Mr.~~and ~~Shrewsbury~~are ~~under~~not ~~the~~reported ~~Exchange~~under ~~Agreement~~Audit Fees.

InTax addition, in consideration of Mr. Shrewsbury agreeing to consolidate and restructure the indebtedness, the Company granted to Mr. Shrewsbury options to purchase an aggregate of 500,000 shares of the Company’s common stock pursuant to the terms of a Non-Qualified Stock Option Agreement, issued February 25, 2014. The options were exercisable commencing April 1, 2014, and for a period of three years thereafter. The options were exercisable at a price of $0.0924 per share subject to certain anti-dilution adjustments in the event of stock dividends, subdivisions, capital reorganizations, a consolidation or merger, or sale of all or substantially all of our assets. The options expired on March 31, 2017.Fees

~~Advances~~Tax fees represent the aggregate fees billed for professional services rendered by our principal accountants for tax compliance, tax advice, and tax planning.

AsAll ofother September 30, 2018, Mr. Shrewsbury had advanced an aggregate of $92,487 to the Company. The advances do not bear interest and are repayable upon demand. At September 30, 2018, the Company also has a payable of $84,000 to Mr. Shrewsbury for warehouse storage rental.Fees

~~Mr.~~All ~~Shrewsbury~~other ~~has~~fees ~~agreed~~represent ~~that~~ the ~~Consolidated~~aggregate ~~Note~~fees ~~and~~billed ~~advances~~for products and ~~other~~services ~~claims~~reported ~~due~~in ~~from~~ the ~~Company~~other ~~to Mr~~categories. ~~Shrewsbury~~There ~~are~~were ~~subordinate~~no tosuch ~~the~~fees ~~Company’s~~in ~~bank~~either ~~indebtedness~~fiscal 2019 or fiscal 2018.

~~Lease~~All ~~Agreement~~above audit services and audit-related services were pre-approved by the Board of Directors, which concluded that the provision of such services by Turner Stone was compatible with the maintenance of the firm’s independence in the conduct of its audits.

On November 2012, the Company entered into a lease agreement with Mr. Shrewsbury and Mrs. Shrewsbury, Mr. Shrewsbury’s wife, pursuant to which they agreed to lease to the Company certain office space and certain warehouse space and land to store the Company’s inventory. The lease commenced on October 1, 2012 had a two year term and the option to extend the lease on the same terms for up to an additional 24 months upon written notice at least 30 days prior to the end of the lease. On September 1, 2014, the parties agreed to extend the lease for an additional two years and on September 1, 2016 and subsequently on September 1, 2018 the lease was again extended for an additional two years respectively, to August 31, 2020. The lease rental is $2,000 per month payable on the first of each month. As of September 30, 2018, the Company had accrued and unpaid lease payments due to Mr. and Mrs. Shrewsbury in the amount of $84,000. Accordingly, our lease with Mr. and Mrs. Shrewsbury may be deemed to be in default. As of the date of this report, we have not received a notice of termination of the lease51

~~Freight~~ ITEM ~~Charges~~15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

~~The Company utilizes the services of~~ (a) ~~trucking~~Financial company owned and controlled by Mr. Shrewsbury, our Chief Executive Officer, to transport certain of the Company’s products to its customers. During the years ended September 30, 2018 and 2017, such trucking company was paid $73,385 and $57,773, respectively, for such trucking services. Management believes that the freight charges of such trucking company are at or below market rates for such services.Statements

~~Commission~~The ~~Charges~~following are filed as part of this report commencing on page 26:

InReport ~~connection with the transportation and delivery~~ of ~~certain~~Independent ofRegistered ~~the~~Public ~~Company’s~~Accounting products, the Company utilizes the services of a national transportation company. The chief executive officer and a principal stockholder of the Company owns and controls a company that is an agent of such transportation company. Such controlled company places orders for such transportation services on behalf of the Company and is paid a commission for such transportation services. During the years ended September 30, 2018 and 20176 the amounts of such commission were $10,975 and $9,640, respectively.Firm

~~Accrued~~Balance ~~Officer’s~~Sheets ~~salary~~as at September 30, 2019 and 2018

AsStatements of ~~September~~Operations ~~30,~~for ~~2018,~~ the ~~Company~~years ~~had~~ended anSeptember ~~accrued and unpaid amount of $358~~30,~~179~~ ~~due~~2019 toand Jose Fuentes, CFO as payment forpast services, which are included in our accrued liabilities amount. Payment of the accrued salary is to be secured or otherwise payable by the Company out of the death benefit proceeds of key man insurance of $450,000 that has been purchased by the Company on the life of Mr. Fuentes.2018

51Statements of Changes in Stockholders’ Deficit for the years ended September 30, 2019 and 2018

~~ITEM~~Statements ~~14.~~of ~~PRINCIPAL~~Cash ~~ACCOUNTING~~Flows ~~FEES~~for ~~AND~~the ~~SERVICES~~years ended September 30, 2019 and 2018

~~Audit~~(b) ~~Fees~~Exhibits

The following ~~table~~exhibits ~~sets~~are ~~forth~~filed ~~the~~or ~~aggregate~~“furnished” ~~fees billed to the Company by its independent registered public accounting firm, Turner, Stone & Company, L~~herewith.~~L.P., for each of the last two fiscal years.~~

ACCOUNTING FEES AND SERVICES	2018			2017
			Incorporated by Reference From
Audit fees	$	42,264		$	40,611
Exhibit No.	Exhibit Description		Form		Filing Date	Filed/ “Furnished” Herewith
Audit-related fees		-			-
3.1	Articles of Incorporation.		10-K		12/3/13
Tax fees		-			-
3.2	Articles of Amendment to Articles of Incorporation, dated January 17, 2003.		10-K		12/29/15
All other fees		-			-
3.3	Articles of Amendment to Articles of Incorporation, dated July 25, 2005.		10-Q		05/03/2013
Total	$	42,264		$	40,611
3.4	Articles of Amendment to Articles of Incorporation, dated December 24, 2007.		10-Q		05/03/2013
3.5	By-Laws.		10-KSB		01/14/2003
4.1	Form of Common Stock Certificate.		10-K		12/3/13
10.1	Lease Agreement, dated November 19, 2012, by and among registrant and William Shrewsbury and Peggy Shrewsbury.		10-Q		05/03/2013
10.2	Loan Modification Agreement, dated November 21, 2013, by and between registrant and Home Federal Savings and Loan Association		10-K		12/3/13
10.3	Warehouse Lease Extension, dated September 1, 2014, by and among the Company and William L. Shrewsbury and Peggy Shrewsbury.		10-K		11/18/14
10.4	Consolidated Secured Promissory Note, dated February 25, 2014, issued to William L. Shrewsbury.		8-K		2/28/14
10.5	Non-Qualified Stock Option Agreement, dated February 25, 2014, issued to William L. Shrewsbury.		8-K		2/28/14
10.6	Business Loan Agreement and Exhibits, dated December 3, 2015, by and between registrant and Town Square Bank		10-K		12/29/15
10.7	Warehouse Lease Extension, dated September 1, 2016,by and among registrant and William Shrewsbury and Peggy Shrewsbury		10-K		12/16/16
10.8	Amended and Restated Bylaws		10-K		12/15/17
14.1	Code of Ethics for Chief Executive Officer and Senior Financial Officer.		10-K		12/29/15
21	List of Subsidiaries.		10-K		12/29/15
24.1	Power of Attorney - included on signature page.

~~Audit Fees~~52

“Audit fees” represent the aggregate fees billed for professional services for the audit of our annual consolidated financial statements, reviews of our financial statements included in our quarterly reports services that are normally provided in connection with statutory and regulatory filings or engagements.

31.1	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO)	X
31.2	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO)	X
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO)	X
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO)	X
101.INS	XBRL Instance Document **	X
101.SCH	XBRL Taxonomy Extension Schema Document **	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document **	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document **	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **	X

~~Audit~~** ~~Related~~Users ~~Fees~~of this data are advised pursuant to Rule 406T of Regulation S-X that this interactive data file is deemed not filed or part of a registration statement or prospectus for the purpose of section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

~~“Audit-related~~ITEM ~~fees”~~16. ~~represent~~FORM ~~the~~10-K aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under Audit Fees.SUMMARY

~~Tax~~The ~~Fees~~Company has determined not to include a summary of the information required by the Form 10K under this item 16 of the Form 10-K.

~~Tax fees represent the aggregate fees billed for professional services rendered by our principal accountants for tax compliance, tax advice, and tax planning.~~53

~~All other Fees~~SIGNATURES

~~All~~Pursuant ~~other~~to ~~fees~~the ~~represent~~requirements ~~the~~of ~~aggregate~~Section ~~fees~~13 ~~billed~~or ~~for~~15(d) ~~products~~of ~~and~~the ~~services~~Securities ~~reported~~Exchange inAct of 1934, the ~~other~~Registrant ~~categories.~~has ~~There~~duly ~~were~~caused nothis ~~such~~Report ~~fees~~to inbe ~~either~~signed ~~fiscal~~on ~~2018~~its orbehalf ~~fiscal~~by ~~2017~~the undersigned, thereunto duly authorized.

All above audit services and audit-related services were pre-approved by the Board of Directors, which concluded that the provision of such services by Turner Stone was compatible with the maintenance of the firm’s independence in the conduct of its audits.

	TX HOLDINGS, INC.

December 9, 2019	By:	/s/ William L Shrewsbury
		William L. Shrewsbury
		Chief Executive Officer

52POWER OF ATTORNEY

~~ITEM~~KNOW 15ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William L. ~~EXHIBITS~~Shrewsbury ~~AND~~and ~~FINANCIAL~~Jose ~~STATEMENT~~Fuentes, ~~SCHEDULES~~and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K for the year ended September 30, 2019, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

~~(a)~~Pursuant ~~Financial~~to ~~Statements~~the requirements of 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.

The following are filed as part of this report commencing on page 26:

Signature	Title	Date


/s/ William L. Shrewsbury William L. Shrewsbury	Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)	December 9, 2019

/s/ Jose Fuentes Jose Fuentes	Chief Financial Officer and Director (Principal Financial and Accounting Officer)	December 9, 2019

/s/ James Graneto Martin Lipper	Director	December 9, 2019

~~Report of Independent Registered Public Accounting Firm~~54

Consolidated Balance Sheets as at September 30, 2018 and 2017

Consolidated Statements of Operations for the years ended September 30, 2018 and 2017

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended September 30, 2018 and 2017

Consolidated Statements of Cash Flows for the years ended September 30, 2018 and 2017

(b) Exhibits

The following exhibits are filed or “furnished” herewith.

		Incorporated by Reference From
Exhibit No.	Exhibit Description	Form	Filing Date	Filed/ “Furnished” Herewith
3.1	Articles of Incorporation.	10-K	12/3/13
3.2	Articles of Amendment to Articles of Incorporation, dated January 17, 2003.	10-K	12/29/15
3.3	Articles of Amendment to Articles of Incorporation, dated July 25, 2005.	10-Q	05/03/2013
3.4	Articles of Amendment to Articles of Incorporation, dated December 24, 2007.	10-Q	05/03/2013
3.5	By-Laws.	10-KSB	01/14/2003
4.1	Form of Common Stock Certificate.	10-K	12/3/13
10.1	Lease Agreement, dated November 19, 2012, by and among registrant and William Shrewsbury and Peggy Shrewsbury.	10-Q	05/03/2013
10.2	Loan Modification Agreement, dated November 21, 2013, by and between registrant and home Federal Savings and Loan Association	10-K	12/3/13
10.3	Warehouse Lease Extension, dated September 1, 2014, by and among the Company and William L. Shrewsbury and Peggy Shrewsbury.	10-K	11/18/14
10.4	Consolidated Secured Promissory Note, dated February 25, 2014, issued to William L. Shrewsbury.	8-K	2/28/14
10.5	Non-Qualified Stock Option Agreement, dated February 25, 2014, issued to William L. Shrewsbury.	8-K	2/28/14
10.6	Business Loan Agreement and Exhibits, dated December 3, 2015, by and between registrant and Town Square Bank.	10-K	12/29/15

10.7	Warehouse Lease Extension, dated September 1, 2016,by and among registrant and William Shrewsbury and Peggy Shrewsbury	10-K	12/16/16
10.8	Amended and Restated Bylaws	10-K	12/15/17
14.1	Code of Ethics for Chief Executive Officer and Senior Financial Officer.	10-K	12/29/15
21	List of Subsidiaries.	10-K	12/29/15
24.1	Power of Attorney - included on signature page.
31.1	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO)			X
31.2	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO)			X
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO)			X
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO)			X
101.INS	XBRL Instance Document **			X
101.SCH	XBRL Taxonomy Extension Schema Document **			X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document **			X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document **			X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **			X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **			X

** Users of this data are advised pursuant to Rule 406T of Regulation S-X that this interactive data file is deemed not filed or part of a registration statement or prospectus for the purpose of section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

ITEM 16. FORM 10-K SUMMARY

The Company has determined not to include a summary of the information required by the Form 10K under this item 16 of the Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TX HOLDINGS, INC.
	By:	/s/ William L. Shrewsbury
		William L. Shrewsbury
		Chief Executive Officer
December 19, 2018

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William L. Shrewsbury and Jose Fuentes, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K for the year ended September 30, 2018, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of 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.

Signature	Title	Date
/s/ William L. Shrewsbury William L. Shrewsbury	Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)	December 19, 2018
/s/ Jose Fuentes Jose Fuentes	Chief Financial Officer and Director (Principal Financial and Accounting Officer)	December 19, 2018
/s/ Martin Lipper Martin Lipper	Director	December 19, 2018

Filing Compare · TX Rail Products, Inc.