U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-9459
NUMEX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 06-1034587
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
14115 S. Pontlavoy Ave. 90670
(Address of Principal Executive Offices) (Zip Code)
(310) 404-7176
(Issuer's Telephone Number, Including Area Code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Act of 1934 during the past 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 X No
Registrant had 6,145,600 shares of its common stock, $.10 par value, outstanding
at September 30, 1995.
Traditional Small Business Disclosure Format (check one):
Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
<CAPTION>
NUMEX CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, 1995
(Unaudited)
Assets
<S> <C>
Current Assets:
Cash and equivalents $37,231
Restricted cash 825
Accounts receivable 1,049
Inventory 64,234
Prepaid expenses 1,193
------------
Total current assets 104,532
Fixed assets, net 6,978
Intangible assets, net 409,022
Deposits 18,664
------------
Total assets $ 539,196
============
<CAPTION>
Liabilities & Stockholders' Equity
<S> <C>
Current liabilities:
Notes payable $372,284
Notes payable to related parties, current portion 286,834
Accounts payable 609,240
Accrued expenses 508,671
------------
Total current liabilities 1,777,029
Long -term liabilities:
Notes payable to related parties, long- term 1,165,000
------------
Total liabilities 2,942,029
Stockholders' equity:
Preferred stock, $100 par value, 100,000 shares
authorized, none issued -
Common stock, $.10 par value, 20,000,000 shares
authorized, 6,270,600 issued and
6,145,600 shares outstanding 627,060
Treasury stock, at cost, 125,000 shares (143,324)
Unearned portion of restricted stock issued (562,500)
Additional paid in capital 7,882,903
Accumulated deficit (10,206,972)
------------
Total stockholders' equity (2,402,833)
Total liabilities & stockholders' equity $ 539,196
============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months
and Six Months Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $313,683 $112,507 $932,350 $299,036
Cost of sales 166,486 93,082 512,925 183,082
----------- ---------- ----------- -----------
Gross profit 147,197 19,425 419,425 115,954
Selling, general and
administrative expenses 229,887 392,265 634,422 640,264
----------- ---------- ----------- -----------
Loss from operations ( 82,690) (372,840) (214,997) (524,310)
----------- ---------- ----------- -----------
Other Income(Expense)
Interest expense, net ( 14,947) ( 35,282) ( 58,817) ( 62,921)
Loss on assignment of assets
for benefit of creditors
- subsidiary (403,009) 0 (403,009) 0
Loss-write-off of goodwill (533,475) 0 (533,475) 0
----------- ---------- ----------- -----------
Total Other expense (951,431) ( 35,282) (995,301) ( 62,921)
----------- ---------- ----------- -----------
Loss before income taxes (1,034,121) (408,122) (1,210,298) (587,231)
Provision for income taxes (800) 0 (800) (800)
----------- ---------- ----------- -----------
Net loss ($1,034,921) ($408,122) ($1,211,098) ($588,031)
=========== ========== =========== ===========
Per share data:
Net loss ($0.17) ($0.07) ($0.20) ($0.10)
=========== ========== =========== ===========
Weighted average common
shares outstanding 6,145,600 6,145,600 6,145,600 5,662,540
=========== ========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Six Months Ended, September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended Sept 30
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,211,098) ($588,031)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Loss on assignment of assets to creditors 402,789 0
Loss on write-off of goodwill 533,575 0
Depreciation and amortization 61,123 70,073
Conversion of accounts payable to note payable 0 175,000
Changes in operating assets and liabilities:
Accounts receivable ( 954) 1,919
Inventory 68,114 (67,510)
Prepaid expenses ( 8,058) 5,496
Restricted cash 5,910 0
Deposits 1,249 (29,207)
Accounts payable ( 37,214) 106,295
Accrued expenses ( 18,490) 3,400
---------- ----------
Net cash used in operating activities ( 203,054) (322,565)
---------- ----------
Cash flows from investing activities:
Purchase of fixed assets 0 (199,854)
Purchase of intangible assets 0 ( 10,392)
Business combination, net 0 ( 2,990)
---------- ----------
Net cash used in investing activities 0 (213,236)
---------- ----------
Cash flows from financing activities:
Proceeds from note payable - 0
Proceeds from n/p to related parties 230,000 123,000
Repayment of notes payable ( 70,730) ( 18,000)
Repayment of n/p to related parties ( 32,500) ( 21,000)
Proceeds from issuance of common stock 0 500,000
---------- ----------
Net cash provided by financing 126,770 584,000
---------- ----------
Net(decrease)increase in cash
& cash equivalents ( 76,284) 48,199
Cash and cash equivalents,
beginning of period 113,515 6,708
---------- ----------
Cash and cash equivalents,
end of period $37,231 $54,907
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30, 1995
(Unaudited)
Supplemental cash flow information for the six months ended September 30, was as
follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Interest paid $80,251 $46,887
Income taxes paid
</TABLE>
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
September 30, 1995
(UNAUDITED)
NOTE 1. GENERAL
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments and
reclassifications considered necessary for a fair presentation of the
consolidated financial statements have been included.
For further information, refer to the consolidated financial statements and
footnotes thereto included in Registrant's Form 10-KSB for fiscal year ended
March 31, 1995. Operating results for the six months ended September 30, 1995
are not necessarily indicative of the results that may be expected for any other
interim period or for the fiscal year ended March 31, 1996.
NOTE 2. VIASTAR
Effective July 31, 1995, an assignment was made for the benefit of creditors of
the assets of ViaStar Marketing, Inc., resulting in a loss of $403,009. These
assets are expected to yield approximately $15,000 to the creditors. The
goodwill from the 1994 acquisition of ViaStar of $533,475 has been written off
resulting in a combined loss of $936,484. 500,000 shares of the common stock of
Numex remain in escrow pursuant to the terms of the original agreement pursuant
to which Numex acquired the stock of ViaStar. Numex has requested the escrow
agent which holds the shares to release the shares to Numex since the shares
were originally designated for certain officers and consultants of ViaStar only
if ViaStar achieved certain performance goals. Since the performance goals will
not be achieved due to ViaStar's assignment for the benefit of creditors, the
Company believes the escrow agent will release the shares to Numex in the near
future.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
Net sales for the three months ended September 30, 1995 were $313,683, as
compared to $112,507 for comparable period in 1994. The increase is due to sales
of its wholly owned subsidiary, ViaStar Marketing, Inc., which increase amounted
to $68,298, of which subsidiary was acquired in June 1994. Product sales
(Therapy Plus) were up $132,878 due to sales to wholesale distributors. As set
forth before in Current Plans of Registrant, subject to FDA acceptance of the
company's clinical study which the company believes substantiates its claims
that the Product relieves paind due to arthritis, the Company plans to resume
retail marketing of the product.
Selling, general and administrative expenses during the three months ended
September 30, 1995 were $229,887, as compared to $392,265 during 1994. The
$162,378 decrease in selling, general and administrative expenses is due
primarily to the decrease of expenses of ViaStar which had its last month of
operations in July 1995. The selling, general and administrative expenses of
ViaStar were $109,244 for the three months ended September 30, 1995 as compared
with $244,144 for the three months ended September 30, 1994. The selling,
general and administrative expenses of the Company without taking the expenses
of ViaStar into account also decreased in the amount of $27,477 as a result of
cost cutting measures originally implemented by the Company in 1992.
Other Income (Expense) - expense
During the three months ended September 30, 1995, other expense was $14,947 as
compared to $35,282 for the three months ended September 30, 1994. The decrease
of $20,335 is due to a sales tax audit adjustment (accrued) of $12,907 and 1994
audit fee reduction of $17,000, otherwise, interest expense was up $9,632 for
the September 30, 1995 period.
The following adjustments related to ViaStar in other expense were the loss on
assignment of assets for the benefit of creditors of $403,009 and the write-off
of goodwill in the amount of $533,475 a total of $936,484 which had no
corresponding figures for the same three months ended September 30, 1994.
See Note 2 to Financial Statements.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
Cash used in operations during the current six month period was $203,054, which
was offset by a net increase in debt incurred of $126,770, resulting in a
decrease of $76,284 in Registrant's cash position.
In the past, Registrant's Chairman of The Board and principal stockholder has
provided Registrant, either directly or indirectly through guarantees, with the
necessary working capital needed to continue operating. However, Registrant has
received no assurances, nor is there any agreement in place that the Chairman
will continue to provide such funding.
Current Plans of Registrant
- ---------------------------
Numex
- -----
Registrant plans to continue its wholesale sales of Therapy Plus without any
changes in labeling, and to continue to work with the FDA for acceptance of the
clinical study as substantiation for adding claims of efficacy in relief of
arthritis pain to its labeling.
If authorization to sell the Product with the claims of efficacy in relieving
pain due to arthritis is obtained, Registrant plans to resume the direct
response marketing of the Product, in addition to marketing the Product through
other complementary distribution channels.
Registrant continues to review new products and ventures which have the best
potential to be marketed through Registrant's direct response system, as well as
through other established marketing channels. Funding necessary to acquire any
new products or the rights to these products would either be obtained through
the issuance of Registrant's stock, by issuing Registrant's stock as
consideration for the acquisition, or by any other means that is agreeable to
Registrant and the parties involved in the transaction.
Registrant continues to conduct negotiations with a number of companies with the
intent of acquiring either them or their products. Registrant's intention is to
raise the requisite funding either through the issuance of registrant's stock as
consideration for the acquisition, or by any other means that is agreeable to
both parties.
<PAGE>
PART II. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULT IN SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
Form 8-K dated August 2, 1995. *
* previously filed
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the Company has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
NUMEX CORPORATION
By /s/ William R. Fryrear Chief Financial Officer
Dated: November 16, 1995
