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, June 30, 1996
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 6-1034587
(Stateor Other Jurisdiction of I.R.S. Employer Identification Number)
Incorporation or Organization)
14115 S. Pontlavoy Ave. Santa Fe Springs, CA 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 6,167,750 shares of its common stock, $.10 par value,
outstanding at June 30, 1996.
Traditional Small Business Disclosure Format (check one):
Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
NUMEX CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 1996
(Unaudited)
Assets
Current Assets:
Cash and equivalents $ 5,928
Restricted cash 4,718
Accounts receivable 372
Inventory 58,826
Prepaid expenses 129,610
------------
Total current assets 199,454
Fixed assets, net 3,492
Intangible assets, net 384,086
Deposits 13,430
------------
Total assets $ 600,462
============
Liabilities & Stockholders' Equity
Current liabilities:
Notes payable $696,000
Accounts payable 45,136
Accrued expenses 461,747
Liabilities subject to assignment of assets of subsidiary 603,565
------------
Total current liabilities 1,806,448
Long-term liabilities:
Notes payable - other, long-term 916,000
Notes payable to related parties, long-term 376,834
------------
Total liabilities 3,099,282
Stockholders' equity:
Preferred stock, $1.00 par value, 10,000,000 shares
authorized, none issued 0
Common stock, $.10 par value, 20,000,000 shares
authorized, 6,292,750 issued and
6,167,750 shares outstanding 629,275
Treasury stock, at cost, 125,000 shares (143,324)
Unearned portion of restricted stock issued (562,500)
Additional paid in capital 7,892,031
Stock subscription 170,850
Accumulated deficit (10,485,152)
------------
Total stockholders' equity (2,498,820)
Total liabilities & stockholders' equity $ 600,462
============
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended
June 30,
1996 1995
----------- --------
Net sales $ 16,140 $ 618,667
Cost of sales 4,403 346,439
----------- ---------
Gross profit 11,737 272,228
Selling, general and administrative expenses 163,377 404,535
----------- ---------
Loss from operations (151,640) (132,307)
----------- ----------
Interest expense, net ( 39,894) ( 43,870)
----------- ----------
Loss before income taxes (191,534) (176,177)
Provision for income taxes ( 800) 0
----------- ----------
Net loss ($192,334) ($176,177)
=========== =========
Per share data:
Net loss ($0.03) ($0.03)
=========== ==========
Weighted average common
shares outstanding 6,163,052 6,145,600
=========== ==========
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Three Months Ended, June 30, 1996 and 1995
(Unaudited)
Three Months ended June 30
1996 1995
---------- ---------
Cash flows from operating activities:
Net loss ($ 192,333) ($176,177)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 9,112 33,863
Conversion of accounts payable to common stock 11,344 0
Changes in operating assets and liabilities:
Accounts receivable 302 59
Inventory ( 8,896) 62,918
Prepaid expenses (93,010) (19,271)
Restricted cash ( 397) 5,964
Deposits ( 1,000) 0
Accounts payable (21,190) 13,286
Accrued expenses 20,464 (29,698)
Customer deposits 65,753 0
---------- ---------
Net cash used in operating activities ( 209,851) (109,056)
---------- ---------
Cash flows from investing activities:
Purchase of fixed assets 0 0
Purchase of intangible assets 0 0
Business combination, net 0 0
---------- ---------
Net cash used in investing activities 0 0
---------- ---------
Cash flows from financing activities:
Proceeds from note payable 57,000 0
Proceeds from n/p to related parties 12,000 52,000
Repayment of notes payable ( 24,000) ( 29,816)
Repayment of n/p to related parties ( 12,000) 0
Proceeds from stock subscription 170,850 0
---------- ---------
Net cash provided by financing 203,850 22,184
---------- ---------
Net(decrease)increase in cash
& cash equivalents ( 6,001) ( 86,872)
Cash and cash equivalents,
beginning of period 11,929 113,515
---------- ---------
Cash and cash equivalents,
end of period $ 5,928 $26,643
========== =========
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30, 1996
(Unaudited)
Supplemental cash flow information for the three months ended
June 30, as follows:
1996 1995
----------- ----------
Interest paid $22,362 $40,004
Income taxes paid 800 800
Non - financing activity for the three months ended June 30,
was as follows:
1996 1995
----------- ----------
Issuance of common stock in payment of legal
services $11,344 -
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1996
(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, 1996 Operating results for the three months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for any other
interim period or for the fiscal year ended March 31, 1997
.
NOTE 2. VIASTAR
In June 1994 the Company issued 1,000,000 shares of the Company's stock to
the shareholder of ViaStar Marketing Inc. in exchange for all the issued and
outstanding shares of ViaStar. Of these 1,000,000 shares, 500,000 were placed in
escrow pending ViaStar's achievement of certain minimum profit goals through
March 31, 1997. Insofar as ViaStar is no longer in business and its assets have
been assigned for the benefit of creditors, the achievement of the minimum
required goals will not be met. Accordingly, as provided in the escrow
agreement, the 500,000 shares in escrow shall be returned to the Company
automatically at March 31, 1997, if not earlier
Effective July 31, 1995 an assignment was made for the benefit of creditors
of the assets of ViaStar Marketing, Inc. a wholly owned subsidiary of Company,
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.
<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 June 30, 1996 were $16,140, as
compared to $618,700 for the comparable period in 1995. The decrease of $602,560
is due to the discontinuance of operations of ViaStar Marketing, Inc., which
subsidiary was acquired in June 1994. ViaStar's sales for the three months ended
June 30, 1995 were $429,311 compared to $.00 for the same period in 1996. There
was a decrease in Numex product sales (Therapy Plus) of $157,076 for the same
three month period as wholesale sales were off but orders had been received in
late June 1996 and July 1996 to make up the difference on an annual basis.
Selling, general and administrative expenses during the three months ended
June 30, 1996 were $163,000, as compared to $404,000 during 1996. The operations
of ViaStar Marketing Inc., accounted for $.00 of current quarter expenses. The
decrease of $241,000, 1996 vs. 1995 was a result of $67,000 increase in Numex
selling and administrative expenses the result of $30,000 of non allocable
expenses previously allocated to ViaStar, a ($15,000) reduction of officers and
office salaries and wages, a result of continued cost cutting measures. An
$11,000 increase in building lease costs, $20,000 increase in legal expenses, a
$9,000 in consulting and $12,000 increase/decrease in miscellaneous items.
ViaStar accounted for $308,000 selling, general and administrative expense for
the first quarter ended June 30, 1995 with none for the first quarter ended June
30, 1996.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current three month period was $209,851
which was offset by a net increase in debt incurred of $203,850 resulting in a
decrease of $6,001 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.
Private Placement
In April 1996 the Company commenced a private placement of 350,000 shares
of convertible preferred stock and warrants of the Company which has not been
completed. Gross proceeds of the offering would be $350,000 if all units are
sold. As of June 20, 1996 the Company has sold 170 units for proceeds of
$171,000. The net proceeds of this placement are being used to finance the
reintroduction of the Product.
Current Plans of Registrant
Numex
On February 6, 1996 the FDA in response to a premarket notification (510-k)
advised Registrant that it may market its Therapy Plus manual massage roller for
temporary relief of minor muscular pain associated with arthritis. Registrant
also previously sponsored a controlled clinical study to comply with an FTC
order with respect to Therapy Plus's effectiveness in relief for pain associated
with arthritis. Accordingly, Registrant is now exploring options for resuming
marketing Therapy Plus in the United States through direct response television
and other distribution channels.
In addition, registrant will continue its wholesale sales of Therapy Plus
for resale in markets outside of the United States.
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, by issuing 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
Meir Hayon v. Numex Corporation, et al
Reference is made to previously filed 10-KSB march 31, 1996 litigation
known as Meir Hayon v. Numex Corporation, et al that was filed in the United
States District Court for the Central District of Caliofornia, on November 29,
1995.
We are pleased to report that plaintiff informed Numex through their
attorney that they are withdrawing and dicontinuing the lawsuit.
Subsequently, the court in the matter referred to above issued its order
dismissing the action on July 17, 1996; the order was filed July 22, 1996 and
entered on July 25, 1996.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULT IN SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On April 1, 1996 by Written Consent of stockholders owning a majority of
the issued and outstanding shares of Common Stock of the Company, Article IV of
the Certificate of Incorporation was amended to allow the Company to issue ten
million (10,000,000)shares of Preferred Stock with a par value of $1.00, in lieu
of the one hundred thousand (100,000) shares with a par value of $100.00
previously authorized.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
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: August 12, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<LEGEND>
UNAUDITED FINANCIAL DATA SCHEDULE
</LEGEND>
<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 0
<CASH> 10,646
<SECURITIES> 0
<RECEIVABLES> 372
<ALLOWANCES> 0
<INVENTORY> 58,826
<CURRENT-ASSETS> 199,454
<PP&E> 214,901
<DEPRECIATION> (211,409)
<TOTAL-ASSETS> 600,463
<CURRENT-LIABILITIES> 1,806,448
<BONDS> 0
0
0
<COMMON> 629,275
<OTHER-SE> (3,128,095)
<TOTAL-LIABILITY-AND-EQUITY> 600,463
<SALES> 16,140
<TOTAL-REVENUES> 16,140
<CGS> 4,403
<TOTAL-COSTS> 167,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,070
<INCOME-PRETAX> (191,534)
<INCOME-TAX> 800
<INCOME-CONTINUING> (192,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (192,334)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
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