U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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Commission File Number 0-9459
NUMEX CORPORATION
Incorporated pursuant to the Laws of Delaware State
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Internal Revenue Service -- Employer Identification No.06-1034587
14115 S. Pontlavoy Ave. Santa Fe Springs, CA 90670
(310) 404-7176
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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 common stock, $.10 par value, and
170,000 shares of preferred stock, $1.00 par value, outstanding at September 30,
1996.
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, 1996
(Unaudited)
Assets
<S> <C>
Current Assets:
Cash and equivalents $ 3,112
Restricted cash 4,892
Accounts receivable 151
Inventory 60,108
Prepaid expenses 150,326
------------
Total current assets 218,589
Fixed assets, net 2,832
Intangible assets, net 375,774
Dubs 4,385
Deposits 13,426
------------
Total assets $ 615,006
============
<CAPTION>
Liabilities & Stockholders' Equity
<S> <C>
Current liabilities:
Notes payable $725,500
Accounts payable 46,683
Accrued expenses 474,789
Liabilities subject to assignment of assets of subsidiary 603,565
------------
Total current liabilities 1,850,537
Long -term liabilities:
Notes payable - other, long-term 916,000
Notes payable to related parties, long-term 376,834
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Total liabilities 3,143,371
Stockholders' equity:
Preferred stock, $1 par value, 10,000,000 shares
authorized, 170,000 issued 170,000
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 7,875,343
Accumulated deficit (10,497,159)
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Total stockholders' equity (2,528,365)
Total liabilities & stockholders' equity $ 615,006
============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $148,251 $313,683 $164,391 $932,350
Cost of sales 63,216 166,487 67,619 512,925
----------- ---------- ----------- -----------
Gross profit 85,035 147,196 96,772 419,425
Selling, general and
administrative expenses 77,949 229,886 241,326 634,422
----------- ---------- ----------- -----------
Loss from operations 7,086 ( 82,690) (144,554) (214,997)
----------- ---------- ----------- -----------
Other Income(Expense)
Interest expense, net ( 43,258) ( 14,947) ( 93,328) ( 58,817)
Other Income 24,027 0 34,203 0
Loss on assignment of assets
for benefit of creditors
- subsidiary 138 (403,009) 138 (403,009)
Loss-write-off of goodwill 0 (533,475) 0 (533,475)
----------- ---------- ----------- -----------
Total Other expense ( 19,093) (951,431) ( 58,987) (995,301)
----------- ---------- ----------- -----------
Loss before income taxes ( 12,007)(1,034,121) (203,541) (1,210,298)
Provision for income taxes 0 (800) (800) (800)
----------- ---------- ----------- -----------
Net loss ($12,007)($1,034,921) ($ 204,341)($1,211,098)
=========== ========== =========== ===========
Per share data:
Net loss ($0.002) ($0.17) ($0.03) ($0.20)
=========== ========== =========== ===========
Weighted average common
shares outstanding 6,167,750 6,145,600 6,165,414 6,145,600
=========== ========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Six Months Ended, September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended Sept 30
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net loss ($204,341) ($1,211,098)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Loss on assignment of assets to creditors 0 402,789
Loss on write-off of goodwill 0 533,575
Depreciation and amortization 18,085 61,123
Conversion of accounts payable to note payable 11,344 0
Changes in operating assets and liabilities:
Accounts receivable 523 ( 954)
Inventory ( 10,178) 68,114
Prepaid expenses (113,726) ( 8,058)
Restricted cash ( 571) 5,910
Dubs ( 4,385) 0
Deposits ( 995) 1,249
Accounts payable ( 19,644) (37,214)
Accrued expenses 39,316 (18,490)
Customer deposits 59,943 0
---------- ----------
Net cash used in operating activities ( 224,629) (203,054)
---------- ----------
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 88,000 0
Proceeds from n/p to related parties 12,000 230,000
Repayment of notes payable ( 25,500) ( 70,730)
Repayment of n/p to related parties ( 12,000) ( 32,500)
Proceeds from issuance of preferred stock 153,312 0
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Net cash provided by financing 215,812 126,770
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Net(decrease)increase in cash
& cash equivalents (8,817) (76,284)
Cash and cash equivalents,
beginning of period 11,929 113,515
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Cash and cash equivalents,
end of period $ 3,112 $37,231
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30, 1996
(Unaudited)
Supplemental cash flow information for the six months ended September 30, was as
follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Interest paid $42,639 $80,251
Income taxes paid
</TABLE>
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
September 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 six months ended September 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 shareholders of ViaStar Marketing Inc. in exchange for all the issued and
outstanding shares of that company's, which merged with a wholly owned
subsidiary of the Company renamed ViaStar Marketing Inc. ("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 the
company, resulting in a loss of $403,000. These assets are expected to yield
approximately $15,000 to the creditors. The goodwill from the 1994 acquisition
of ViaStar of $533,000 has been written off resulting in a combined loss of
$936,000.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net sales for the six months ended September 30,1996 and 1995 were $164,000
and $932,000 respectively. $601,000 of this $768,000 decrease is due to the
discontinuance of operations of ViaStar Marketing , Inc. as of July 31, 1995,
and a substantial portion of the balance was due to manufacturing delays for
Numex Therapy Plus. Numex Therapy Plus sales for the six months ended September
30, 1996 were $164,000 as compared to $331,000 for the six months ended
September 30, 1995. Unfilled Numex Therapy Plus orders as of September 30, 1996
totaled approximately $182,000.
For the six months ended September 30, 1996 and 1995, selling, general and
administrative expenses were $241,000 and $634,000 respectively. The decrease of
$393,000 is due entirely to the discontinuance of ViaStar, insofar as ViaStar's
selling, general and administrative expenses for the period were $418,000.
Net sales for the three months ended September 30, 1996 were $148,000 as
compared to $314,000 for the corresponding period in 1995. The decrease of
$166,000 is due entirely to the discontinuance of operations of ViaStar
Marketing , Inc. as of July 31, 1995, insofar as ViaStar sales for the quarter
ended September 30, 1995 were $172,000. Numex Therapy Plus sales for the quarter
ended September 30, 1996 were $148,000 as compared to $142,000 for the quarter
ended September 30,1995.
Selling, general and administrative expenses during the three months ended
September 30,1996 were $78,000, as compared to $230,000 during 1995. The
decrease of $152,000 is a result of a) the absence of ViaStar expenses in 1996
vs. $109,000 in 1995; and b) $43,000 reduction in Numex 1996 general and
administrative expenses vs. 1995.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current six month period was $225,000,
which was offset by a net increase in debt incurred of $63,000, net proceeds
from the sale of preferred stock of $153,000, and a decrease of $9,000 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 $1.00 par convertible preferred stock and warrants of the Company which if
completed would provide proceeds of $350,000. As of September 30, 1996 the
Company has sold 170 units for gross proceeds of $171,000, and net proceeds of
$153,000. The net proceeds of this placement have been used to finance the
reintroduction of the Product.
Current Plans of Registrant
Numex
On February 6, 1996 the U.S. Food and Drug Administration (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 of pain associated with arthritis.
Accordingly, Registrant has commenced efforts to resume marketing Therapy
Plus in the United States using the newly accepted claims regarding arthritis
pain 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 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 and sale
of Registrant's stock, by issuing Registrant's stock as consideration for the
acquisition, or by any other means that is agreeable to all parties involved in
the transaction.
<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 California, on November 29,
1995. The court entered its order dismissing the action 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
(a) Exhibits.
None.
(b) Reports on Form 8-K.
Form 8-K dated August 2, 1995. *
* previously filed
<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/ Jack I. Salzberg President and Chairman
Dated: November 12, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
UNAUDITED FINANCIAL DATA SCHEDULE
</LEGEND>
<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 0
<CASH> 8,004
<SECURITIES> 0
<RECEIVABLES> 151
<ALLOWANCES> 0
<INVENTORY> 60,108
<CURRENT-ASSETS> 218,589
<PP&E> 215,501
<DEPRECIATION> (212,669)
<TOTAL-ASSETS> 615,006
<CURRENT-LIABILITIES> 1,850,537
<BONDS> 1,292,834
0
170,000
<COMMON> 629,275
<OTHER-SE> (3,327,640)
<TOTAL-LIABILITY-AND-EQUITY> 615,006
<SALES> 164,391
<TOTAL-REVENUES> 164,391
<CGS> 67,619
<TOTAL-COSTS> 308,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93,328
<INCOME-PRETAX> (203,541)
<INCOME-TAX> 800
<INCOME-CONTINUING> (204,478)
<DISCONTINUED> 137
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (204,341)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
