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, 1997
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)
(562) 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 Exchange 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 5,967,750 shares of common stock, $.10 par value, and
170,000 shares of preferred stock, $1.00 par value, outstanding at June 30,
1997.
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, 1997
(Unaudited)
Assets
Current Assets:
Cash and equivalents $ 1,511
Restricted cash 1,019
Accounts receivable 1,093
Inventory 10,758
Prepaid expenses 2,427
------------
Total current assets 16,808
Fixed assets, net 17,595
Deposits 12,391
------------
Total assets $ 46,794
============
Liabilities & Stockholders' Equity
Current liabilities:
Notes payable $1,283,111
Accounts payable 59,937
Accrued expenses 687,951
------------
Total current liabilities 2,030,999
Long-term liabilities:
Notes payable - other, long-term 600,000
------------
Total liabilities 2,630,999
Stockholders' equity:
Preferred stock, $1.00 par value, 10,000,000 shares
authorized, 170,000 issued 170,000
Common stock, $.10 par value, 20,000,000 shares
authorized, 6,592,750 issued and
5,967,750 shares outstanding 659,275
Treasury stock, at cost, 625,000 shares (705,824)
Additional paid in capital 8,132,279
Accumulated deficit (10,839,935)
------------
Total stockholders' equity (2,584,205)
Total liabilities & stockholders' equity $ 46,794
============
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
Three Months Ended
June 30,
1997 1996
----------- --------
Net sales $ 30,414 $ 16,140
Cost of sales 12,450 4,403
----------- ---------
Gross profit 17,964 11,737
Selling, general and administrative expenses 55,269 163,377
----------- ---------
Loss from operations ( 37,305) (151,640)
Interest expense, net ( 44,760) ( 50,070)
Other income 10,176
----------- ----------
Loss before income taxes ( 82,065) (191,534)
Provision for income taxes 0 ( 800)
----------- ----------
Net loss ($ 82,065) ($192,334)
=========== =========
Per share data:
Net loss ($0.01) ($0.03)
=========== ==========
Weighted average common
shares outstanding 5,967,750 6,163,052
=========== ==========
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Three Months Ended, June 30, 1997 and 1996
(Unaudited)
Three Months ended June 30
1997 1996
---------- ---------
Cash flows from operating activities:
Net loss ($ 82,065) ($192,333)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,316 9,112
Conversion of accounts payable to common stock 0 11,344
Changes in operating assets and liabilities:
Accounts receivable 7,964 302
Inventory ( 1,935) ( 8,896)
Prepaid expenses ( 2,427) (93,010)
Restricted cash 4,756 ( 397)
Deposits 0 ( 1,000)
Accounts payable (18,762) (21,190)
Accrued expenses 22,183 20,464
Customer deposits (28,000) 65,753
---------- ---------
Net cash used in operating activities ( 96,970) (209,851)
---------- ---------
Cash flows from investing activities:
Purchase of fixed assets 0 0
Purchase of intangible assets 0 0
---------- ---------
Net cash used in investing activities 0 0
---------- ---------
Cash flows from financing activities:
Proceeds from note payable 85,500 57,000
Proceeds from n/p to related parties 0 12,000
Repayment of notes payable ( 2,000) ( 24,000)
Repayment of n/p to related parties 0 ( 12,000)
Proceeds from stock subscription 0 170,850
---------- ---------
Net cash provided by financing 83,500 203,850
---------- ---------
Net(decrease)increase in cash
& cash equivalents ( 13,470) ( 6,001)
Cash and cash equivalents,
beginning of period 14,981 11,929
---------- ---------
Cash and cash equivalents,
end of period $ 1,511 $ 5,928
========== =========
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30, 1997
(Unaudited)
Supplemental cash flow information for the three months ended
June 30, as follows:
1997 1996
----------- ----------
Interest paid $10,025 $22,362
Income taxes paid - 800
Non - financing activity for the three months ended June 30,
was as follows:
1997 1996
----------- ----------
Issuance of common stock in payment of legal
services - $11,344
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(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, 1997. Operating results for the three months ended June 30, 1997 are
not necessarily indicative of the results that may be expected for any other
interim period or for the fiscal year ended March 31, 1998.
<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, 1997 and 1996 were $30,000
and $16,000 respectively. The increase of $14,000 was largely due from wholesale
sales.
Selling, general and administrative expenses during the three months ended
June 30, 1997 were $55,000 as compared to $163,000 during 1996. The decrease of
$108,000 was a result of the continued cost cutting measures, retirement of
fixed assets, write off of intangibles, sublet of a portion of the warehouse and
offices, and there was no airtime bought for the current quarter.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current three month period was $97,000,
which was offset by a net increase in debt incurred of $84,000 resulting in a
decrease of $13,000 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 pursuant to
a private placement memorandum dated April 8, 1996 and would have provided
proceeds of $350,000 if all units were sold. The offering closed on or about
September 30, 1996 with a total of 170,000 shares of the Registrant's preferred
stock issued. The Company sold 170 units for gross proceeds of $171,000. The net
proceeds, $140,000, of this placement were 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, the Company plans to continue marketing Therapy Plus through
wholesale and export distributors, using the newly accepted claims by the
government regulatory agency, regarding arthritis pain. The Company is currently
negotiating with several major companies to distribute the Therapy Plus Product.
Since late fall 1996, Management has been intensively pursuing acquisitions
of a profitable business. Management has been reviewing several acquisition
candidates. In anticipation of possible acquisitions the Company has established
a relationship with a medium size investment banking house which specializes in
private placements of securities and notes with institutional investors.
Management is now in the process of due diligence phase of several
acquisition candidates, whose revenues range from $4 - $30 million annual sales.
Although, there is no guarantee that any of the proposed acquisitions will
materialize, there is reasonable anticipation, once the target company is
definitely established and meets all the criteria of the Company and
institutional investors that funds can be obtained to finalize such an
acquisition.
It is to be noted that the Company has approximately a $6.5 million tax
loss carryforward which can be available to be utilized by any profitable
acquisition.
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
Belin Rawlings & Badal LLP and Numex Corporation and Jack I. Salzberg
American Arbitration Association RE:72 194 01200 96
On December 6, 1997 Belin Rawlings & Badal LLP (the "Claimants") filed a
Demand for Arbitration before the American Arbitration Association in a
proceeding entitled In the Matter of the Arbitration between Belin Rawlings &
Badal LLP, and Numex Corporation and Jack I. Salzberg (the "Respondents") (Case
No. 72 194 01200 9) (the "Proceeding"). The proceeding arose out of an
allegation by the Claimants that pursuant to a Promissory Note and Agreement
dated June 28, 1994 (the "Agreement") by and between Belin Rawlings & Badal LLP
and Numex Corporation and Mr. Salzberg, the Respondents failed to meet an
obligation to pay an unpaid principal in the amount of $151,000.
Subsequently, on May 15, 1997, the American Arbitration Association awarded
to the Claimants, Belin Rawlings & Badall LLP a total amount of $208,778, plus
interest, at the rate of 10% per annum from May 6, 1997.
Discussions are currently being held by the Company and the Plaintiff to
convert this amount into common stock of the Company.
Barnes Morris Wolf P.C. vs. Numex Corporation and Jack I. Salzberg, an
individual LAMC Case No. 97C01978
On June 6th, 1997, Barnes Morris Wolf P. C. (the "Plaintiff") filed a
litigation known as Barnes Morris Wolf P. C. vs. Numex Corporation (the
"Company"), a Delaware Corporation and Jack I. Salzberg, an individual ("the
Defendants") with the Municipal Court, Whittier Judicial District, County of Los
Angeles, California. The action alleges that the Plaintiff and the Company
entered into a contract, and pursuant to the contract the Plaintiff is seeking
$13,214 in payments due. The Company does not agree with the Plaintiff's amount
of payments due. Negotiations are taking place with the respective attorneys.
Jacob M. M. Graff, an individual vs. Numex Corporation; Jack I. Salzberg,
an individual; Anna S. Salzberg, an individual, Superior Court for the State of
California, County of Los Angeles. Case No. BC 172 944
An application for a right to attach order and writ of attachment was filed
on July 21, 1997, by Jacob M. M. Graff (the "Plaintiff"), in the amount to be
secured of $200,000, relating to a promissory note executed and dated September
9, 1992. Concurrent with the execution of the promissory note as referred to
above, by Jack I. Salzberg, as Chairman of the Board of Numex, Mr. Salzberg also
signed a personal guarantee concerning the loan balances of the original and
renewal notes.
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
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/ Jack I. Salzberg
President & CEO
Dated: August 12, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<LEGEND>
UNAUDITED FINANCIAL DATA SCHEDULE
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<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
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<CASH> 2,530
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<RECEIVABLES> 1,094
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<CURRENT-ASSETS> 16,808
<PP&E> 216,766
<DEPRECIATION> (199,171)
<TOTAL-ASSETS> 46,794
<CURRENT-LIABILITIES> 2,030,999
<BONDS> 600,000
0
170,000
<COMMON> 659,275
<OTHER-SE> (3,413,480)
<TOTAL-LIABILITY-AND-EQUITY> 46,794
<SALES> 30,414
<TOTAL-REVENUES> 30,414
<CGS> 12,450
<TOTAL-COSTS> 67,719
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,759
<INCOME-PRETAX> (82,065)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,065)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,065)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
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