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 December 31, 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
(562) 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 December 31,
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
December 31, 1996
(Unaudited)
Assets
<S> <C>
Current Assets:
Cash and equivalents $10,921
Restricted cash 5,680
Accounts receivable 1,377
Inventory 47,081
Prepaid expenses 133,966
------------
Total current assets 199,025
Fixed assets, net 2,113
Intangible assets, net 367,462
Dubs 7,195
Deposits 20,891
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Total assets $ 596,686
============
<CAPTION>
Liabilities & Stockholders' Equity
<S> <C>
Current liabilities:
Notes payable $1,078,834
Accounts payable 71,432
Accrued expenses 518,691
Liabilities subject to assignment of assets of subsidiary 603,565
------------
Total current liabilities 2,272,522
Long -term liabilities:
Notes payable - other, long-term 600,000
Notes payable to related parties, long-term 300,000
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Total liabilities 3,172,522
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 (10,544,630)
------------
Total stockholders' equity (2,575,836)
Total liabilities & stockholders' equity $ 596,686
============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $112,907 $ 4,149 $277,298 $936,499
Cost of sales 44,622 1,072 112,241 513,996
----------- ---------- ----------- -----------
Gross profit 68,285 3,077 165,057 422,503
Selling, general and
administrative expenses 99,374 105,019 340,700 739,442
----------- ---------- ----------- -----------
Loss from operations (31,089) (101,942) (175,643) (316,939)
----------- ---------- ----------- -----------
Other Income(Expense)
Interest expense, net ( 46,796) ( 46,029) (140,124) (136,039)
Other Income 30,415 122,590 64,618 153,783
Loss on assignment of assets
for benefit of creditors
- subsidiary - - 137 (403,009)
Loss-write-off of goodwill - - - (533,475)
----------- ---------- ----------- -----------
Total Other expense ( 16,381) ( 76,561) ( 75,369) (918,740)
----------- ---------- ----------- -----------
Loss before income taxes ( 47,470) ( 25,381) (251,012) (1,235,679)
Provision for income taxes - - (800) (800)
----------- ---------- ----------- -----------
Net loss ($47,470) ($25,381) ($251,812)($1,236,479)
=========== ========== =========== ===========
Per share data:
Net loss ($0.008) ($0.004) ($0.04) ($0.20)
=========== ========== =========== ===========
Weighted average common
shares outstanding 6,167,750 6,145,600 6,166,195 6,145,600
=========== ========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Nine Months Ended, December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($251,812) ($1,236,478)
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 0 533,474
Depreciation and amortization 13,165 71,183
Conversion of accounts payable to note payable 11,344 0
Changes in operating assets and liabilities:
Accounts receivable (703) ( 1,886)
Inventory 2,850 69,126
Prepaid expenses ( 97,366) ( 8,165)
Restricted cash ( 1,359) 5,881
Dubs ( 7,195) 0
Deposits ( 8,460) 1,249
Accounts payable 5,105 (211,097)
Accrued expenses 41,218 29,948
Customer deposits 101,943 34,240
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Net cash used in operating activities ( 191,270) (309,735)
---------- ----------
Cash flows from investing activities:
Purchase of fixed assets 0 ( 914)
Cash proceeds from insurance settlement
for lost tooling 13,950 0
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Net cash used in investing activities 13,950 ( 914)
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Cash flows from financing activities:
Proceeds from note payable 100,000 332,000
Repayment of notes payable ( 77,000) ( 112,730)
Proceeds from issuance of preferred stock 153,312 0
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Net cash provided by financing 176,312 219,270
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Net(decrease)increase in cash
& cash equivalents (1,008) (91,379)
Cash and cash equivalents,
beginning of period 11,929 113,515
---------- ----------
Cash and cash equivalents,
end of period $10,921 $22,136
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1996
(Unaudited)
Supplemental cash flow information for the nine months ended December 31, was as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Interest paid $61,329 $94,221
Income taxes paid 800 800
</TABLE>
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 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 from 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 December 31, 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 nine months ended December 31,1996 and 1995 were $277,000
and $936,000 respectively. $601,000 of this $659,000 decrease is due to the
discontinuance of operations of ViaStar Marketing , Inc. as of July 31, 1995
Numex Therapy Plus sales for the nine months ended December 31, 1996 were
$277,000 as compared to $335,000 for the nine months ended December 31, 1995.
Unfilled Numex Therapy Plus orders as of December 31, 1996 totaled approximately
$101,024.
For the nine months ended December 31, 1996 and 1995, selling, general and
administrative expenses were $341,000 and $739,000 respectively. The decrease of
$398,000 is due entirely to the discontinuance of ViaStar, insofar as ViaStar's
selling, general and administrative expenses for the 1995 period were $418,000.
Net sales for the three months ended December 31, 1996 were $113,000 as
compared to $4,000 for the corresponding period in 1995. The increase of
$109,000 compensates for the prior quarters' decreased sales of Therapy Plus due
to manufacturing delays.
Selling, general and administrative expenses during the three months ended
December 31,1996 were $99,000, as compared to $105,000 during 1995. The decrease
of $6,000 is a result of Numex's further cost cutting measures.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current nine month period was $191,000,
which was offset by a net increase in debt incurred of $23,000, net proceeds
from the sale of preferred stock of $153,000, net cash proceeds from insurance
settlement for lost tooling of $14,000 and a decrease of $1,000 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 have provided 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 commenced efforts to resume marketing Therapy Plus
in the United States using the newly accepted claims by the government
regulatory agency, regarding arthritis pain through direct response television,
which to date has not been economically effective. 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
Financial Advertising Services, Inc., etc. v. Numex Corporation, Etc., et al
LASC Case No. BC 162019
The litigation known as Financial Advertising Services, Inc. d.b.a. FMS
Direct, a California Corporation ("FMS") (the "Plaintiff"). v. Numex
Corporation, a Delaware Corporation (the "Company") (the "Defendants"), et al.
was filed in the Superior Court of the State of California for the County of Los
Angels, on December 5, 1996. The action alleges that the supplier, FMS, and the
Company entered into a contract and pursuant to the contract FMS is seeking
$20,000 in payments due. The Company is unable to determine, if any, the
ultimate outcome of the lawsuit, but management of the Company believes the
claims are without merit.
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 authorize 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/ Jack I. Salzberg
President and Chairman of the Board
Dated: Dated: February 11, 1997
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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 0
<CASH> 16,601
<SECURITIES> 0
<RECEIVABLES> 1,377
<ALLOWANCES> 0
<INVENTORY> 47,080
<CURRENT-ASSETS> 199,025
<PP&E> 201,551
<DEPRECIATION> (199,438)
<TOTAL-ASSETS> 596,685
<CURRENT-LIABILITIES> 2,272,522
<BONDS> 900,000
0
170,000
<COMMON> 629,275
<OTHER-SE> (3,375,111)
<TOTAL-LIABILITY-AND-EQUITY> 596,685
<SALES> 277,298
<TOTAL-REVENUES> 277,298
<CGS> 112,241
<TOTAL-COSTS> 452,941
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140,124
<INCOME-PRETAX> (251,149)
<INCOME-TAX> 800
<INCOME-CONTINUING> (251,949)
<DISCONTINUED> 137
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (251,812)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
