NUMEX CORP, 10KSB, 1998-07-14

NUMEX CORP
10KSB, 1998-07-14
BUSINESS SERVICES, NEC

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-KSB
(Mark One)

X Annual report under Section 13 or 15(d)of the Securities Exchange Act of 1934.

For the fiscal year ended March 31, 1998

Transition report under Section 13 or 15(d) of the Securities Exchange Act of
1934.

Commission file number 0-9459

Numex Corporation
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)

Delaware 06-1034587
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

14115 S. Pontlavoy Ave., Santa Fe Springs, California 90670
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)

Issuer's telephone number, including area code: (562) 404-7176

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock, par value
$.10 per share

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 _____

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this

Form 10-KSB or any amendment to this Form 10-KSB. X

Revenues for the fiscal year ended March 31, 1998 were approximately $176,500.

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 31, 1998, amounted to approximately $9,016,795.

Registrant had 10,889,219 shares of its Common Stock, $.10 par value, and
170,000 of Preferred Stock, $1.00 par value outstanding as of June 30, 1998.

Documents Incorporated By Reference: None

Transitional Small Business Disclosure Format: Yes ___ No X

<PAGE>

PART I.

ITEM 1. DESCRIPTION OF BUSINESS

The Company was organized and incorporated in Delaware on August 1, 1980.
The term the "Company" as used herein includes Numex Corporation and its
subsidiaries, unless the context otherwise requires.

The Company, through a wholly owned subsidiary was engaged in the
remanufacturing and servicing of metal cutting machine tools and the
retrofitting of such tools with new electronic controls. The Company's
operations were substantially eliminated during fiscal year 1988, and from that
time until January 1991, the Company was not an operating company. Since January
1991, the Company has been operating as the manufacturer, through
subcontractors, and the distributor of its primary product known as Therapy
Plus, a hand-held massage device used for the relief of muscular pain.

Therapy Plus is a patented non-electric, cylinder-shaped pain relieving
device comprised of a series of starwheels, mounted on a shaft, with hundreds of
points which do not puncture the surface of the skin. The product is rolled
briskly over the painful areas of the body for three to eight minutes. The sale
of the product is permitted under a 510(k) registration with the Food and Drug
Administration which authorizes the following claims to be made in connection
with the product: "Provides temporary relief of minor muscular pain associated
with arthritis; Temporarily relieves pain from overexertion and fatigue.
Increases blood circulation. Relaxes tense muscles." The product produces the
therapeutic effect of a massage.

The product has been manufactured for the Company by unaffiliated companies
in conformity with the Company's instructions and specifications. These
companies have no right, title or interest in or to the product and serve only
as the Company's subcontractors to manufacture the product. To the Company's
best knowledge, all of the materials used in making the product are readily
available.

Therapy Plus is currently being sold primarily to the general public either
through wholesalers or export distributors. The target purchaser is any
individual who experiences muscular pain associated with arthritis, or caused by
fatigue or overexertion.

All orders of the product are shipped to customers from the Company's
facilities in Santa Fe Springs, California. The Company's employees are
available to respond to customer questions and complaints, and offers a
thirty-day unconditional money back guarantee on retail sales in addition to a
one-year guarantee against defects in the Product.

Recent Developments
- -------------------

On February 4, 1998, the Company entered into a Letter of Intent with
Modular Structures International Inc ("MSI"), a closely held, Southern
California-based, manufacturing company of prefab modular office units and
school classrooms. The Company and MSI negotiated in good faith and processed
due diligence in contemplation of closing on February 28, 1998 which was later
extended to March 6, 1998. In the middle of March, 1998, all negotiations with
MSI were suspended due to the inability of the Company, and one of the
institutional financing sources (which represented less than 15% of the
aggregate acquisition financing requirement) to reach an agreement on the
definitive terms of proposed financing.

<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)

Competition
- -----------

Significant competition exists in the pain relief market as a whole. Most
of the Company's competition in the general pain relief market is from pills,
creams and ointments. Competition from companies selling medical devices is more
limited. The Company is aware of several hand-held devices that are designed for
purposes of massage, but is unaware of any other such devices legally sold in
the United States for the relief of pain associated with arthritis.

Trademarks, Licenses, Patents and Royalty Agreements
- ----------------------------------------------------

As a condition for obtaining the License Agreement to manufacture Therapy
Plus, the Company paid the patent owner a one-time license fee of $120,000. This
payment was made in June 1992 and was capitalized as an intangible asset. On
March 31, 1997 the remaining value of the license fee and related expenses were
written off. The License Agreement also provides for royalties at a rate ranging
from $.65 per unit to $1.20 per unit depending on the method of distribution
used.

The Company maintains that due to government intervention into the
marketing of the product from August 1992 to January 1996, the obligation to pay
minimum royalties is stayed. The Company further claims that it has no liability
of any kind under the License Agreement based on the interpretation of its
language of the License Agreement and because the limitation period for the
bringing of any action thereunder has expired to a substantial extent. Moreover,
the Company believes that the inventor discontinued business in Germany and
supposedly moved to Cyprus. Neither the Licensor nor any legal representative
thereof has communicated with the Company for the last 4 months. Accordingly, on
March 31, 1998, the management made an adjustment of the prior year's accrual on
royalty estimates accrued to the Licensor. See Item 8, "Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure."

Employees
- ---------

As of March 31, 1998, Company employed 2 full-time employees. These
employees performed services in administration, marketing, order processing,
shipping, customer service and accounting. Company believes it is on good terms
with its employees and does not foresee any labor difficulties in the future.

ITEM 2. PROPERTIES

The Company operated from one facility during fiscal year 1998 as follows:

14115 South Pontlavoy Avenue, Santa Fe Springs, California 90670

The Company moved into its current location on February 1, 1995. The new
office space is used for general office space, customer service and shipment of
Product, and until July 1995, was used to provide fulfillment services for
ViaStar. The facility contains 12,460 square feet, including shipping
facilities. The monthly rental was $5,732 plus taxes, insurance and other
maintenance costs. The Company occupied this facility under a three-year lease
which expired on January 31, 1998. The Company also subleased a certain section
of the space for $2,250 per month from July 1997 through January 1998.

In January, 1998 the Company negotiated with the lessor to amend the Lease
to provide for a further extension of the term of the lease. Under the First
Amendment to Lease, the term of the lease was extended to January 31, 1999. The
monthly rental is $6,355, plus taxes, insurance and other maintenance costs. The
Company also extended a sublease for a certain section of the space for $ 4,900
per month. Accordingly, the Company net cost for the space occupied is $1,455
per month.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

Numex Corporation, a Delaware Corporation v. William Lovell, Robert
Circosta, George Simone and Ben White, case no. 98-001276-AD in the Circuit
Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida.

On February 11,1998, a Complaint and Motion for Temporary Injunction and
Request was filed by the Company against William Lovell, Robert Circosta, George
Simone, and Ben White (the "defendants"), in the Fifteenth Judicial Circuit, in
and for Palm Beach County, Florida. The action stems from the acquisition by the
Company of ViaStar Marketing, Inc. (ViaStar) a Florida corporation, which became
the Company's wholly owned subsidiary, and certain related Amended and Restated
Acquisition Agreement and Employment Agreements with William Lovell and Robert
Circosta, as well as a Consulting Contract with George Simone, whereby
five-hundred thousand shares of the Company's restricted common stock was to be
"paid up front" to the defendants in connection with aforementioned agreements
and contract.

A settlement agreement has been signed between parties which will be filed
with the court. Under the contemplated agreement, the Under the contemplated
agreement, the defendants will return 300,000 shares to the Company and the
remaining 200,000 shares will be reissued to the defendants in equal amounts
without restriction.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's stock is traded in the over the counter market. The closing
bid price on July 13, 1998 was $.78125. The following table sets forth the
closing high and low bid and ask quotations for each of the fiscal quarters for
the years ending March 31, 1997 and March 31, 1998, as reported by the National
Quotation Bureau, Inc.

Fiscal Year Ended Closing Bid/Ask Quotes
High Low
March 31, 1997 Bid Ask Bid Ask
- -------------- --- --- --- ---
First Quarter .625 .938 .438 .688
Second Quarter .625 .938 .375 .562
Third Quarter .50 .75 .375 .625
Fourth Quarter .594 .688 .375 .625

March 31, 1998
First Quarter .469 .625 .375 .50
Second Quarter .50 .594 .312 .438
Third Quarter 1.469 1.531 .375 .46
Fourth Quarter 3.625 3.875 1.062 1.312

The above quotations represent prices between dealers and do not include
retail markup, markdown or commission, and do not represent actual transactions.

<PAGE>
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (CONTINUED)

As of March 31, 1998 there were approximately 419 shareholders of record of
Company's Common Stock. This number does not reflect individual participants in
security position listings held in "street name" accounts which is approximately
1,000 shareholders.

The Company has not paid any cash or stock dividends on its common stock
since its incorporation and anticipates that, for the foreseeable future, any
earnings will be retained for use in the Company's business.

Recent Sales of Unregistered Securities
- ---------------------------------------

In April and May 1996, the Company issued 22,150 shares of common stock to
Friedman and Phillips, the Company's corporate counsel, in lieu of $11,344 legal
fees incurred.

On March 31, 1997, Mr. Jack I. Salzberg converted his $300,000 convertible
note into 300,000 shares of common stock. He also converted the remaining
outstanding note and accrued interest in the amount of $143,916 into 287,831
shares of common stock on September 10, 1997. Mr. Salzberg is the Chairman of
the Board, President and CEO of the Company. See Item 9 "Directors, Executive
Officers, Promoters and Control Persons" and Item 12 "Certain Relationships and
Related Transactions."

On August 11, 1997, Ms. Esther Kozienicki converted her long term
convertible note of $300,000 into 600,000 shares of common stock. She also
converted some of her demand notes and accrued interest in the amount of
$479,880 into 959,760 shares of common stock on December 31, 1997. Ms Kozienicki
is the sister of Jack Salzberg. See Item 12 "Certain Relationships and Related
Transactions."

On August 11, 1997, Ms. Malka Livne converted her long term convertible
note of $300,000 into 600,000 shares of common stock. She also converted some of
her demand notes and accrued interest in the amount of $163,995 into 327,990
shares of common stock on December 31, 1997. Ms Livne is the sister in law of
Jack Salzberg. See Item 12 "Certain Relationships and Related Transactions."

On December 31, 1997, Ms. Dafna Breines converted outstanding notes in an
aggregate amount of $161,000 into 322,000 shares of common stock; Ms Adira
Hulkower converted outstanding notes for $80,000 into 160,000 shares of common
stock; Ron Livne converted his notes in an aggregate amount of $42,500 into
85,000 shares of common stock; Frank Naft converted outstanding notes for
$50,000 into 100,000 shares of common stock; Miriam Salzberg converted
outstanding notes for $50,000 into 100,000 shares of common stock; 1989
Grandchildren Trust for the Benefit of Adam Salzberg converted outstanding note
of $40,500 into 81,000 shares of common stock; and, 1989 Grandchildren Trust for
the Benefit of Matthew Salzberg converted outstanding note of $40,500 into
81,000 shares.

On December 31, 1997, the Company issued 443,888 shares of common stock, of
which 43,888 shares were restricted, to Mr. Dovid Breines who purchased a 1992
convertible promissory note from an unaffiliated party in the amount of
$221,994.

On February 24, 1998, a note in the amount of $224,000 which had been
assumed by a family member of Jack Salzberg, was converted into 448,000 shares
of Common Stock and issued s follows: Regina Hulkower 100,000 shares, Judah
Hulkower 100,000 shares, Ron Livne 98,000 shares, 1989 Grandchildren Trust FBO
Adam Salzberg 50,000 shares, 1989 Grandchildren Trust FBO Jacob Salzberg 50,000
shares and 1989 Grandchildren Trust FBO Matthew Salzberg 50,000 shares.

Subsequent to the end of fiscal year 1998, on May 29, 1998, Jack Salzberg
converted his $300,000 accrued compensation into 240,000 shares of common stock;
Esther Kozienicki converted $160,000 outstanding notes into 128,000 shares of
common stock; Malka Livne converted $120,000 outstanding notes into 96,000
shares of common stock; Dafna Breines converted $26,250 outstanding notes into
21,000 shares of common stock. See Item 6 "Management Discussion and Analysis of
Financial Condition and Results of Operation" and Item 12 "Certain Relationships
and Related Transactions."

Subsequent to the end of fiscal year 1998, on May 29, 1998, the law firm in
the transaction with MSI converted $172,000 legal fees into 140,000 shares of
common stock. See Item 1 "Description of Business." and Item 6 "Management
Discussion and Analysis of Financial Condition and Results of Operation."

Each of the foregoing transactions was exempt from the registration
provisions of the Securities Act of 1933, as amended (the"Securities Act"),
pursuant to section 4(2) thereof for issuance of securities not involving any
public offering.

<PAGE>

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

The following discussion should be read in conjuction with the Company's
consolidated financial statements and the notes thereto appearing elsewhere in
this Form 10-KSB. Certain statements contained herein that are not related to
historical results, including, without limitation, statements regarding the
Company's business strategy and objectives, future financial position,
expectations about pending litigation and estimated cost savings, are
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
`Securities Exchange Act") and involve risks and uncertainties. Although the
Company believes that the assumptions on which these forward-looking statements
are based are reasonable, there can be no assurance that such assumptions will
prove to be accurate and actual results could differ materially from those
discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, regulatory
policies, competition from other similar businesses, and market and general
policies, competition from other similar businesses, and market and general
economic factors. All forward-looking statements contained in this Form 10-KSB
are qualified in their entirety by this statement.

Fiscal Year Ended March 31, 1998 Compared To Fiscal Year Ended March 31, 1997
- -----------------------------------------------------------------------------

Net sales for the fiscal year 1998 of approximately $176,000 were 41% lower
than last year's $296,000.

Cost of sales as a percentage of net sales decreased from 52% during the
fiscal year 1997 to 47% in 1998. The 5% decrease in product cost resulted from
the use of the newly completed tooling which was more efficient in the
manufacture of Therapy Plus.

During the year, the Company incurred approximately $362,000 of legal
expense and other services related to the due diligence process associated with
an acquisition target company and the financial institutions. These expenses
were incorporated with company's selling, general and administrative expenses.
Normal operating expenses this year of approximately $291,000, versus last
year's $653,000, reflects a 55% decrease in expenses as a result of continued
cost cutting measures.

Due to Mr. Jack I. Salzberg's effort to reduce the Company's indebtedness
and converting them into equity, interest expense decreased by 37%.

The Company's other income for the fiscal year 1998 of $356,600 resulted
from the adjustment on prior year's accrual on royalty estimates. Other expense
of $300,000 was accrued as officer/stockholder compensation to the Chairman of
the Board.

<PAGE>

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (CONTINUED)

Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------

Net cash used in operations during fiscal year 1998 was $562,000. The
Company funded this usage from notes payable proceeds which resulted in net cash
flows from financing activities of 556,000.

During the year, Jack I. Salzberg converted $143,916 of his notes
receivable and accrued interest into common stock at $0.50 per share. At the
same rate, $1,708,000 of Company indebtedness to the Mr. Salzberg's relatives
were also converted into equity. See Item 5 "Market for Common Equity and
Related Stockholder Matters" and Item 12 "Certain Relationships and Related
Transactions."

Subsequent to the year ended March 1998, Jack I. Salzberg converted his
accrued compensation of $300,000 into 240,000 shares of common stock at $1.25
per share. The bid price at the time of conversion was $.875. Legal fees of
$172,000 of the law firm in the transaction with MSI which was not consummated
(see Item 1 "Description of Business"), and $280,000 outstanding notes of three
relatives of the Mr. Salzberg, elected to convert this obligation into 385,000
shares of common stock at $1.25 per share. See Item 5 "Market for Common Equity
and Related Stockholder Matters" and Item 12 "Certain Relationships and Related
Transactions."

Subsequent to the fiscal year ended March 1998, the Company reached a
settlement agreement with former employees of ViaStar Marketing resulting in an
extraordinary gain in the amount of $337,500. See Item 3 "Legal Proceedings."

Due to the current low sales volume, the Company plans to continue to rely
upon external financing sources to meet the cash requirement of its ongoing
operation. In the past, Jack I. Salzberg has provided the Company, either
directly or indirectly through guarantees, with the necessary working capital
needed to continue operating. In the last 4 years, Mr. Salzberg has provided
operating funds either directly or indirectly over $3,000,000 in loans, majority
of which were converted into common stock. In view of the fact that the
operating expenses are now significant less than they were, Mr. Salzberg
informed the Board of Directors that he will continue to provide such funds for
the continuance of business until an acquisition is completed or a private
placement of securities has been made.

Current Plans
- -------------

While the Company is continuing to explore the marketing of Therapy plus,
the main emphasis of management is directed to acquiring profitable operating
companies. The Company has $6,900,000 federal tax loss carry forward and
$1,600.000 tax loss for the State that can be utilized against profitable
operations.

The Company's management has been pursuing acquisition of profitable
businesses whose revenues range from $10 - $30 million annual sales. The Company
is currently in discussion with several acquisition candidates but no agreement
has been reached with any of them. In anticipation of possible acquisitions, the
Company has established a relationship with a medium size investment banking
house which specializes in private placements of securites and notes with
institutional investors. Although there is no guarantee that any of the proposed
acquisitions will materialize, there is reasonable anticipation that funds can
be obtained to finalize such an acquisition once the target company is
definitely established and meets all the criteria.

<PAGE>

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (CONTINUED)

Inflation and Changing Prices
- -----------------------------

The Company does not foresee any adverse effects on its earnings as a
result of inflation or changing prices.

Year 2000 Issues
- ----------------

The nature of the Company's business systems is such that the year 2000 is
expected to have a minimal impact on the Company's operations or financial
performance. However, there can be no assurance that the systems or other
parties upon which the Company's businesses also rely will address the year 2000
problem adequately.

Proforma Balance Sheet
- ----------------------

The proforma balance sheet below is based upon the following assumptions
and subsequent to year end 1988 events: (a) conversion of debt and obligations
into common stock on May 29, 1998 (see Item 5 "Market for Common Equity and
Related Stockholder Matters"), (b) receipt of 300,000 shares from ViaStar
employees per settlement agreement (see Item 3 "Legal Proceedings"), and, (c)
exercise of vested stock options of Mr. Salzberg (see Item 10 "Executive
Compensation"). Mr Salzberg notified the Company that he will exercise his
option of 850,000 shares within the next fiscal year.

<TABLE>
<CAPTION>
March 31, 1998 March 31, 1998
Assets Historical Adjustment Proforma
- ------ ---------- ---------- --------
<S> <C> <C> <C>
Current Assets 37,448 425,000 462,448
Fixed Assets 17,046 17,046
Deposits 7,158 0 7,158
----- - -----

Total Assets 61,652 425,000 486,652
====== ======= =======

Liabilities
Current Liabilities 180,999 180,999
Loan payable, other 171,930 (171,930) 0
Accrued salaries, officer - stockholder 300,000 (300,000) 0
Notes payable, other less current maturities 246,250 (246,250) 0
------- --------- -
899,179 (718,180) 180,999

Stockholders' Equity
Preferred stock 170,000 170,000
Common stock 1,118,922 55,000 1,173,922
Treasury stock (705,824) 705,824 0
Additional paid in capital 9,970,866 104,856 10,075,722
Deficiency (11,391,491) 277,500 (11,113.991)
------------ ------- ------------
(837,527) 1,143,180 305,653

Total Liabilities & Stockholders Equity $61,652 425,000 486,652
======= ======= =======

</TABLE>

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

NUMEX CORPORATION AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 1998 AND 1997

CONTENTS

Page

Independent Auditors' Report 10

Financial Statements:
Consolidated Balance Sheets 12
Consolidated Statements of Operations 13
Consolidated Statement of Stockholders' Deficiency 14
Consolidated Statements of Cash Flows 15
Notes to Consolidated Financial Statements 16-26

<PAGE>

(Accounting firm letterhead)

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Numex Corporation
Santa Fe Springs, California

We have audited the accompanying consolidated balance sheet of Numex Corporation
and subsidiary as of March 31, 1998 and the related consolidated statements of
operations, stockholders' deficiency, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The consolidated financial statements as of March 31, 1997 as
presented, were audited by other auditors whose report dated June 3, 1997,
included an explanatory paragraph which expressed substantial doubt about the
Company's ability to continue as a going concern.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Numex Corporation
and subsidiary as of March 31, 1998, and the consolidated results of their
operations and their consolidated cash flows for the year ended March 31, 1998,
in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred net losses from operations, has negative
cash flows from operations, and has a net capital deficiency. These factors,
among others as discussed in Note 1 to the financial statements, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
July 13, 1998

<PAGE>

(Accounting firm letterhead)

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Numex Corporation

We have audited the accompanying consolidated statements of operations,
stockholders', and cash flows of Numex Corporation and subsidiary for the year
ended March 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of Numex Corporation and subsidiary for the year ended March 31,
1997, in conformity with generally accepted accounting principles.

/s/ Singer Lewak Greenbaum & Goldstein LLP
SINGER LEWAK GREENBAUM & GOLSTEIN LLP

Los Angeles, California
June 3, 1997

NUMEX CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET - MARCH 31, 1998

ASSETS
<S> <C>
Current assets:
Cash $ 27,218
Inventory 10,230
----------------

Total current assets $ 37,448

Property and equipment, net of
accumulated depreciation and amortization 17,046

Deposits 7,158
----------------
$ 61,652
================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
Accounts payable and accrued expenses $ 77,210
Current maturities of notes payable, others 45,039
Current maturities of notes payable, related parties 58,750
----------------

Total current liabilities $ 180,999

Loan payable, other 171,930

Loan payable, officer-stockholder 300,000

Notes payable, related parties, less current maturities 246,250

Stockholders' deficiency:
Preferred stock; $1.00 par value, 10,000,000 shares
authorized, 170,000 shares issued and outstanding 170,000
Common stock; $.10 par value, 20,000,000 shares
authorized, 11,189,219 issued and 10,564,219
shares outstanding 1,118,922
Treasury stock, at cost, 625,000 shares (705,824)
Additional paid-in capital 9,970,866
Deficiency (11,391,491)
----------------

Total stockholders' deficiency (837,527)
----------------
$ 61,652
================

See accompanying independent auditors' report and notes to financial statements.

</TABLE>
<PAGE>

<TABLE>
NUMEX CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
Year ended Year ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net sales $ 176,513 $ 296,357

Cost of sales 83,605 155,203
-------------- ---------------

Gross profit 92,908 141,154

Selling, general and administrative expenses 653,734 653,447
-------------- ---------------

Loss from operations (560,826) (512,293)
-------------- ---------------

Other income (expense):
Officer-stockholder compensation (300,000) -
Interest expense, net (128,572) (203,766)
Other income - 40,618
Adjustment of the prior years accruals on royalty estimates 356,600 -
Loss on intangible assets in excess of net present value - (392,398)
-------------- ---------------

Total other expense (71,972) (555,546)
-------------- ---------------

Loss before provision for income taxes and
extraordinary item (632,798) (1,067,839)

Provision for income taxes 800 800
-------------- ---------------

Loss before extraordinary item (633,598) (1,068,639)

Extraordinary item, gain on extinguishment of debt - 603,565
-------------- ---------------

Net loss $ (633,598) $ (465,074)
============== ===============

Loss per share before extraordinary item (.08) (.18)

Gain per share attributable to extraordinary item - .10
-------------- ----------------

Net loss per share (.08) (.08)
============== ===============

Weighted average number of common shares
outstanding used to calculate loss per share 7,601,295 6,166,031
============== ===============

</TABLE>

See accompanying independent auditors' report and notes to financial statements.

<PAGE>

<TABLE>

NUMEX CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE FISCAL YEARS ENDED MARCH 31, 1998 AND 1997

<CAPTION>
Unearned
Treasury stock portion of Additional
Preferred stock Common stock at cost restricted paid in Accumulated
Shares Amount Shares Amount Shares Amount stock issued capital deficit Total

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1996 - $ - 6,270,600 $627,060 125,000 $(143,324) $(562,500) $7,882,903 $(10,292,819) $(2,488,680)

Preferred stock
issued for cash 170,000 170,000 850 170,850

Offering costs (30,602) (30,602)

Common stock issued
for conversion of debt 322,150 32,215 279,129 311,344

Conversion of restricted
Stock to Treasury stock 500,000 (562,500) 562,500 -

Net loss (465,074) (465,074)
----------------------------------------------------------------------------------------------------------------

Balance at
March 31, 1997 170,000 170,000 6,592,750 659,275 625,000 (705,824) - 8,132,280 (10,757,893) (2,502,162)

Common stock issued
for conversion of debt 4,596,469 459,647 1,838,586 2,298,233

Net loss (633,598) (633,598)
---------------------------------------------------------------------------------------------------------------

Balance at
March 31, 1998 170,000 $170,000 11,189,219 $1,118,922 625,000 $(705,824) $ - $9,970,866 $(11,391,491) $(837,527)
===============================================================================================================

See accompanying independent auditors' report and notes to financial statements.

</TABLE>
<PAGE>

<TABLE>

NUMEX CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<CAPTION>
Year ended Year ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows provided by (used for) operating activities:
Net loss $ (633,598) $ (465,074)
-------------- -------------

Adjustments to reconcile net loss to net cash provided
by (used for) operating activities:
Depreciation and amortization 5,916 3,249
Write-off of intangible assets - 392,398
Gain on extinguishment of debt - (603,565)
Adjustment of the prior years accruals on royalty estimates (356,600) -
Legal fees and interest expense accrued as loan payable, other 171,930 57,778
Officer-stockholder compensation accrued as loan payable,
officer-stockholder 300,000 -

Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 9,058 (8,384)
Inventory (1,406) 41,106
Prepaid expenses and other current assets - 36,600
Deposits 5,233 40

Increase (decrease) in liabilities -
accounts payable and accrued expenses (62,583) 341,976
-------------- -------------

Total adjustments 71,548 261,198
-------------- -------------

Net cash used for operating activities (562,050) (203,876)
-------------- -------------

Cash flows used for investing activities -
payments to acquire property and equipment (4,051) (17,866)
-------------- -------------

Cash flows provided by (used for) financing activities:
Cash restricted 5,775 (1,454)
Proceeds from loans and notes payable, net 572,563 86,000
Proceeds from issuance of preferred stock - 170,850
Offering costs - (30,602)
-------------- -------------

Net cash provided by financing activities 578,338 224,794
-------------- -------------

Net increase in cash 12,237 3,052
Cash and cash equivalents, beginning of year 14,981 11,929
-------------- -------------

Cash and cash equivalents, end of year $ 27,218 $ 14,981
============== =============
</TABLE>
See Note (17) for supplemental disclosures of non-cash investing and financing
activities.

See accompanying independent auditors' report and notes to financial statements.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1998 AND 1997

(1) Organization and Management's Plans:

Numex Corporation (the "Company") was incorporated in the state of Delaware
in August 1980. The Company is engaged in the business of manufacturing and
distributing a hand-held mechanical patterned coetaneous nerve stimulator
(the "Product"), which the Company markets under the name "Therapy Plus."
The Product was sold primarily through an infomercial (the "Infomercial")
on television from March 1991 though August 1992. An Infomercial is a
one-half hour paid commercial program broadcast on television, the primary
purpose of which is to sell one or more products.

In September 1992, the Company voluntarily discontinued the airing of the
Infomercial as a result of an investigation by the United States Federal
Trade Commission (the "FTC"). The FTC concluded that the Infomercial
contained certain advertising claims which were not supported by reliable
scientific evidence.

In October 1992, the Company signed an agreement with the FTC consenting to
refrain from making certain advertising claims concerning the Product, the
signing of which did not constitute an admission of a law violation. Since
the discontinuance of the airing of the Infomercial in September 1992, the
Company has sold the Product primarily to distributors and has not been
engaged in any television marketing campaign to sell the Product.

In October 1993, the Company completed a controlled clinical study to serve
as the basis for the Food and Drug Administration ("FDA") authorization to
make certain claims relative to the efficacy of the Product in relieving
paid due to arthritis and to comply with the FTC's requirements.

In November 1993, the Company submitted a 501(k) notification to the FDA
advising the agency of the Company's intention to add the word "arthritis"
to its labeling claims. In February 1996, the Company received a FDA
notification that the Product could be marketed as a "temporary relief of
minor muscular pain associated with arthritis."

In June 1994, a subsidiary of the Company acquired ViaStar Marketing, Inc.
("ViaStar"). ViaStar was in the business of outbound telemarketing of
celebrity-owned or endorsed products. The purchase price was 1,000,000
shares of the common stock of the Company in exchange for all of the issued
and outstanding shares of ViaStar. Subject to ViaStar's achieving certain
earnings goals, 500,000 of the shares issued were held in escrow (the
"Escrow Shares"). The value of those shares, in the amount of $562,500, was
shown as a reduction of the stockholders' equity as of March 31, 1996.
Insofar as ViaStar is no longer in business, the 500,000 shares held in
escrow were released back to the Company, and the Company placed the
shares, at cost, in Treasury stock as of March 31, 1997.

On August 2, 1995, ViaStar filed, and was granted, a petition commencing an
assignment for the benefit of creditors, pursuant to Chapter 727 of the
Florida State Statutes. The book value of the assets in the amount of
$399,352 was assigned to the trustee for the benefit of the creditors and
was charged to earnings. As a result of the petition, the Company
determined that there had been a permanent impairment in the carrying value
of goodwill, and the remaining unamortized balance of $533,474 was charged
to earnings for the year ended March 31, 1996. On March 28, 1997, the
shareholders of ViaStar dissolved the corporation under Delaware state law
(see Note 13).

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(1) Organization and Management's Plans, Continued:

The Company's consolidated financial statements have been presented on the
basis that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company incurred net losses during 1997 after
airing a new infomercial, and has a net capital deficiency as presented on
the balance sheet. Also, during the fiscal years 1998 and 1997, the Company
experienced insufficient cash flows from operations, and funds for
operations were obtained through the issuances of notes payable and
preferred stock. These factors raise substantial doubt about the Company's
ability to continue as a going concern.

The Company's continued existence is dependent upon its ability to achieve
a new operating plan and its success of selling Therapy Plus through
wholesale distributors. Management's plans in connection with this
uncertainty are as follow:

The Company plans to continue marketing Therapy Plus through wholesale
distributors and exporters.

Management has been aggressively pursuing several profitable businesses as
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. Included in selling, general and
administrative expenses for the year ended March 31, 1998, are
approximately $362,000 related to accounting, legal and financing costs
associated with an acquisition target.

(2) Summary of Significant Accounting Policies:

Principles of Consolidation:

The consolidated financial statements include the accounts of the
Company and its subsidiary. All intercompany accounts and
transactions have been eliminated.

Cash and Cash Equivalents:

Equivalents
------------

For purposes of the statement of cash flows, cash equivalents
include all highly liquid debt instruments with original
maturities of three months or less which are not securing any
corporate obligations.

The carrying amounts of these assets approximate fair value due
to the short maturity of the instruments.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(2) Summary of Significant Accounting Policies, Continued:

Cash and Cash Equivalents, Continued:

Concentration
-------------

The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any such losses in such accounts.

Inventories:

Inventories are stated at the lower of cost or market value. Cost
is determined using the first-in, first-out ("FIFO") method.

Property and equipment:

Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to earnings as incurred,
whereas, additions, renewals, and betterments are capitalized.
When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from
the respective accounts, and any gain or loss is included in
operations. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets

Impairment of Long-Lived Assets:

In 1997, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."

SFAS No. 121 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amounts of such assets may not be recoverable.
Impairment losses would be recognized if the carrying amounts of
the assets exceed the fair value of the asset. The impact of such
adoption resulted in the write-off of $392,398 for the purchased
intangibles and the costs of obtaining a licensing agreement from
the patent holder of the Product during the year ended March 31,
1997.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(2) Summary of Significant Accounting Policies, Continued:

Advertising:

The Company expenses the cost of advertising the first time the
advertising takes place, except for direct-response advertising.
Direct-response advertising consists primarily of the cost to
produce a television infomercial. The cost of direct-response
advertising is deferred and amortized over the expected revenue
stream of approximately six to twelve months.

For the year ended March 31, 1997, direct-response advertising
costs of approximately $113,000 were expensed due to the
unsuccessful attempt of a direct-response advertising campaign
during 1997.

Revenue Recognition:

Sales and related cost of sales are recorded upon shipment of the
Product. The Company has an unconditional money-back guarantee
policy under which the full sale price is returned to retail
customers if the Product is returned within 30 days from the date
of sale. The Company has estimated a provision for future returns
for sales to retail customers.

Stock Option Plans:

The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25), and related interpretations in accounting for the employee
stock options, rather than adopt the alternative fair value
accounting provided under The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation."

Income Taxes:

The Company uses the liability method of accounting for income
taxes pursuant to SFAS No. 109, "Accounting for Income Taxes."

Deferred income tax assets result from temporary differences when
certain amounts are deducted for financial statement purposes and
when they are deducted for income tax purposes.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(2) Summary of Significant Accounting Policies, Continued:

Net Loss Per Share:

The Company has adopted Statement of Financial Accounting
Standard No. 128, Earnings per Share ("SFAS No. 128"), which is
effective for annual and interim financial statements issued for
periods ending after December 15, 1997. SFAS No. 128 was issued
to simplify the standards for calculating earnings per share
("EPS") previously in APB No. 15, Earnings Per Share. SFAS No.
128 replaces the presentation of primary EPS with a presentation
of basic EPS. The new rules also require dual presentation of
basic and diluted EPS on the face of the statement of operations.
Common equivalent shares, consisting of outstanding stock
options, are not included, since they are anti-dilutive. Net loss
per common share is computed based on the weighted average number
of common shares outstanding.

Fair Value of Financial Instruments:

The Company measures its financial assets and liabilities in
accordance with generally accepted accounting principles. Certain
of the Company's financial instruments, including cash, accounts
receivable, accounts payable, and accrued expenses, the carrying
amounts approximate fair value due to their short maturities. The
amounts shown for debt also approximate fair value because
current interest rates offered to the Company for debt of similar
maturities are substantially the same.

Use of Estimates:

In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

(3) Cash:

The Company had $56 of restricted cash to serve as collateral for a
credit card reserve, as of March 31, 1998.

(4) Major Customers:

During the year ended March 31, 1998, the Company did business with two
customers whose sales comprised approximately 22% and 65% of net sales,
respectively. During the year ended March 31, 1997, the Company did
business with two customers whose sales comprised approximately 56% and
28% of net sales, respectively.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(5) Inventory:

A summary is as follows: 1998

Finished goods $ 7,731
Supplies and packaging 2,499
--------------

$ 10,230
==============

(6) Property and Equipment:

A summary is as follows:
1998

Furniture and fixtures $ 37,620
Office and computer equipment 144,937
Tools and dies 38,259
--------------

220,816
Less accumulated depreciation 203,770
--------------
$ 17,046
==============
(7) Accounts Payable and Accrued Expenses:

A summary is as follows:
1998

Accounts payable $ 36,354
Accrued interest 3,441
Other 37,415
--------------
$ 77,210
==============

During the year ended March 31, 1998, approximately $76,176 of the
Company's purchases were made from two vendors. No amounts were due
to these vendors as of March 31, 1998.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(8) Loan Payable, Other:

During the year ended March 31, 1998, the Company received legal
services related to an acquisition target. Subsequent to the year ended
March 31, 1998 the board of directors of the Company approved and
issued 140,000 shares of its treasury stock, at $1.23, to this vendor
for legal services rendered in the amount of $ 171,930 (see Note 18).

(9) Loan Payable, Officer-Stockholder:

During the year ended March 31, 1998, the board of directors of the
Company approved a bonus in the amount of $300,000 to an
officer-stockholder, payable at such time as funds became available and
would not be detrimental to the financial position of the Company.
Subsequent to the year ended March 31, 1998, the board of directors of
the Company approved and issued 240,000 shares of its treasury stock,
at $1.25, to convert the accrued officer-stockholder compensation
obligation of $300,000 (see Note 18).

(10) Notes Payable, Others:

A summary is as follows:
1998

Promissory note, at prime (8.5% at March 31, 1998)
plus 2%, payable in monthly principal payments of
$2,000 plus interest, due on December 18, 1995. $ 23,000

Promissory note, non-interest bearing, due on
January 11, 1999. This note may be converted
at the holder's option into shares of $0.10
par value common stock on or before due date at
the rate of $0.50 per share. 22,039
--------------

45,039
Less current maturities 45,039
--------------
$ -
==============

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(11) Notes Payable, Related Parties:

A summary is as follows:
1998

Promissory note, bearing interest at 8%,
unsecured and due on demand. $ 25,000
Promissory note, bearing interest at 8%,
unsecured and due on demand (see Note 18). 60,000
Promissory notes, bearing interest at 8%,
unsecured and due on demand (see Note 18). 105,000
Promissory note, bearing interest at 8%,
unsecured and due on demand (see Note 18). 115,000
--------------

305,000
Less current maturities 58,750
---------------
$ 246,250
===============

Subsequent to March 31, 1998, the board of directors of the Company
approved and issued 197,000 shares of its treasury stock, at $1.25 per
share, to convert certain notes payable, related parties in the amount
of $246,250 into equity (see Note 18).

(12) Income Taxes:

The current provision for income taxes in both fiscal years 1998 and
1997 is related to the minimum corporate state income taxes. As of
March 31, 1998, the Company had net federal operating loss
carryforwards and net state operating loss carryforwards totaling
approximately $6,900,000 and $1,600,000, respectively. The net federal
operating loss carryforwards expire in various years through 2013 and
net state operating loss carryforwards expire in various years through
2003.

The primary components of temporary differences which give rise to the
Company's net deferred tax asset at March 31, approximate as follows:

Deferred tax asset (liability):
Net operating losses $ 2,500,000
Valuation allowance (2,500,000)
--------------

Net deferred tax asset (liability) $ -
==============
The valuation allowance increased by approximately $250,000 in 1998.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(13) Gain on Extinguishment of Debt:

On March 28, 1997, the shareholders of ViaStar filed a corporate
dissolution under Delaware law. Since the corporation was dissolved
and the shareholders are not responsible for the debt of the Company,
the unpaid debts of $603,565 were extinguished, and the Company
recognized a gain. There is no tax effect of the gain since the
Company has no current tax expense given its utilization of net
operating loss carryforwards.

(14) Stock Option Plans:

On September 30, 1992, the stockholders approved a non-qualified stock
option plan and an incentive stock option plan, pursuant to which a
maximum aggregate of 1,000,000 shares of common stock have been
reserved for grant to officers and key employees. Under both plans,
the option price may not be less than the fair market value of the
common stock on the date of grant. Options are exercisable over a
five-year period beginning one year after the date of grant, and the
option exercise period is not to exceed ten years from that date.

As of March 31, 1998, the Company had 1,000,000 options granted under
the non-qualified option plan to the Company's Chairman of the Board
and a former officer, of which 970,000 options were fully vested and
unexercised. These options may be exercised at prices ranging from
$0.50 to $1.00 per share.

Proforma information regarding net income and earnings per share under
the fair value method has not been presented, as the amounts are
immaterial.

(15) Related Party Transactions:

During the year ended March 31, 1998, certain notes payable, related
parties, in the amount of $1,672,290, were converted to 3,344,581
shares of restricted and unrestricted common stock. Interest expense
to related parties was approximately $83,954 and $38,345 for the years
ended March 31, 1998 and 1997, respectively.

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(16) Commitments and Contingencies:

The inventor of the Product obtained a United States patent for the
Product in February 1991. The Company and the patent owner entered
into a license agreement (the "License Agreement") as of January 1,
1992. The License Agreement grants the Company an exclusive license to
market, manufacture, and sell the Product in the United States and its
possessions and territories for the remaining life of the patent which
is currently twelve years. Thereafter, the design of the Product will
be in the public domain, and the Company, as well as other companies,
will have the right to market, manufacture, and sell the Product.

The License Agreement also provides for royalties at rates ranging
from $.50 per unit to $1.20 per unit depending on the method of
distribution used. However, a minimum royalty of $125,000 is required
to be paid during each calendar year of the term of the License
Agreement whether or not the Company sells any units of the Product.

At March 31, 1998, the Company owed the patent owner an aggregate of
$356,600 in accrued royalties. Pursuant to the agreement, the
obligations of the Company to pay royalty shall be stayed pending such
period of governmental prohibition and as such, management made an
adjustment of the prior year accruals on royalty estimates and
recognized a gain as of March 31, 1998 in the amount of $356,600.

The Company has obtained legal advice in support of the defenses
available to them regarding the royalty estimate adjustment.

(17) Supplemental Disclosure of Cash Flow Information:

Supplemental cash flow information for the years ended March 31 are as
follows:

1998 1997
---- ----

Cash paid for interest $ 43,610 $ 73,958
Cash paid for income taxes 800 800

Non-cash financing activities for the years ended March 31 were as
follows:

1998 1997
---- ----
Conversion of promissory notes payable,
related party, to 3,344,581 and 300,000
shares of common stock, respectively. $ 1,672,290 $ 300,000
Conversion of promissory notes payable,
others, to 1,251,888 shares of common
stock. 625,943 -
Conversion of accounts payable to 22,150
shares of common stock - 11,344

See accompanying independent auditors' report.

<PAGE>

NUMEX CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED MARCH 31, 1998 AND 1997

(18) Subsequent Events:

The Company has entered into an agreement with the original owners and
an independent consultant (prior to acquisition by Numex Corporation)
of ViaStar Marketing, Inc., to reacquire 300,000 shares, at cost, of
the Company's common stock outstanding as of March 31, 1998. The
Company had originally presented the issuance of restricted common
stock as Goodwill purchased in excess of fair market value from the
acquisition of ViaStar Marketing, Inc. The unamortized carrying value
of purchased goodwill (see Note 1) was charged against earnings for
the year ended March 31, 1996.

The board of directors of the Company approved and issued 140,000
shares of its treasury stock, at $1.23, to a vendor for legal services
rendered related to an acquisition target in the amount of $171,930
(see Note 8).

The board of directors of the Company approved and issued 240,000
shares of its treasury stock, at $1.25, to convert the accrued
officer- stockholder compensation obligation of $300,000 (see Note 9).

The board of directors of the Company approved and issued 197,000
shares of its treasury stock, at $1.25 per share, to convert $246,250
of notes payable, related parties, as presented in the balance sheet,
into equity (see Note 11).

The Company also issued 48,000 shares of treasury stock, at $1.25 per
share, to convert $60,000 of additional notes payable, related parties
issued after March 31, 1998.

See accompanying independent auditors' report.

<PAGE>

ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Singer, Lewak, Greenbaum & Goldstein, LLP resigned as independent public
accountants for the Company as of April 30, 1998.

In considering whether to renew its engagement as the Company's independent
auditors for the fiscal year ended March 31, 1998, Singer, Lewak, Greenbaum &
Goldstein, LLP requested that, if the Company sought to eliminate a liability
from the Company's financial statements because the Company had no legal or
contractual obligation to pay such liability, the Company obtain either a
verification from a party as to the Company's potential liability under the
terms of a licensing agreement as part of its auditing procedures or a legal
opinion regarding such potential liability. For business reasons unrelated to an
audit, the Company preferred not to request such a verification and sought to
instead provide a form of legal opinion which would satisfy Singer, Lewak,
Greenbaum & Goldstein LLP's auditing procedures regarding the potential
liability. The Company had engaged its corporate counsel to prepare a form of
opinion to address this issue. Discussions regarding the form of opinion, and
the potential elimination of the liability, were not completed as of April 30,
1998.

The report of the Company's prior accountants, Singer Lewak Greenbaum &
Goldstein LLP, on the financial statements of the Company for the fiscal years
ended March 31, 1995, March 31, 1996, and March 31, 1997, did not contain an
adverse opinion, disclaimer of opinion nor was it qualified or modified as to
audit, scope accounting principles or uncertainty, except that the accountants'
report included an explanatory paragraph relating to going concern
considerations for fiscal years ended March 31, 1995, 1996 and 1997.

There were no disagreements with Singer Lewak Greenbaum & Goldstein LLP
within the two most recent years, nor subsequently, on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Singer
Lewak Greenbaum & Goldstein LLP would have cause it to make reference to the
subject matter of the disagreement in its reports.

Singer Lewak Greenbaum & Goldstein LLP did not, however, audit or review
the Company's financial statements for any period subsequent to the fiscal year
ended March 31, 1997.

On May 18, 1998, the Board of Directors of the Company approved
management's proposal to engage Stonefield Josephson, Inc., as the Company's new
independent public accountants.

PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth the directors and executive officers of
Registrant as of March 31, 1998.

Name Age Current Position with Company
- ---- --- -----------------------------
Gerald A. Bagg 46 Director
Robert J. Fabregas 52 Director
Isaac S. Salzberg 46 Vice President, Secretary and Director
Jack I. Salzberg 75 Chairman of the Board, President, and
Chief Executive Officer

<PAGE>

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS (CONTINUED)

Listed below are descriptions of the business experience for at least the
past five years for each director and executive officer listed in the preceding
table. Unless otherwise described below, none of these individuals is related in
any way, or has been involved in certain legal proceedings in the past five
years, except as described in the legal proceedings section of this report.

GERALD A. BAGG served as President, Chief Operating Officer, and a director
of the Company since March 20, 1992 and as Chief Executive Officer since
December 30, 1992. As of February 1996, Mr. Bagg resigned as President and CEO
but remains a director. He is Senior Vice President of Account Management and
Marketing with Williams Worldwide, a major television media buying firm. From at
least 1988, Mr. Bagg served as President of Brentwood Marketing, a marketing and
strategic planning firm located in Los Angeles, California. Brentwood Marketing
has launched numerous entrepreneurial consumer products, including Epilady which
produced sales in excess of $100,000,000 in its first year and $400,000,000 in
its third year.

J. ROBERT FABREGAS has served as a director of the Company since March 11,
1998. From June, 1988 to the present, Mr. Fabregas has been the President of
Stonepine Holdings, Limited, a California corporation which is a boutique
investment banking firm. He has twenty five years experience in corporate
finance and commercial lending with major domestic and foreign banks, one of the
largest U.S. savings and loans, a Fortune 500 manufacturing company, and
privately held investment banking firms. He has served as a Member of Management
in the Los Angeles office of Credit Suisse, a major Swiss financial institution.
He presently maintains NASD Series 7, and 63 General Securities Licenses, in
addition, to an SEC Series 65 License as a Registered Investment Advisor.

ISAAC S. SALZBERG has served as a director of the Company since March,
1989. He was formerly President and Chief Executive Officer of the Company from
March, 1989 to March, 1992. He has been a director of First Charter Bank since
1988 and an officer since 1989. Mr. Salzberg left the bank and all positions in
October 1996. Mr. Salzberg is an investment broker with Prudential Securities.
Mr. Salzberg is the son of the Chairman of the Board, Chief Executive Officer
and President of the Company, Jack I. Salzberg.

JACK I. SALZBERG has been Chairman of the Board since January, 1985 and has
served as Chief Executive Officer of Registrant from March, 1992 until December,
1992. He assumed the additional office of President in February 1996. He had
been Chairman of the Board since 1983 and Chief Executive Officer since June,
1989 of First Charter Bank, N.A., a national bank which operates two branch
offices in the Los Angeles area, and of which he was also a major stockholder.
Mr. Salzberg retired from all positions with First Charter Bank and divested
himself all stock ownership on September 30, 1995. Mr. Salzberg is the father of
Isaac S. Salzberg, a director of the Company.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and person who beneficially own more than 10% of a
registered class of the Company's equity securities, to file reports of
beneficial ownership and changes in beneficial ownership of the Company's
Securities with the Securities and Exchange Commission. Officers, directors and
beneficial owners of more than 10% of the Company's Common Stock are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
forms that they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no reports on Form 5
were required, the Company believes that for the period from April 1, 1997
through March 31, 1998, all officers, directors and greater-than-10% beneficial
owners complied with all Section 16(a) filing requirements applicable to them.

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to or earned by the
Chief Executive Officer and all officers of the Company whose compensation
exceeded $100,000 for all services rendered to the Company during the fiscal
years ending March 31, 1998, 1997, and 1996 (Named Executive Officers).

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation Awards
Restricted Securities Underlying
Name and Principal Position Year Salary Stock Award(s) Options/SARs(#)
<S> <C> <C> <C> <C>
Jack I. Salzberg 1998 $300,000 (1) 850,000
Chairman of the Board,
President, CEO
1997 $-0- -0-
1996 $-0- -0-
</TABLE>

(1) Compensation awarded by the Directors to Mr. Jack I. Salzberg on
December 18, 1997 for his extraordinary efforts and years of service to the
Company without compensation. On April 30, 1998, the Board authorized the
conversion of this accrued liability into common stock @ $1.25 per share
which was then converted on May 1998.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Number of Percent of
Securities Total Options/
Underlying SARs Granted to Exercise
Options/SARs Employees in Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date
- ----- ----------- ----------- ----- ----
Jack I. Salzberg 850,000 (2) 100% $.50 none

(2) Option granted by the Board of Directors on November 21, 1997 to Mr.
Jack I. Salzberg.

Arrangements with Directors
- ---------------------------

J. Robert Fabregas was appointed to the Board of directors on March 11,
1998. During the fiscal year 1998, he received a total of $34,500 as
compensation through his company, Stonepine Holdings, Limited, for consulting
services rendered to the Company unrelated to his services and duties as a
director.

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning ownership of the
Company's Common Stock as of March 31, 1998 by (a) each director of the Company;
(b) each person known to the Company to be the beneficial owner of more than
five percent (5%) of its Common Stock; and (c) all directors and officers of the
Company as a group.

Amount and Nature
of
Beneficial Ownership

Name of Beneficial Number of Percent of
Owner Title Shares Class
- ----- ----- ------ -------
Gerald A. Bagg Director 150,000 (1) 1.27%
J. Robert Fabregas Director 0 0%
Isaac S. Salzberg Corporate Secretary and Director 246,500 (2) 2.09%
Jack I. Salzberg Chairman of the Board & President 2,247,800 (3) 19.04%

All Directors and Officers as a group (four) persons 2,644,300 22.4%

Esther Kozienicki (4) 759,760 6.44%

(Footnotes)

(1) Consists of 150,000 shares which Mr. Bagg has the right to acquire
through stock option plan which became exercisable on June 1, 1998

(2) Includes 85,000 shares are held by Isaac S. Salzberg and Susan S.
Salzberg as trustees for the Isaac S. Salzberg and Susan S. Salzberg
Living Trust. The balance of these shares is held by Mr. Salzberg as
custodian for his minor children. Mr. Salzberg has the power to both
vote and direct the disposition of his children's shares.

(3) Includes 850,000 stock option of Mr J. Salzberg exercisable at the
option of the holder at $.50 per share, and 240,000 shares issued on
May, 1998 on conversion of accrued salaries of $300,000 at $1.25 per
share. The bid price at the time of conversion was 7/8.

(4) Ms. Kozienicki is the sister of Jack I. Salzberg. Mr. Salzberg
disclaims beneficial ownership of any of the shares owned by Ms.
Kozienicki.

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the July, 1997 and December, 1997 Board resolution to
eliminate most of the existing indebtedness, the following noteholders elected
to convert their receivables into common stock:

Jack I Salzberg
- ---------------

Jack I. Salzberg, the Company's Chairman of the Board and President,
converted all accrued interests and notes payable due him in the amount of
$143,916 into 287,831 shares of common stock at $.50 per share. Last year, he
converted his 2 1/2 year note for $300,000 into 300,000 shares of common stock
at $1.00 per share. See Item 5 "Market for Common Equity and Related Stockholder
Matter", Item 9 "Directors, Executive Officers, Promoters and Control Persons",
and, Item 10 "Executive Compensation".

Esther Kozienicki
- -----------------

Esther Kozienicki is the sister of Jack I. Salzberg. At March 31, 1997, she
had $566,000 outstanding notes receivable from the Company. In addition, the
Company issued new demand notes payable for operating cash received in an
aggregate amount of $227,000 during the fiscal year 1998. She converted $779,880
of outstanding notes and accrued interests through December 1997 into 1,559,760
shares of common stock at $.50 per share. Ms. Kozienicki had continually
provided the Company with operating cash fund since 1993. On May 29, 1998,
subsequent to the fiscal year, Ms. Kozienicki converted $160,000 notes into
128,000 shares of common stock at $1.25 per share. See Item 5 "Market for Common
Equity and Related Stockholder Matters".

Malka Livne
- -----------

The Company issued new demand notes payable to Malka Livne, sister in law
of Jack I. Salzberg, an aggregate amount of $149,000 for operating cash received
during the fiscal year ended March, 1998. At March 31, 1997 she had $350,000
outstanding notes receivable from the Company. During the year, she converted
outstanding notes and accrued interests through December 1997 amounting to
$463,995 into 927,990 shares of common stock at $.50 per share. Ms. Livne had
continually provided the Company with operating cash fund since 1994. See Item 5
"Market for Common Equity and Related Stockholder Matters".

PART IV.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a)(1) Exhibits

See Index to Exhibits. The exhibits therein listed and
attached hereto, and the Exhibits therein incorporated by
reference, are filed as a part of this report.

(a)(2) List

See exhibits.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of
the period covered by this report.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

NUMEX CORPORATION

By /s/ JACK I. SALZBERG
Jack I. Salzberg
Chairman of the Board & President

Dated: June 29, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

/s/ JACK I. SALZBERG
Jack I. Salzberg
Chairman of the Board & President

/s/ ISAAC S. SALZBERG
Isaac S. Salzberg
Secretary and Director

/s/ GERALD A. BAGG
Gerald A. Bagg
Director

/s/ J. ROBERT FABREGAS
J. Robert Fabregas
Director

Dated: June 29, 1998

<PAGE>

INDEX TO EXHIBITS

Exhibit No.

3.1 Certificate of Incorporation. Incorporated by reference to exhibit 2.1 to
Company's Registration Statement on Form S-18, filed on August 14, 1980.

3.2 Certificate of Amendment to the Certificate of Incorporation filed
August 30, 1985. Incorporated by reference to exhibit 3.3 to Company's
Form 10-K for fiscal year ending March 31, 1988.

3.3 Certificate of Amendment to the Certificate of Incorporation filed March
31, 1986. Incorporated by reference to exhibit 10.4 to Company's Form
10-K for fiscal year ending March 31, 1986.

3.4 Certificate of Amendment to the Certificate of Incorporation filed
October 14, 1992. Incorporated by reference to exhibit 3.4 to Company's
Form 10-KSB for fiscal year ending March 31, 1993.

3.5 Bylaws. Incorporated by reference to exhibit 2.2 to Company's Registration
Statement on Form S-18, filed on August 14, 1980.

3.6 Amendment to Bylaws dated March 19, 1992. Incorporated by reference to
exhibit 3.6 to Company's Form 10-KSB for fiscal year ending March 31, 1993.

3.7 Amendment to Bylaws dated March 30, 1992. Incorporated by reference to
exhibit 3.7 to Company's Form 10-KSB for fiscal year ending March 31, 1993.

3.8 Amendment to Bylaws dated July 15, 1992. Incorporated by reference to
exhibit 3.8 to Company's Form 10-KSB for fiscal year ending March 31, 1993.

3.9 Amendment to Bylaws dated December 30, 1992. Incorporated by reference
to exhibit 3.9 to Company's Form 10-KSB for fiscal year ending March 31,
1993.

4 Specimen Common Stock Certificate. Incorporated by reference to
exhibit 3.0 to Company's Registration Statement on Form S-18, filed on
August 14, 1980 (by amendment).

10.1 License agreement dated as of January 1, 1992 between the Company and
Gunter Schweisfurth concerning Therapy Plus. Incorporated by reference
to exhibit 10.1 to Company's Form 10-KSB for fiscal year ending March 31,
1993.

10.8 1992 Stock Option Plan. Incorporated by reference to exhibit 10.8 to
Company's Form 10-KSB for fiscal year ending March 31, 1993.

10.9 Stock Option Agreement with Gerald A. Bagg. Incorporated by reference
to exhibit 10.9 to Company's Form 10-KSB for fiscal year ending March 31,
1993.

10.16 Settlement Agreement and Release of All Claims dated December 29,1997
between the Company and Jacob M.M. Graff. Filed herewith.

10.17 Settlement Agreement and Release of All Claims dated January 29, 1998
between the Company and Belin Rawlings and Badal LLP. Filed
herewith.

10.18 Settlement Agreement and Release of All Claims dated February 5,
1998 between the Company and Barnes Morris Wolf P.C.. Filed
herewith

<PAGE>
INDEX TO EXHIBITS, cont.

11 Statement regarding computation of per share earnings. Set forth on
Consolidated Statements of Operations, above, as the Company has a simple
capital structure.

21 Subsidiaries of Registrant. Filed herewith

27 Financial Data Schedule

<PAGE>

INDEX TO ANNUAL REPORT ON FORM 10-K
10-K Contents
PAGE
PART I
Item 1. Business 2

Item 2. Properties 3

Item 3. Legal Proceedings 4

Item 4. Submission of Matters to Vote of
Security Holders 4
PART II.
Item 5. Market for Common Equity and Related
Stockholder Matters 4

Item 6. Management's Discussion and Analysis
of Financial Conditions and Results of
Operations 6

Item 7. Financial Statements and Supplementary Data 9-26

Item 8. Changes in and disagreements with
Accountants on Accounting and Financial
Disclosure 27
PART III
Item 9. Directors and Executive Officers of the
Company 27

Item 10. Executive Compensation 29

Item 11. Security Ownership of Certain Beneficial
Owners and Management . 30

Item 12. Certain Relationships and Related
Transactions 31
PART IV
Item 13. Exhibits, List and Reports on Form 8-K 31

SIGNATURES 32

INDEX TO EXHIBITS 33-34

"EXHIBIT 10.16"

SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS

This Settlement Agreement and Release of All Claims is made on December 29,
1997 by and between JACOB M.M. GRAFF ("Graff") on the one hand and NUMEX
CORPORATION, a corporation, JACK I. SALZBERG and ANNA S. SALZBERG (collectively
"Numex"), on the other hand, with reference to the following facts:

A. Disputes and differences have arisen between Graff and Numex regarding
monies lent by Graff to Numex and the execution by Numex of that certain
Promissory Note dated December 31, 1994 ("the Note");

B. Said disputes and differences are reflected in the action entitled,
"Jacob M.M. Graff, etc., plaintiff, vs. Numex Corporation, etc., et al.,
defendants," Los Angeles Superior Court Case No. BC 172 944 ("said action"); and

C. The parties hereto have agreed to settle and compromise all of the
claims, disputes and differences between them, including, without limitation,
those alleged in said action, and to dismiss, with prejudice, said action. NOW,
THEREFORE, in consideration of the covenants, conditions and releases
hereinafter set forth, the parties hereto agree as follows:

1. Upon the execution of this Settlement Agreement and Release of All
Claims, Numex shall pay to Graff by check issued from the client trust account
of Richman, Lawrence, Mann, Greene, Chizever & Phillips, counsel for Numex,
the sum of $184,000.00, receipt of which is hereby acknowledged, Graff shall
deliver to Numex the original of the Note, and Graff shall dismiss, with
prejudice, said Action.

2. Graff will take all steps and actions reasonably necessary to
arrange for and see to the return to Numex of any monies attached as a result
of the writ of attachment issued and served in said action, including, but not
limited to, providing to the appropriate enforcement agencies written
instructions to return any such funds to Numex.

3. Except as expressly set forth herein, each of the parties hereto
hereby releases the other parties hereto from any and all sums of money,
accounts, actions, suits, proceedings, claims, damages and demands of
whatsoever kind or nature which either of them at any time had or has up to the
date hereof against the other of them for or by reason of or in respect
of any act, cause, matter, or things.

4. The parties hereto represent and warrant that they have not
heretofore assigned, transferred, purported to assign or transfer to any
person, firm or corporation any matter herein released by them.

5. With respect to the release as contained herein, it is acknowledged
by the parties hereto, and each of them, that they have been informed of the
provisions of Section 1542 of the Civil Code of the State of California, and
do hereby expressly waive and relinquish all rights and benefits which they
have or may have under said Section, which reads as follows:

"A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must
have materially affected his settlement with the debtor."

6. Execution of this Settlement Agreement and Release of All Claims shall
not be construed to be an admission of liability and/or wrongdoing by any party
hereto.

7. The parties hereto affirmatively represent that they have read this
Settlement Agreement and Release of All Claims and understand the terms used
herein and the consequences thereof.

8. This Settlement Agreement and Release of All Claims has been negotiated
between the parties hereto and has been prepared in accordance with their joint
instructions. To the extent that there is any uncertainty or ambiguity herein,
neither party hereto shall be deemed to have caused it within the meaning of
Section 1654 of the California Civil Code.

9. The terms and conditions of this Settlement Agreement and Release of All
Claims, including all of the provisions hereof and the sum provided for herein
to be paid, are, shall be and shall remain strictly confidential, are not to be
disclosed to anyone (other than members of the immediate families of, and the
accountants for, the parties hereto, their attorneys, and/or governmental
agencies), and no party hereto, including his attorneys, representatives and
agents, shall make any statement or representation whatsoever relating thereto
to any other person or entity except pursuant to an order of a court of
competent jurisdiction.

10. This Settlement Agreement and Release of All Claims shall be construed
under and be deemed governed by the laws of the State of California.

11. This Settlement Agreement and Release of All Claims shall inure to the
benefit of and be binding upon the heirs, successors, administrators, executors
and assigns of the parties hereto.

12. This Settlement Agreement and Release of All Claims constitutes the
entire agreement between the parties hereto and supersedes all oral or written
agreements made and entered into between said parties prior to the date hereof.

13. In the event an action is instituted by either of the parties hereto,
which action arises out of or pertains to this Settlement Agreement and Release
of All Claims, the prevailing party shall be entitled to recover a reasonable
sum or sums as and for attorneys' fees for prosecuting or defending such action.

IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement and Release of All Claims on the date first above written.

"GRAFF" /s/ JACOB M. M. GRAFF
Jacob M.M. Graff

"NUMEX" Numex Corporation, a corporation

By: /s/ JACK I. SALZBERG
Jack I. Salzberg

/s/ JACK I. SALZBERG
Jack I. Salzberg

/s/ ANNA S. SALZBERG
Anna S. Salzberg

APPROVED AS TO FORM AND CONTENT:

Law Offices of Leslie E. Chayo

By: /s/ LESLIE E. CHAYO
Leslie E. Chayo
Attorneys for Graff

Richman, Lawrence, Mann, Greene,
Chizever & Phillips

By: /s/ JERRY S. PHILLIPS
Jerry S. Phillips
Attorneys for Numex

"EXHIBIT 10.17"

SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

This Settlement Agreement and Mutual General Release (the "Agreement"),
dated January 29, 1998, is made by and between Belin Rawlings and Badal LLP, a
California Limited Liability Partnership ("Belin Rawlings") on the one hand and
Numex Corporation, a California Corporation and JACK I. SALZBERG, an individual
("Salzberg") on the other hand, with reference to the following:

A. Belin Rawlings provided legal representation and services ("the
Representation") to Numex.

B. On or about June 28, 1994 Numex executed a Promissory Note in favor
of Belin Rawlings for fees due in connection with the Representation in the
principal amount of $175,000.00. The Promissory Note was guaranteed by Salzberg.

C. On May 15, 1997 the American Arbitration Association, John H.
Brinsley, Arbitrator, issued its Award of Arbitrator against Numex and Salzberg
and in favor of Belin Rawlings in the total sum of $208,777.66 plus costs and
interest. The Award was confirmed as a Judgment entered on July 24, 1997.

D. The parties hereto now desire to put to rest all of their differences
and disputes relating to these matters, as well as any potential
claims that may exist between them.

NOW THEREFORE in consideration of the following convenants, promises
and conditions, the parties agree as follows:

1. Concurrent with the execution of this Agreement, Numex or Salzberg shall
pay to Belin Rawlings the sum of One Hundred Fifteen Thousand Five Hundred Fifty
Dollars ($115,550.00).

2. Belin Rawlings shall provide Numex with a Satisfaction of Judgment in
favor of Numex and Salzberg.

3. Belin Rawlings hereby completely releases and forever discharges Numex
and Salzberg and each of their heirs, successors, predecessors, assigns,
affiliates, parents, subsidiaries, partners, officers, directors, attorneys,
shareholders, agents, servants and employees from any and all claims, actions,
causes of action or demands, claims, debts, expenses and attorney fees of any
kind or nature, in law or in equity, known or unknown, presently in existence or
which may arise in the future, arising out of or in connection with any claim,
cause, act or event whatsoever which occurred prior to the date of this
Agreement, including but not limited to any claim arising out of or in
connection with the Representation, the Promissory Note or the Judgment.

4. Numex and Salzberg hereby completely release and forever discharge Belin
Rawlings and each of its heirs, successors, predecessors, assigns, affiliates,
parents, subsidiaries, partners officers, directors, attorneys, shareholders,
agents, servants and employees from any and all claims, actions, causes of
action or demands, claims, debts, expenses and attorneys fees of any kind or
nature, in law or in equity, known or unknown, presently in existence or which
may arise in the future, arising out of or in connection with any claim, cause,
act or event whatsoever which occurred prior to the date of this Agreement,
including but not limited to any claim arising out of or in connection with the
Representation, the Promissory Note or the Judgment.

5. The parties hereto each agree and acknowledge that this Agreement
constitutes a full, complete, fair and final mutual release and settlement of
all claims and disputes between them, known or unknown, contingent or accrued,
that exist or may hereafter exist between them. The parties hereto hereby waive
any and all rights which either may have under the provisions of Section 1542 of
the Civil Code, which section reads as follows:

"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if know by him must have
materially affected his settlement with the debtor."

6. The parties hereto represent and warrant that each has secured
independent legal advise and consultation in connection with this Agreement, and
that neither has relied upon any representation or statement by the other in
executing this Agreement, other than those which are expressly made herein.

7. This Agreement and all matters relating to the validity, construction,
interpretation, enforcement and effect of this Agreement shall be governed by
the laws of the State of California.

8. This Agreement is intended to be performed in accordance with and only
to the extent permitted by all applicable laws, ordinances, rules and
regulations. If any provision of this Agreement or the application thereof to
any person or circumstance, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and the application to such
provision to the other persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent permitted by law.

9. This Agreement contains the entire understanding and Agreement
between the parties hereto, and it is expressly understood and agreed that this
Agreement may not be altered, amended or otherwise modified in any respect
except by writing, duly executed by all parties hereto.

10. The parties hereto agree that should this Agreement be breached,
the breaching party shall stay and hold harmless the nonbreaching party from any
and all claims, costs and expenses, including, but not limited to, reasonable
attorneys fees incurred as a result of such breach.

BELIN RAWLINGS & BADAL LLP

/s/ CHIP RAWLINGS
By: Chip Rawlings

NUMEX CORPORATION

/s/ JACK I. SALZBERG
By: Jack Salzberg
Title: President

/s/ JACK I. SALZBERG
By: Jack Salzberg, Individual

"EXHIBIT 10.18"

SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS

This Settlement Agreement and Release of All Claims is made on February
5, 1998 by and between BARNES MORRIS WOLF P.C. ("Barnes") on the one hand and
NUMEX CORPORATION, a corporation and JACK SALZBERG (collectively "Numex"), on
the other hand, with reference to the following facts:

A. Disputes and differences have arisen between Barnes and Numex regarding
legal services rendered by Barnes for the benefit of Numex;

B. Said disputes and differences are reflected in the action entitled,
"Barnes Morris Wolf, P.C., plaintiff, vs. Numex Corporation, etc., et al.,
defendants," Los Angeles Municipal Court Case No. 97C01978 ("said action"); and

NOW, THEREFORE, in consideration of the covenants, conditions and releases
hereinafter set forth, the parties hereto agree as follows:

1. Upon the execution of this Settlement Agreement and Release of All
Claims, Numex shall pay to Barnes the sum of $8,500.00, receipt of which is
hereby acknowledged, and Barnes shall dismiss, with prejudice, said action.

2. Except as expressly set forth herein, each of the parties hereto hereby
releases the other parties hereto from any and all sums of money, accounts,
actions, suits, proceedings, claims, damages and demands of whatsoever kind or
nature which either of them at any time had or has up to the date hereof against
the other of them for or by reason of or in respect of any act, cause, matter,
or things.

3. The parties hereto represent and warrant that they have not heretofore
assigned, transferred, purported to assign or transfer to any person, firm or
corporation any matter herein released by them.

4. With respect to the release as contained herein, it is acknowledged by
the parties hereto, and each of them, that they have been informed of the
provisions of Section 1542 of the Civil Code of the State of California, and do
hereby expressly waive and relinquish all rights and benefits which they have or
may have under said Section, which reads as follows:

5. Execution of this Settlement Agreement and Release of All Claims shall
not be construed to be an admission of liability and/or wrongdoing by any party
hereto.

6. The parties hereto affirmatively represent that they have read this
Settlement Agreement and Release of All Claims and understand the terms used
herein and the consequences thereof.

7. This Settlement Agreement and Release of All Claims has been negotiated
between the parties hereto and has been prepared in accordance with their joint
instructions. To the extent that there is any uncertainty or ambiguity herein,
neither party hereto shall be deemed to have caused it within the meaning of
Section 1654 of the California Civil Code.

8. The terms and conditions of this Settlement Agreement and Release of All
Claims, including all of the provisions hereof and the sum provided for herein
to be paid, are, shall be and shall remain strictly confidential, are not to be
disclosed to anyone (other than members of the immediate families of, and the
accountants for, the parties hereto), and no party hereto, including his
attorneys, representatives and agents, shall make any statement or
representation whatsoever relating thereto to any other person or entity except
pursuant to an order of a court of competent jurisdiction.

9. This Settlement Agreement and Release of All Claims shall be construed
under and be deemed governed by the laws of the State of California.

10. This Settlement Agreement and Release of All Claims shall inure to the
benefit of and be binding upon the heirs,
successors, administrators, executors and assigns of the parties hereto.

11. This Settlement Agreement and Release of All Claims constitutes the
entire agreement between the parties hereto and supersedes all oral or written
agreements made and entered into between said parties prior to the date hereof.

12. In the event an action is instituted by either of the parties hereto,
which action arises out of or pertains to this Settlement Agreement and Release
of All Claims, the prevailing party shall be entitled to recover a reasonable
sum or sums as and for attorneys' fees for prosecuting or defending such action.

IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement and Release of All Claims on the date first above written.

"Barnes" BARNES MORRIS WOLF, P.C.

By: /s/ MICHAEL BARNES
Michael Barnes, President

"Numex" NUMEX CORPORATION, a corporation

By: /s/ JACK I. SALZBERG
Jack Salzberg, President

/s/ JACK I. SALZBERG
Jack Salzberg, Individual

APPROVED AS TO FORM AND CONTENT:

By: /s/ DAVID WALL
David Wall
Attorneys for Barnes

Richman, Lawrence, Mann,
Chizever & Phillips

By: /s/ JERRY S. PHILLIPS
Jerry S. Phillips
Attorneys for Numex

EXHIBIT 21

Numex Corporation
List of Subsidiaries

Name of Subsidiary State of Incorporation

United States Sales Corporation Connecticut

<ARTICLE> 5
<LEGEND>
(AUDITED)
</LEGEND>
<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 27,218
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10,230
<CURRENT-ASSETS> 37,448
<PP&E> 220,817
<DEPRECIATION> 203,771
<TOTAL-ASSETS> 61,652
<CURRENT-LIABILITIES> 899,180
<BONDS> 0
0
170,000
<COMMON> 1,118,922
<OTHER-SE> (2,126,449)
<TOTAL-LIABILITY-AND-EQUITY> 61,652
<SALES> 176,513
<TOTAL-REVENUES> 176,513
<CGS> 83,605
<TOTAL-COSTS> 737,339
<OTHER-EXPENSES> (56,600)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,572
<INCOME-PRETAX> (632,798)
<INCOME-TAX> 800
<INCOME-CONTINUING> (633,598)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (633,598)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)

</TABLE>