U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended, December 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-9459
NUMEX CORPORATION
Delaware 06-1034587
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
14115 S. Pontlavoy Ave. Santa Fe Springs, CA 90670
(Address of Principal Executive Offices) (Zip Code)
(562) 404-7176
(Issuer's Telephone Number, Including Area Code)
Check whether the registrant: (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Registrant had 10,116,219 shares of common stock, $.10 par value, and
170,000 shares of preferred stock, $1.00 par value outstanding at December 31,
1997
Traditional Small Business Disclosure Format (check one):
Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NUMEX CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(Unaudited)
Assets
<S> <C>
Current Assets:
Cash and equivalents $ 5,762
Accounts receivable 9,491
Inventory 12,273
Prepaid expenses 893
-----------
Total current assets 28,420
Fixed assets, net 18,401
Other assets 27,405
Deposits 6,659
-----------
Total assets $80,884
===========
Liabilities & Stockholders' Equity
<S> <C>
Current liabilities:
Notes payable $257,816
Accounts payable 45,545
Accrued expenses 694,345
Customer deposit 28,224
-----------
Total current liabilities 1,025,931
Long-term liabilities:
Notes payable to related parties, long-term 0
-----------
Total liabilities 1,025,931
Stockholders' equity:
Preferred stock, $1.00 par value, 10,000,000 shares
authorized, 170,000 issued and outstanding 170,000
Common stock, $.10 par value, 20,000,000 shares authorized,
10,741,219 issued and 10,116,219 shares outstanding 1,074,122
Treasury stock, at cost, 625,000 shares (705,824)
Additional paid in capital 9,791,666
Accumulated deficit (11,275,011)
-----------
Total stockholders' equity (945,047)
Total liabilities & stockholders' equity $80,884
===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED, DECEMBER 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
------------------ ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Net sales $39,368 $112,907 $150,886 $277,298
Cost of sales 15,554 44,622 59,840 112,241
------------------ ----------------- ---------------- ------------------
Gross profit 23,814 68,285 91,046 165,057
Selling, general and
administrative expenses 363,037 99,374 484,466 340,563
------------------ ----------------- ---------------- ------------------
Loss from operations (339,223) (31,089) (393,420) (175,506)
------------------ ----------------- ---------------- ------------------
Other Income (Expense)
Interest expense, net (38,413) (46,796) (123,422) (140,124)
Other Income 500 30,415 500 64,618
Loss on assignment of assets
for the benefit of creditors
- subsidiary 0 0 0 0
------------------ ----------------- ---------------- ------------------
Total Other Income(Expense) (37,913) (16,381) (122,922) (75,506)
------------------ ----------------- ---------------- ------------------
Loss before income taxes (377,136) (47,470) (516,342) (251,012)
Provision for income taxes 0 0 (800) (800)
------------------ ----------------- ---------------- ------------------
Net loss ($377,136) ($47,470) ($517,142) ($251,812)
================== ================= ================ ==================
Per share data:
Net loss ($0.05) ($0.008) ($0.08) ($0.04)
================== ================= ================ ==================
Weighted average common
shares outstanding 7,484,501 6,167,750 6,719,697 6,166,195
================== ================= ================ ==================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Six Months Ended, December 31 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended December 31
1997 1996
------------------------ ----------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($517,141) ($251,812)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 4,280 13,165
Changes in operating assets and liabilities:
Accounts receivable (433) (703)
Inventory (3,450) 2,850
Prepaid expenses (893) (97,366)
Restricted cash 5,772 (1,359)
Dubs 0 (7,195)
Other assets (27,405) 0
Deposits 5,731 (8,460)
Accounts payable (33,154) 16,449
Accrued expenses 399,932 41,218
Customer deposits (88,191) 101,943
------------------------ ----------------------
Net cash used in operating activities (254,951) (191,270)
------------------------ ----------------------
Cash flows from investing activities:
Purchase of fixed assets (3,770) 0
Cash proceeds from insurance settlement of lost tooling 0 13,950
------------------------ ----------------------
Net cash used in investing activities (3,770) 13,950
------------------------ ----------------------
Cash flows from financing activities:
Proceeds from note payable 255,500 100,000
Proceeds from notes payable to related parties 0 0
Repayment of notes payable (6,000) (77,000)
Repayment of notes payable to related parties 0 0
Proceeds from preferred stock issued 0 153,312
------------------------ ----------------------
Net cash provided by financing activities 249,500 176,312
------------------------ ----------------------
Net decrease in cash and cash equivalents (9,221) (1,008)
Cash and cash equivalents, beginning of period 14,981 11,929
------------------------ ----------------------
Cash and cash equivalents, end of period $5,760 $10,921
======================== ======================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1997
(Unaudited)
Supplemental cash flow information for the nine months ended December 31, was as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------ ----------------------
<S> <C> <C>
Interest paid $38,198 $61,329
Income taxes paid 800 800
Non-cash financing activity for the nine months ended December 31 was as
follows:
Issuance of common stock in payment of legal services 0 11,344
Conversion of accrued interests of a related party
noteholder into common stock 67,082
Conversion of accounts payable into notes payable 22,039
Conversion of notes payable and accrued interests of other
noteholders into common stock @ $0.50 per share 1,330,319
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 1997
(UNAUDITED)
NOTE 1. GENERAL
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments and reclassifications
considered necessary for a fair presentation of the consolidated
financial statements have been included.
For further information, refer to the consolidated financial statements
and footnotes thereto included in Registrant's Form 10-KSB for fiscal
year ended March 31, 1997 Operating results for the nine months ended
December 31, 1997 are not necessarily indicative of the results that
may be expected for any other interim period or for the fiscal year
ended March 31, 1998.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
Results of Operations
Net sales for the nine months ended December 31,1997 and 1996 were $151,000 and
$277,000 respectively. The 45% decrease in current year's net sales was due
mainly from decreased dealer sales.
For the nine months ended December 31, 1997 and 1996, selling, general and
administrative expenses were $484,000 and $341,000 respectively. The increase of
$143,000 this year compared to last year was a combination of the non recurring
bonus accrual granted to the Chairman of the Board and the decrease in expenses
due to the absence of infomercial costs, write-off of intangibles at fiscal year
ending March 31, 1997 and continued cost cutting measures implemented by the
company.
Net sales for the three months ended December 31, 1997 were $39,000 as compared
to $113,000 for the corresponding period in 1996. The Therapy Plus international
sales through distributors has been the Company's major source of sales income.
The timing difference with regards to receiving and fulfilling the large
quantity orders may result in increase or decrease in quarterly sales as
compared to it's corresponding period.
Selling, general and administrative expenses during the three months ended
December 31,1997 were $363,000, as compared to $99,000 during 1996. Net increase
of $264,000 compared to 3rd qtr 1996 was due to the combination of decrease in
operating costs and the accrual of non recurring bonus granted by the Board of
Directors to the Chairman of the Board for extraordinary efforts and years of
service with no compensation but subject to payment being made only at such time
as funds became available and would not be a detriment on company's financial
position.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current nine month period was $255,000, which
was offset by a net increase in debt incurred of $250,000, and a decrease of
$9,221 in Registrant's cash position.
During the 3rd quarter, the majority of noteholders converted their notes
receivable and accrued interests in the amount of $1,330,000 into common stock
at $0.50 per share. During the 2nd quarter two noteholders have converted
$600,000 of their long term convertible notes into common stock at $0.50 per
share. As previously disclosed in March 31, 1997 10KSB, the Chairman of the
Board converted $300,000 of the Company's indebtedness into common stock for
$1.00 per share and the remaining $144,000 indebtedness were converted into
common stock in September 1997 at $.50 per share.
In the past, Registrant's Chairman of The Board and principal stockholder has
provided Registrant, either directly or indirectly through guarantees, with the
necessary working capital needed to continue operating. However, Registrant has
received no assurances, nor is there any agreement in place that the Chairman
will continue to provide such funding.
Current Plans of Registrant
Numex
On February 4, 1998 the Company announced that it had entered into a Letter of
Intent with Modular Structures International, Inc. (MSI), a Southern California
based, manufacturing company of prefabricated modular classrooms, office units
and other commercial requirements.
The Company has received and accepted proposals to finance the acquisition from
two major financial institutions. Ultimately, the proposals will be in the form
of firm commitments after both companies complete the required due diligence. As
of this date the two companies have completed the due diligence process. The
Letter of Intent calls for the final agreement and acquisition to close on or
before February 27, 1998.
The Company plans to continue marketing Therapy Plus through international and
domestic wholesale and export distributors, using the accepted claims by the
government regulatory agency, regarding arthritis pain.
The Company is currently working with QVC Inc. in promoting Therapy Plus. The
product has already appeared twice, once on the Morning Show program and once on
their Feel Great in 98 program which is health and fitness related. Product
sales were encouraging and QVC plans more airdates over the next few months.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Belin Rawlings & Badal LLP and Numex Corporation and Jack I. Salzberg
American Arbitration Association RE:72 194 01200 96
As previously referred to on the company's March 31, 1997 10-KSB filling,
relating to Numex vs. Belin Rawlings & Badal LLP. the Company is pleased to
report that the matter has been resolved as of January 30, 1998. The related
promissory note plus accrued interest in the total amount of $224,000 has been
converted into common stock of the Company.
Jacob M. M. Graff, an individual vs. Numex Corporation; Jack I. Salzberg,
an individual; Anna S. Salzberg, an individual, Superior Court for the State of
California, County of Los Angeles. Case No. BC 172 944
The litigation as previously referred to on the Company's September 30, 1997,
10-QSB filling, has been resolved and a dismissal has been filed with the court.
The related promissory note plus accrued interest has been converted into common
stock of the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULT IN SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NUMEX CORPORATION
By /s/ Jack I. Salzberg
President and Chairman of the Board
Dated: February 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(UNAUDITED FINANCIAL DATA SCHEDULE)
</LEGEND>
<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U S DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 5,762
<SECURITIES> 0
<RECEIVABLES> 9,491
<ALLOWANCES> 0
<INVENTORY> 12,273
<CURRENT-ASSETS> 28,420
<PP&E> 220,536
<DEPRECIATION> (202,135)
<TOTAL-ASSETS> 80,884
<CURRENT-LIABILITIES> 1,025,931
<BONDS> 0
0
170,000
<COMMON> 1,074,122
<OTHER-SE> (2,189,168)
<TOTAL-LIABILITY-AND-EQUITY> 80,884
<SALES> 150,886
<TOTAL-REVENUES> 150,886
<CGS> 59,840
<TOTAL-COSTS> 544,305
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123,422
<INCOME-PRETAX> (516,341)
<INCOME-TAX> 800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (517,141)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
