U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended, June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
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Commission File Number 0-9459
NUMEX CORPORATION
Incorporated pursuant to the Laws of Delaware State
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Internal Revenue Service - Employer Identification No. 06-1034587
14115 S. Pontlavoy Ave. Santa Fe Springs, CA 90670
(562) 404-7176
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Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the 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 10,889,219 shares of Common Stock, $.10 par value, and
170,000 shares of Preferred stock, $1.00 par value, outstanding as of August 6,
1998.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NUMEX CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 1998
(Unaudited)
Assets
Current Assets:
Cash and equivalents $73,262
Inventory 7,149
Prepaid expenses 496
---------------
Total current assets 80,907
Fixed assets, net 15,765
Deposits 7,158
---------------
Total assets $103,830
===============
Liabilities & Stockholders' Equity
Current liabilities:
Notes payable $180,789
Accounts payable 27,529
Accrued expenses 30,382
---------------
Total current liabilities 238,700
Stockholders' equity:
Preferred stock, $1.00 par value,
10,000,000 shares authorized, 170,000 issued 170,000
Common stock, $.10 par value, 20,000,000 shares authorized,
11,189,219 shares issued and outstanding 1,118,922
Additional paid in capital 10,043,222
Accumulated deficit (11,467,014)
---------------
Total stockholders' equity (134,870)
Total liabilities & stockholders' equity $103,830
===============
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1998 And 1997
(Unaudited)
Three Months Ended, June 30
1998 1997
-------------- ---------------
Net sales $2,084 $30,414
Cost of sales 626 12,450
-------------- ---------------
Gross profit 1,458 17,964
Selling, general and administrative expenses 71,505 55,269
-------------- ---------------
Loss from operations (70,047) (37,305)
Interest expense, net (5,475) (44,760)
-------------- ---------------
Loss before income taxes (75,522) (82,065)
Provision for income taxes 0 0
-------------- ---------------
Net loss ($75,522) ($82,065)
============== ===============
Per share data:
Net loss ($0.01) ($0.01)
============== ===============
Weighted average common shares outstanding 10,783,999 5,967,750
============== ===============
See Notes to Consolidated Financial Statements.
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Three Months Ended, June 30, 1998 and 1997
(Unaudited)
Three Months ended June 30
1998 1997
-------------- -------------
Cash flows from operating activities:
Net loss ($75,522) ($82,065)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,281 1,316
Changes in operating assets and liabilities:
Accounts receivable (139) 7,964
Inventory 3,081 (1,935)
Prepaid expenses (496) (2,427)
Restricted cash 0 4,756
Deposits 0 0
Accounts payable (7,980) (18,762)
Accrued expenses (11,181) 22,183
Customer Deposits 0 (28,000)
--------------- ------------
Net cash used in operating activities (90,956) (96,970)
--------------- ------------
Cash flows from investing activities:
Purchase of fixed assets 0 0
Purchase of Intangible Assets 0 0
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Net cash used in investing activities 0 0
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Cash flows from financing activities:
Proceeds from note payable 140,000 85,500
Proceeds from notes payable to related parties 0 0
Repayment of notes payable (3,000) (2,000)
Repayment of notes payable to related parties 0 0
--------------- ------------
Net cash provided by financing activities 137,000 83,500
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Net decrease in cash and cash equivalents 46,044 (13,470)
Cash and cash equivalents, beginning of period 27,218 14,981
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Cash and cash equivalents, end of period $73,262 $1,511
=============== ============
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30, 1998
(Unaudited)
Supplemental cash flow information for the three months ended June 30, was as
follows:
1998 1997
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Interest paid $590 $10,025
Income taxes paid - -
Non-cash financing activity for the three months ended June 30, was as follows:
1998 1997
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Issuance of common stock in payment of
legal services at $1.23 per share $171,930 -
Conversion of accrued compensation of a related party
into common stock at $1.25 per share 300,000 -
Conversion of notes payable into shares of common stock
at $1.25 per share 306,250 -
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(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 the Company's 10-KSB for fiscal year
ended March 31, 1998. Operating results for the three months ended June
30, 1998 are not necessarily indicative of the results that may be
expected for any other interim period or for the fiscal year ended
March 31, 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net Sales for the three months ended June 30, 1998 and 1997 were $2,000
and $30,000 respectively. There were no large distributor nor dealer orders for
the current quarter which resulted to a $28,000 decrease in sales compared to
last year's.
Selling, general and administrative expenses during the three months
ended June 30, 1998 and 1997 were $71,000 and $55,000 respectively. The increase
in expenses was largely due to the $6,000 decrease in rent from having a
sublessee, $15,000 increase in legal fees for preparation of registration
statement and other corporate matters, and $5,000 increase in outside services
incurred for matters related in pursuit of acquiring profitable businesses.
Interest expense for this quarter of $5,500 compared to last year's
$44,800 is significantly decreased due to conversions of notes payable into
shares of common stock as previously reported in March 31, 1998 10-KSB.
Financial Condition, Liquidity and Capital Resources
Cash used in operations during the current three month period was
$91,000, which was offset by a net increase in debt incurred of $137,000
resulting in an increase of $46,000 in the Company's cash position.
As previously reported in March 31, 1998 10-KSB, an aggregate
indebtedness of $778,000 were converted into 625,000 shares of common stock
during the quarter ended June 30, 1998. The Company's treasury stocks were used
for this transaction.
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. As
previously reported in March 31, 1998 10-KSB, Mr. Salzberg made a commitment to
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.
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.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Previously reported on March 31, 1998 10-KSB Item 5 Market for Common
Equity and Related Stockholder Matters.
ITEM 3. DEFAULT UPON 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
(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
A Form 8-K dated April 30, 1998 was filed on May 6, 1998
regarding the resignation of the Company's accountants, Singer
Lewak Greenbaum & Goldstein.
A Form 8-K/A dated April 30, 1998 was filed on May 12, 1998
regarding Singer Lewak Greenbaum & Goldstein's confirming
statements made on this Form 8-K/A.
A Form 8-K dated May 18, 1998 was filed on May 21, 1998
regarding Singer Lewak Greenbaum & Goldstein's and the new
accountants, Stonefield Josephson, Inc.'s confirming
statements made on this Form 8-K.
<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.
10.16Settlement Agreement and Release of All Claims dated December 29, 1997
between the Company and Jacob M.M. Graff. Incorporated by reference to
exhibit 10.16 to Company's Form 10-KSB for fiscal year ending March 31,
1998.
10.17Settlement Agreement and Release of All Claims dated January 29, 1998
between the Company and Belin Rawlings and Badal LLP. Incorporated by
reference to exhibit 10.17 to Company's Form 10-KSB for fiscal year ending
March 31, 1998.
10.18Settlement Agreement and Release of All Claims dated February 5, 1998
between the Company and Barnes Morris Wolf P.C.. Incorporated by reference
to exhibit 10.18 to Company's Form 10-KSB for fiscal year ending March 31,
1998.
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. Incorporated by reference to exhibit 21 to
Company's Form 10-KSB for the fiscal year ended March 31, 1998.
27 Financial Data Schedule. Filed herewith
<PAGE>
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NUMEX CORPORATION
By /s/ Jack I. Salzberg
President & CEO
Dated: August 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(UNAUDITED)
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<CIK> 0000318716
<NAME> NUMEX CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 73,262
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<RECEIVABLES> 0
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<INVENTORY> 7,149
<CURRENT-ASSETS> 81,046
<PP&E> 220,817
<DEPRECIATION> 205,052
<TOTAL-ASSETS> 103,969
<CURRENT-LIABILITIES> 238,700
<BONDS> 0
0
170,000
<COMMON> 1,118,922
<OTHER-SE> (1,423,792)
<TOTAL-LIABILITY-AND-EQUITY> 103,969
<SALES> 2,084
<TOTAL-REVENUES> 2,084
<CGS> 625
<TOTAL-COSTS> 72,131
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,475
<INCOME-PRETAX> (75,522)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75,522)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75,522)
<EPS-PRIMARY> (0.01)
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