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, September 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 11,312,833 shares of Common Stock, $.10 par value,
outstanding as of September 30, 1998.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
See Notes to Consolidated Financial Statements.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NUMEX CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(Unaudited)
Assets
Current Assets:
Cash and equivalents $32,627
Accounts receivable - other 5,106
Inventory 10,430
Prepaid expenses 496
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Total Current Assets 48,657
Fixed Assets
Fixed assets 220,817
Less Accumulated depreciated (206,333)
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Total fixed assets 14,484
Other Assets
Deposits 8,058
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Total Assets $71,199
=========================
Liabilities and Equity
Current Liabilities:
Accounts payable $13,867
Accrued expenses 14,018
Notes payable 47,000
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Total Current Liabilities 74,885
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Stockholders' Equity:
Preferred stock, $1.00 par value, 10,000,000 shares authorized
none issued
Common stock, $.10 par value, 20,000,000 shares authorized,
11,312,833 shares issued and outstanding 1,131,283
Treasury stock, at cost 77,509 shares -
Additional paid in capital 10,401,313
Retained earnings (11,391,492)
Current net income/(loss) (144,790)
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Total Stockholders' Equity (3,685)
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TOTAL LIABILITIES AND EQUITY $71,199
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See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED, SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
<S> <C> <C> <C> <C>
1998 1997 1998 1997
----------- ---------- --------- --------
Net sales $204 $81,104 $2,288 $111,518
Cost of Sales $204 31,836 829 44,286
----------- ------------- --------- ---------
Gross Profit 0 49,268 1,459 67,232
Selling, general and
administrative expenses 66,459 66,160 137,964 121,429
----------- ----------- ---------- ----------
Net Income/(Loss) from
operations (66,459) (16,892) (136,505) (54,197)
----------- ------------ ---------- ----------
Other Income/(Expense)
Interest expense, net (2,010) (40,250) (7,485) (85,009)
----------- ------------ ---------- ----------
Total Other Income/(Expense) (2,010) (40,250) (7,485) (85,009)
Net Income/(Loss) before
income taxes (68,489) (57,142) (143,990) (139,206)
0
Provision for income taxes (800) (800) (800) (800)
----------- ------------ ---------- ----------
Net Income/(Loss) ($69,269) ($57,942) ($144,790) ($140,006)
=========== =========== =========== ==========
Per share data:
Net loss ($0.01) ($0.01) ($0.02) ($0.02)
=========== =========== ========== ===========
Weighted average common
shares outstanding 11,191,906 $6,698,668 10,989,067 $6,335,206
=========== ============ ============ ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED, SEPTEMBER 30, 1998 AND 1997
(Unaudited)
Six Months ended September 30
1998 1997
Cash flows from operating activities:
Net Income/Loss ($144,790) 140,007)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,562 2,877
Conversion of liabilities to common stock 67,082
Conversion of accrued interest & expenses into notes payable 180,213
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (5,106) (30,573)
(Increase) decrease in prepaid expenses (496) (6,660)
(Increase) decrease in inventories (199) (318)
(Increase) decrease in restricted cash 5,755
(Increase) decrease in deposits (900) -
Increase (decrease) in accounts payable (21,782) (34,259)
Increase (decrease) in accrued liabilities (17,881) 171,062)
Increase (decrease in customer deposits - (68,591)
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Total adjustments (43,801) (55,536)
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Net cash provided (used) by operating activities (188,591) (195,543)
Cash flows from investing activities:
Purchase of fixed assets - (270)
------------ ---------
Net cash provided (used) by investing activities - (270)
Cash flows from financing activities:
Proceeds from notes payable 200,000 200,500
Repayment of notes payable (6,000) (4,000)
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Net cash provided by financing activities 194,000 196,500
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Net increase (decrease) in cash and cash equivalents 5,409 687
Cash and cash equivalents, beginning of period 27,217 14,981
------------ ---------
Cash and cash equivalents, end of period $32,626 $15,668
========= =========
Supplemental cash flow information:
Interest paid $7,485 $22,767
Income taxes paid 800 800
Non-cash financing activity:
Conversion of preferred stock to common stock 170,000
Conversion of notes payable to common stock 515,039
Conversion of accrued compensation of a related party 300,000
Issuance of common stock in payment of legal services 171,930
Conversion of accrued interest of a related party
noteholder into common stock 67,082
Conversion of accrued interests into notes payable 158,174
Conversion of accounts payable into notes payable 22,039
See Notes to Consolidated Financial Statements.
<PAGE>
NUMEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 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 six months ended September 30, 1998 and 1997 were $2,000
and $112,000 respectively. The decease of $110,000 in current year's net sales
was due to decreased dealer sales.
Selling, general and administrative expenses during the six months ended
September 30, 1998 and 1997 were $138,100 and $121,000 respectively. The
increase was largely due to the increase in legal fees for preparation of
registration statement and other corporate matters, and $30,000 increase in
outside services incurred for matters related in pursuit of acquiring profitable
businesses.
Net Sales for the three months ended September 30, 1998 and 1997 were $200
and $112,000 respectively. There were no large distributor nor dealer orders for
the current quarter which resulted in the decrease in sales compared to last
year.
Selling, general and administrative expenses during the three months ended
September 30, 1998 and 1997 were the same, $66,000 and $66,000 respectively.
Interest expense for this quarter of $2,000 compared to last year's $40,000
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 six month period was $189,000,
which was offset by a net increase in debt incurred of $194,000 resulting in an
increase of $5,000 in the Company's cash position.
During the second quarter, four noteholders converted their aggregate
indebtedness of $178,000 into common stock of the Company at $1.00 per share. A
fifth noteholder converted his note receivable of $22,000 at $0.50 per share of
common stock of the Company. A total of 222,491 of the Company's treasury stocks
were used for this transaction.
On September 30, 1998 the preferred shareholders exchanged all their shares
to common stock of the Company, on a one to one basis, for a total of 201,123
shares. The total included their original investment plus accrued dividends at
the rate of $1.00 per share.
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 is currently pursuing acquisition of several
target companies dependent upon obtaining financing and due diligence to be
performed by the company. 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
None
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
None
<PAGE>
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NUMEX CORPORATION
By /s/ Jack I. Salzberg
President & CEO
Dated: November 6, 1998
