U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended, December 31, 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
*433 N. Camden Drive, 4th Floor, #216
Beverly Hills, CA 90210
(310) 274-6296
*As of February 1, 1999
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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 December 31, 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
December 31, 1998
(Unaudited)
Assets
Current Assets:
Cash and equivalents
$ 7,704
Accounts receivable - other 163
Inventory 9,829
Prepaid expenses 496
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Total Current Assets 18,192
Fixed Assets
Fixed assets 220,817
Less Accumulated depreciated (207,6114)
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Total fixed assets 13,203
Other Assets
Deposits 8,058
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Total Assets $39,453
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Liabilities and Equity
Current Liabilities:
Accounts payable $18,915
Accrued expenses 20,086
Notes payable 14,000
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Total Current Liabilities 53,001
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Long -Term Debt 80,000
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) (243,653)
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Total Stockholders' Equity (93,548)
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TOTAL LIABILITIES AND EQUITY $39,453
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2
See Notes to Consolidated Financial Statements
<PAGE>
NUMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED, DECEMBER 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
<S> <C> <C> <C> <C>
1998 1997 1998 1997
------------ ----------- ---------- ----------
Net sales $ 2,619 $ 39,369 $ 4,906 $ 150,886
Cost of Sales 601 15,554 1,430 59,840
--------- --------- --------- ---------
Gross Profit 2,018 23,814 3,476 91,046
Selling, general and
84,149 363,037 234,079 484,466
--------- --------- --------- ---------
Net Income/(Loss) from
operations (82,131) (339,223) (230,603) (393,420)
--------- --------- --------- ---------
Other Income/(Expense)
Interest expense, net (1,509) (38,413) (8,993) (123,422)
Other income 5,743 500 5,743 500
--------- --------- --------- ---------
Total Other 4,234 (37,913) (3,250) (122,922)
Income/(Expenses)
Net Income/(Loss) before
income taxes (77,897) (377,136) (233,853) (516,342)
Provision for income taxes -- (800) (800) (800)
--------- --------- --------- --------
Net Income/(Loss) (77,897) ($377,936) ($234,653) ($517,142)
========== ========== ========== =========
Per share data:
Net loss ($0.01) ($0.05) ($0.02) ($0.08)
========== ========== ========== =========
Weighted average common
shares outstanding 11,312,833 7,484,501 11,097,382 6,719,697
============ ========= =========== =========
</TABLE>
3
See Notes to Consolidated Financial Statements
<PAGE>
Numex Corporation
Consolidated Statements of Cash Flows
For the Nine Months Ended, December 31, 1998 and 1997
(Unaudited)
Nine Months ended December 31
1998 1997
Cash flows from operating activities:
Net Income/Loss ($234,653) (517,142)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,843 4,280
Conversion of liabilities to common stock
Conversion of accrued interest & expenses into
notes payable
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (162) (433)
(Increase) decrease in prepaid expenses (496) (893)
(Increase) decrease in inventories 401 (3,450)
(Increase) decrease in restricted cash - 5,722
(Increase) decrease in other assets - (27,405)
(Increase) decrease in deposits (900) 5,731
Increase (decrease) in accounts payable (16,733) (33,154)
Increase (decrease) in accrued liabilities (11,812) 399,934
Increase (decrease in customer deposits - (88,192)
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Total adjustments (25,859) 262,191
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Net cash provided (used) by operating (260,512) (254,951)
activities
Cash flows from investing activities:
Purchase of fixed assets - (3,770)
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Net cash provided (used) by investing activities - (3,770)
Cash flows from financing activities:
Proceeds from notes payable 250,000 255,500
Repayment of notes payable (9,000) (6,000)
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Net cash provided by financing activities 241,000 249,500
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Net increase (decrease) in cash and cash equivalents (19,512) (9,221)
Cash and cash equivalents, beginning of period 27,217 14,981
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Cash and cash equivalents, end of period $7,705 $5,760
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Supplemental cash flow information:
Interest paid $8,532 $38,198
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 300,000
Issuance of common stock in payment of legal 171,930
services
Conversion of accrued interest of a noteholder
into common stock 67,082
Conversion of accrued interests and notes payable 1,330,319
into stock
Conversion of accounts payable into notes payable 22,039
4
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 nine months ended December
31, 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.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net Sales for the nine-months ended December 31, 1998 and 1997 were $5,000
and $151,000 respectively. The decease of $146,000 in current year's net sales
was due to decreased dealer sales.
Selling, general and administrative expenses during the nine months ended
December 31, 1998 and 1997 were $234,000 and $484,000 respectively. The decrease
was largely due to reduction in operations.
Net Sales for the three months ended December 1998 and 1997 were $3,000
and $39,000 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
December 31, 1998 were, $84,000 compared to $363,000 during the same period in
1997. The net decrease of $299,000, compared to the 3rd quarter 1997 was largely
due to a reduction in operations.
Interest expense for this quarter of $1,500 compared to last year's
$38,000 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 nine month period was $261,000,
which was offset by a net increase in debt incurred of $241,000 resulting in a
decrease of $20,000, in the Company's cash position.
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.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
Subsequent event
During January 1999, legal fees totaling $18,915, as reflected in the section
entitled Liabilities and Equity, accounts payable, were paid in full.
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<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
Change of address
14115 S. Pontlavoy Ave., Santa Fe Springs, CA 90703
Under the First Amendment to Lease, the term of the Company's lease
expired at the above address, on January 31, 1999. The Company did not require
the 12,460 square feet facility, and as of February 1, 1999, has relocated to
the following address:
Numex Corporation
433 N. Camden Drive, 4th floor, Suite 216
Beverly Hills, CA 90210
Telephone: (310) 274-6296 or (562) 404-7176
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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<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: February 11, 1999
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