UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
April 30, 1998 0-22920
- --------------------- ----------------------
NUMEREX CORP.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 11-2948749
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Four Falls Corporate Center, Suite 407
Route 23 & Woodmont Road
West Conshohocken, PA 19428-2961
--------------------------------------
(Address of principal executive offices)
(610) 941-2844
-------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 ___
As of the close of the period covered by this report, an aggregate of
10,827,592 shares of the registrant's Class A Common Stock no par value (being
the registrant's only class of common stock outstanding), were outstanding.
<PAGE>
NUMEREX CORP. AND SUBSIDIARIES
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at April 30,
1998 (unaudited) and October 31, 1997 4
Condensed Consolidated Statements of Operations (unaudited)
for the three months and six months ended April 30, 1998 and 1997 5
Condensed Consolidated Statements of Cash Flows (unaudited)
for the six months ended April 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature Page 16
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
-3-
<PAGE>
NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS POUNDS STERLING)
April 30, October 31,
1998 1997
(UNAUDITED)
----------- -----------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 14,176 15,626
Accounts Receivable, net 3,195 3,690
Inventory 3,552 2,929
Prepaid Taxes 1,250 1,250
Prepaid Expenses 426 251
------ ------
TOTAL CURRENT ASSETS 22,599 23,746
PROPERTY AND EQUIPMENT, NET 1,150 1,092
GOODWILL, NET 3,491 3,599
INTANGIBLE ASSETS, NET 1,617 1,892
OTHER ASSETS 3,272 2,180
------ ------
TOTAL ASSETS 32,129 32,509
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 1,087 1,518
Income Taxes 643 430
Other Current Liabilities 1,142 839
------ ------
TOTAL CURRENT LIABILITIES 2,872 2,787
LONG-TERM DEBT 2,690 2,688
------ ------
TOTAL LIABILITIES 5,562 5,475
------ ------
SHAREHOLDERS' EQUITY
Class A, Common Stock - no par value;
authorized 30,000,000;
issued 11,607,492 18,358 18,321
Treasury Stock, at cost, 779,900
shares at April 30, 1998 and 684,900
shares at October 31, 1997 (2,184) (1,921)
Accumulated Translation Adjustment
(418) (308)
Retained Earnings 10,811 10,942
------ ------
26,567 27,034
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 32,129 32,509
====== ======
See Accompanying Notes to Condensed Consolidated Financial Statements
-4-
<PAGE>
NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS POUNDS STERLING,
EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
APRIL 30, APRIL 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales 3,414 5,145 7,522 9,288
Cost of Sales 1,533 2,635 3,606 4,836
------ ------ ------ ------
GROSS PROFIT 1,881 2,510 3,916 4,452
Selling, General, Administrative
and Other Expenses 2,266 1,980 4,196 3,780
------ ------ ------ ------
OPERATING INCOME (LOSS) (385) 530 (280) 672
Interest and Other Income (Net) 183 160 401 383
------ ------ ------ ------
INCOME (LOSS) BEFORE
INCOME TAXES (202) 690 121 1,055
Provision for Income Taxes 136 235 252 359
------ ------ ------ ------
NET INCOME (LOSS) (338) 455 (131) 696
====== ====== ====== ======
BASIC AND DILUTED EARNINGS (LOSS) (.03) .04 (.01) .06
PER SHARE ====== ====== ====== ======
NUMBER OF SHARES USED IN PER SHARE
CALCULATION:
BASIC 10,880 11,176 10,899 11,204
====== ====== ====== ======
DILUTED 10,999 11,180 11,028 11,207
====== ====== ====== ======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
-5-
<PAGE>
NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS POUNDS STERLING)
FOR THE SIX
MONTHS ENDED
APRIL 30,
1998 1997
(UNAUDITED) (UNAUDITED)
--------- ---------
OPERATING ACTIVITIES
Net Income (Loss) (131) 696
Adjustments to reconcile net income (Loss)
to net cash provided by
operating activities:
Depreciation and Amortization 759 715
Changes in assets and liabilities which
provided (used) cash:
Accounts Receivable 107 1,051
Inventory (623) 135
Prepaid Expenses (175) (10)
Accounts Payable (431) 71
Other Current Liabilities 516 191
------- -------
Net Cash Provided by Operating Activities 22 2,849
------- -------
INVESTING ACTIVITIES
Investment in Fixed Assets (241) (137)
Increase in Intangible Assets (193) (411)
Investment in Business (692) --
Acquisition of Business, Net of Cash -- (3,547)
------- -------
Net Cash Used in Investing Activities (1,126) (4,095)
------- -------
FINANCING ACTIVITIES
Proceeds from Exercise of Stock Options 37 --
Increase in Short-Term Debt -- 72
Proceeds from Long-Term Debt -- 2,770
Purchase of Treasury Stock (263) (466)
------- -------
Net Cash Provided by (Used in) Financing
Activities (226) 2,376
------- -------
EFFECT OF EXCHANGE DIFFERENCES ON CASH AND CASH
EQUIVALENTS (120) 54
------- -------
Net Increase (Decrease) in Cash &
Cash Equivalents (1,450) 1,184
CASH AND CASH EQUIVALENTS, BEGINNING 15,626 18,459
------- -------
CASH AND CASH EQUIVALENTS, ENDING 14,176 19,643
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements
-6-
<PAGE>
NUMEREX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Financial Statement Presentation
-----------------------------------------
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-Q
and Rule 10-01 of Regulation S-X. 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 (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the six month period ended April 30, 1998 may not be indicative of the
results that may be expected for the year ending October 31, 1998. For
further information, reference is also made to the Company's Annual Report
on Form 10-K for the year ended October 31, 1997 and the consolidated
financial statements contained therein.
On July 17, 1997, the Company invested 598,000 ($1,000,000) in return for
19.5% of the common stock of Uplink Security, Inc. In addition, the Company
extended Uplink a $5,000,000 Line of Credit that could be drawn against a
defined set of milestones over a 24-month period. Various options contained
in the agreements provide the Company a means of acquiring a controlling
interest in Uplink. On May 18, 1998, the Company acquired a controlling
interest in Uplink (See Note 7).
As of April 30, 1998 and October 31, 1997, the Company had loans
outstanding to Uplink totaling 1,196,000 ($2,000,000) and 598,000
($1,000,000), respectively. The Company's investment and loan to Uplink are
included in "Other Assets" in the accompanying consolidated balance sheets
at April 30, 1998.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No.
128"). SFAS No. 128 specifies the computation, presentation, and disclosure
requirements of earnings per share and supersedes Accounting Principles
Board Opinion No. 15, Earnings Per Share. SFAS No. 128 requires
presentation of basic and diluted earnings per share on the face of the
Company's consolidated statement of operations.
-7-
<PAGE>
Basic earnings per share, which replaces primary earnings per share,
excludes the dilutive impact of common stock equivalents and is computed by
dividing net income by the weighted-average number of shares of common
stock outstanding for the period.
Diluted earnings per share includes the effect of potential dilution from
the exercise of outstanding common stock equivalents into common stock
using the treasury stock method at an average market price for the
Company's common stock. Effective with the first quarter ended January 31,
1998, the Company adopted SFAS No. 128. The Company has computed its
earnings per share in accordance with SFAS No. 128 for both the three
months and six months ended April 30, 1998 and has restated 1997 earnings
per share information on a comparable basis.
During the quarter ended January 31, 1998, the Company began shipments
under a significant contract in which it records revenue when product is
delivered to the customer. Payment for the receivables under the contract
will be made through a revenue sharing arrangement with the customer
wherein full payment of the receivables is anticipated within a three-year
period. Accordingly, the receivables at April 30, 1998 have been recorded
as non-current and discounted to its present value assuming a three-year
term.
2. Inventory.
----------
April 30, October 3l,
l998 l997
-------- -----------
(000's omitted)
Raw materials 1,232 1,129
Work-in-progress 523 411
Finished goods 1,797 1,389
----- -----
3,552 2,929
===== =====
3. Revolving Credit Facility
-------------------------
The Company has a revolving credit facility which provides for maximum
borrowings of $10.0 (6.0) million and includes the option to convert, at
maturity, the outstanding balance to an amortizing term loan payable over a
maximum period of up to three years, with a maximum five year amortization.
Interest is charged at the bank's prime lending rate less .25% or LIBOR
plus 1.25%.
On April 30, 1998, there were outstanding borrowings of approximately 2.7
($4.5) million at an interest rate of 6.94%.
The Company is currently in technical violation of certain financial
performance loan covenants, however, the Company expects to receive a full
waiver from the lender.
-8-
<PAGE>
4. New Accounting Pronouncements
-----------------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, which establishes standards for reporting and
disclosure of comprehensive income, is effective for annual periods
beginning after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 130. As this statement only
requires additional disclosures in the Company's consolidated financial
statement; its adoption will not have any impact on the Company's
consolidated financial position or results of operations. The Company
expects to adopt SFAS No. 130 effective November 1, 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement, which establishes
standards for the reporting of information about operating segments and
requires the reporting of selected information about operating segments in
financial statements, is effective for fiscal years beginning after
December 15, 1997, although earlier application is permitted.
Reclassification of segment information for earlier periods presented for
comparative purposes is required under SFAS No. 131. The Company is
evaluating whether the adoption of this statement will result in any
changes to its presentation of financial data. The Company expects to adopt
SFAS No. 131 effective November 1, 1998.
5. Investment Considerations
-------------------------
In analyzing whether to make, or continue, an investment in the Company,
investors should consider, among other factors, certain investment
considerations more particularly described in the Company's Annual Report
on Form 10-K for the year ended October 31, 1997, a copy of which can be
obtained from Charles L. McNew, Chief Financial Officer, NumereX Corp., 100
Four Falls Corporate Center, Suite 407, Route 23 & Woodmont Road, West
Conshohocken, PA 19428-2961.
6. Forward-looking Statements
--------------------------
The information contained in the Quarterly Report on Form 10-Q for the
quarter ended April 30, 1998 contains forward-looking statements (as such
term is defined in the Securities Exchange Act of 1934 and the regulations
thereunder), including without limitation, statements as to trends or
management's beliefs, expectations or opinions, which are based upon a
number of assumptions concerning future conditions that ultimately may
prove to be inaccurate.
Such forward-looking statements are subject to risks and uncertainties and
may be affected by various factors, which may cause actual results to
differ materially from those in the forward-looking statements. Certain of
these risks, uncertainties and other factors, are discussed in the
Company's Annual Report on Form 10-K for the year ended October 31, 1997.
-9-
<PAGE>
7. Subsequent Events
-----------------
NumereX Corporation ("NumereX"), BellSouth Wireless, Inc. ("BellSouth
Wireless") and BellSouth Corporation completed a transaction whereby
Cellemetry LLC, a joint venture between NumereX and BellSouth Wireless, was
effectuated. Cellemetry LLC, a Delaware limited liability company, is owned
60% by NumereX and 40% by BellSouth Wireless. The parties have entered into
an operating agreement (the "Operating Agreement") which deals with, among
other things, the conduct of the business of Cellemetry LLC. Pursuant to
the Operating Agreement, NumereX will make initial in-kind and cash
contributions valued at $7.5 million as well as additional cash
contributions of up to $15.5 million during the first three years of
Cellemetry LLC's operations. NumereX's initial contributions may be
represented by, with the consent of BellSouth Wireless, (i) various
interests it has in Uplink Security, Inc., including a 19.5 equity interest
in Uplink, or (ii) certain business plan attainment levels (as well as a
cash component if certain levels are not attained). The initial
contribution by NumereX also included a license from Europlex Research
Limited relating to gateway router and radio module technologies. BellSouth
Wireless has made an initial in-kind capital contribution of all the assets
related to its cellemetry technology, valued at $15.3 million. Additional
capital contributions are required to be made by BellSouth Wireless.
Pursuant to the Operating Agreement, each party has made warranties,
representations and indemnifications to the other parties. Cellemetry LLC
will initially have five board members, three of whom will be appointed by
NumereX and two by BellSouth Wireless. The Operating Agreement requires
that certain actions of the board of directors require the approval by at
least one of the BellSouth Wireless appointees. In addition, the Operating
Agreement provides certain restrictions on the right to transfer ownership
interests in Cellemetry LLC. In the event certain goals established by the
business plan for Cellemetry LLC are not achieved, in certain
circumstances, at NumereX's election, it may require either that BellSouth
put its interest to NumereX for $15.33 million, plus interest at a 13%
annual compound rate, or take various actions whereby certain property and
other rights belonging to Cellemetry LLC (including cellemetry technology)
would be transferred to BellSouth. The Operating Agreement also addresses
various rights of the parties in the event of dissolution, liquidation and
termination. Cellemetry LLC has elected to be taxed as a partnership for
federal, state and foreign income tax purposes.
On May 18, 1998, the Company acquired an additional 78,795 shares of Uplink
Security, Inc. from certain existing shareholders for approximately
$1,225,000 plus 89,763 NumereX common stock warrants with a strike price of
$6.00. This stock purchase increases the Company's ownership interest in
Uplink to 85%.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
-----------------------------------------------------------
General
- -------
The following table sets forth, for the periods indicated, the percentage of net
sales represented by selected items in the Company's Consolidated Statements of
Income.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales:
Derived Channel Systems ................ 56.6% 53.5% 62.6% 58.2%
Intrusion alarm, broadband and network
Products(1) .......................... 43.4 46.5 37.4 41.8
----- ----- ----- -----
Total net sales .................... 100.0 100.0 100.0 100.0
Cost of sales ............................ 44.9 51.2 47.9 52.1
Gross profit ............................. 55.1 48.8 52.1 47.9
Selling, general, administrative and other 66.4 38.5 55.8 40.7
----- ----- ----- -----
Operating income.(Loss) .................. (11.3) 10.3 (3.7) 7.2
===== ===== ===== =====
Net income (Loss) ........................ (9.9)% 8.8% (1.7)% 7.5%
===== ===== ===== =====
</TABLE>
(1) The Company acquired BNI in March 1997 and sold DA in May 1997. The above
table includes sales of broadband products only for the six months ended
April 30, 1998 and the two months ended April 30, 1997. The table also
includes sales of intrusion alarm products only for the six months ended
April 30, 1997.
Results of Operations
- ---------------------
Net sales decreased 33.6% to 3.4 million for the quarter ended April 30,
1998, as compared to 5.1 million for the comparable period in 1997. For the six
months ended April 30, 1998, net sales decreased 19.0% to 7.5 million as
compared to 9.3 million for the comparable period in 1997. There was a reduction
in Derived Channel products sales principally due to a decrease in network
equipment sales in the United Kingdom and a decrease in net sales of Subscriber
Terminal Units (STUs) primarily due to shift from product sales to royalty
revenue as a result of the sale of DA, effective May 1997. The lack of
significant sales to Bell Canada, resulting from the halting of deployment
shipments to Bell Canada, due to the identification of a technical problem,
negatively impacted sales performance. The Company is working through these
issues with Bell Canada with the hope of reaching a mutually favorable
conclusion; although no assurances can be given. Intrusion alarm product sales
were eliminated due to sale of DA (in May 1997). This was somewhat offset by the
inclusion of sales of broadband products and services (from BNI, which was
acquired in March 1997) and a modest improvement in sales of network management
products.
-11-
<PAGE>
Total cost of sales decreased 41.8% to 1.5 million for the quarter ended
April 30, 1998 and decreased 25.4% to 3.6 million for the six months ended April
30, 1998 as compared to 2.6 million and 4.8 million, respectively, for the
comparable periods in 1997. The decrease resulted primarily from the decline in
net sales. Gross profit as a percentage of net sales increased to 55.1% and
52.1%, respectively, for the three and six months ended April 30, 1998 as
compared to 48.8% and 47.9%, respectively, for the comparable periods in 1997.
The increase in the gross profit margin was primarily due to a shift in sales
mix to higher margin products principally due to the elimination of DA and its
intrusion alarm product line.
As a result of the Company's continuing investment in product development
and sales and marketing programs, total selling, general, administrative and
other expenses increased 14.4% to 2.3 million for the three months ended April
30, 1998 as compared to 2.0 million for the comparable period in 1997. For the
six months ended April 30, 1998, total selling, general, administrative and
other expenses increased 11.0% to 4.2 million as compared to 3.8 million for the
comparable period in 1997. In May of 1998 the Company announced a restructuring
of its DCX business unit.
Due to the Company's decreased sales and the increase in total selling,
general, administrative and other expenses, the Company recognized operating
losses of 0.4 million and 0.3 million, respectively, for the three and six month
periods ended April 30, 1998. This compares to operating income of 0.5 million
and 0.7 million, respectively, for the comparable periods in 1997.
Interest and other income (net) increased 14.4% and 4.7%, respectively, to
0.183 million and 0.401 million, respectively, for the three and six month
periods ended April 30, 1998 as compared to 0.160 million and 0.383 million,
respectively, for the comparable periods in 1997. The increases were principally
related to an increase in interest income generated from temporary cash
investments which were somewhat offset by an increase in the interest expense on
the Revolving Credit Facility which was used in conjunction with the BNI
acquisition.
The Company recorded tax provisions of 0.1 million and 0.3 million,
respectively, for the three and six months ended April 30, 1998 despite the
pre-tax losses. Certain losses arising from United States operations were not
deductible during the three and six-month periods ended April 30, 1998, while
earnings from United Kingdom operations were fully taxable. The effective income
tax rate for both the three and six-month periods ended April 30, 1997 was 34%.
The Company had net losses of 0.3 million and 0.1 million, respectively,
for the three and six months ended April 30, 1998. This compares to net income
of 0.5 million and 0.7 million, respectively, for the comparable periods in
1997.
As a result of the Company's stock buyback program, the weighted average
shares and potential shares outstanding on a diluted basis, declined to 11.0
million for the three month and six month periods ended April 30, 1998 as
compared to 11.2 million shares for the comparable periods in 1997.
-12-
<PAGE>
Liquidity and Capital Resources of the Company
- ----------------------------------------------
The Company is presently able to fund its operations and working capital
requirements from cash flow generated by operations and the proceeds from a
public offering completed in April 1995. Net cash provided by operating
activities was 0.02 million for the six months ended April 30, 1998. Net cash
provided was 2.8 million for the comparable period in 1997. The decrease was
primarily due to net losses, changes in other working capital (including
inventory built in anticipation of product shipments to Bell Canada) and delays
in collecting certain receivables due from a customer in Argentina.
Net cash used in investing activities decreased to 1.1 million for the six
months ended April 30, 1998 as compared to 4.1 million for the comparable period
in 1997. The decrease was primarily attributable to the acquisition of BNI
during 1997 which was somewhat offset by the Company's investment in Uplink
during 1998.
Net cash used in financing activities decreased to 0.2 million for the six
months ended April 30, 1998 as compared to net cash provided of 2.4 million for
the comparable period in 1997. The decrease was principally due to the
borrowings under the Revolving Credit Facility during 1997 which was somewhat
offset by decreased purchases of treasury stock.
The Company had working capital balances of 19.7 million and 21.0 million,
respectively as of April 30, 1998 and October 31, 1997.
The Company's business has not been capital intensive and, accordingly,
capital expenditures have not been material. To date, the Company has funded all
capital expenditures from working capital and cash provided by operating
activities. Presently, the Company is obligated to fund the operations of
Cellemetry LLC (which will require $15.5 million over the next 24-months) and
Uplink, and the Company is also committed to a network equipment deployment in
conjunction with the previously announced Bell Canada agreement. Expansion of
the Company's Derived Channel System business (including an effort to increase
market penetration in North America and the Pacific Rim and expand into other
parts of the world), may also require significantly greater capital investments
than it has in the past.
The Company believes its available cash, including the proceeds of its
public offering completed in April 1995, and funds available under its Revolving
Credit Facility, will be sufficient to finance its operating and capital
requirements at least through the fiscal year ending October 31, 1998. The
Company will have funding obligations for Cellemetry LLC and Uplink as both
entities are expected to be cash flow negative for the balance of fiscal year
1998. Cash requirements for future expansion of the Company's operations will be
evaluated on an as-needed basis and may involve external financing. The Company
does not expect that such expansion, should it occur, will have a materially
negative impact on the Company's ability to fund its existing operations.
-13-
<PAGE>
Foreign Currency
- ----------------
Currently, the Company's functional and reporting currency is British
pounds sterling because a substantial majority of the Company's net sales are
presently generated in the United Kingdom. Although the Company does not have an
ongoing currency-hedging program in place, it has occasionally hedged its
operations selectively against fluctuations in foreign currency as needed. The
Company has used forward U.S. dollar contracts which have a maximum term of six
months and which are not material to the Company. The Company anticipates that
it may utilize additional foreign currency contracts as needed to hedge against
fluctuations in the exchange rate between the U.S. dollar and the British pound
sterling. Fluctuations in foreign currency exchange rates are not expected to
have a material impact on the Company's results of operations or liquidity.
-14-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None - not applicable.
Item 2. Changes in Securities.
None - not applicable.
Item 3. Defaults Upon Senior Securities.
None - not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of shareholders was held on February 26, 1998. In
addition to the election of Directors, the following proposal was
considered at the meeting and received the number of votes indicated:
1. Proposal to increase the number of shares of common stock for
issuance under the Company's Employee Stock Option Plan:
For Against Abstain
--- ------- -------
9,728,930 533,792 34,542
2. Proposal to increase the number of shares of common stock under
the Company's Non-Employee Director Stock Option Plan:
For Against Abstain
--- ------- -------
10,561,508 237,442 41,092
Item 5. Other Information.
None - not applicable.
Item 6. Exhibits and Reports on Form 8-K.
1. Form 8-K - Date of Report (February 25, 1998) - Item 5.
Other events, regarding entering into an agreement regarding the
formation of Cellemetry LLC.
-15-
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
NUMEREX CORP.
-------------
(Registrant)
Date: June 12, 1998 By: /s/ John J. Reis
---------------------- ------------------------------
JOHN J. REIS
President and
Chief Executive Officer
Date: June 12, 1998 By: /s/ Charles L. McNew
---------------------- ------------------------------
CHARLES L. McNEW
Chief Financial Officer and
Chief Accounting Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> Pound
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<EXCHANGE-RATE> 1.6727
<CASH> 14,176
<SECURITIES> 0
<RECEIVABLES> 3,195
<ALLOWANCES> 0
<INVENTORY> 3,552
<CURRENT-ASSETS> 22,599
<PP&E> 1,150
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,129
<CURRENT-LIABILITIES> 2,872
<BONDS> 0
0
0
<COMMON> 18,358
<OTHER-SE> 8,209
<TOTAL-LIABILITY-AND-EQUITY> 32,129
<SALES> 7,522
<TOTAL-REVENUES> 0
<CGS> 3,606
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 121
<INCOME-TAX> 252
<INCOME-CONTINUING> (131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
