8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 25, 2010

NUMEREX CORP.

(Exact Name of Issuer as Specified in Charter)

Pennsylvania	0-22920	11-2948749
--------------	------------	----------------
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1600 Parkwood Circle

Suite 500

Atlanta, Georgia

-------------------

(Address of principal executive offices)

30339

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(Zip code)

(770) 693-5950

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(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR   230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange

     Act (17 CFR 240.13e-4(c))

Item 2.02   Results of Operations and Financial Condition.

On February 25, 2010, Numerex Corp. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ending December 31, 2009.  The text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

In the press release, the Company uses a non-GAAP financial measure, “non-GAAP net income (loss),” and includes a reconciliation of this measure to GAAP.   The Company believes that this presentation of non-GAAP earnings provides useful information relating to its financial condition and results of operations, which provides management and investors with a more complete understanding of the Company’s past performance and certain additional financial or business trends.  The Company believes that the line on the Company’s consolidated statement of operations entitled, “Net earnings (loss),” is the most directly comparable GAAP measure to non-GAAP net income (loss).   The Company also used the non-GAAP measure “Adjusted EBITDA,” which reflects the Company’s earnings after excluding certain litigation expenses and non-cash stock option compensation expenses.   The Company believes that this non-GAAP measure more accurately reflects the results of operations during the period, as the excluded expenses in any specific period may not directly correlate to the underlying performance of Numerex’s business operations.  Period-to-period comparisons of Adjusted EBITDA help Numerex’s management identify additional trends in Numerex’s financial results that may not be shown solely by period-to-period comparisons of consolidated income from continuing operations.   The Company believes that the “basic earnings (loss)” line is the most comparable GAAP measure to the Adjusted EBITDA measure.

The information contained in this Current Report (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, or incorporated by reference in any filing by the Company under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by reference in such filing.

Item 9.01.   Financial Statements and Exhibits.

(d)       Exhibits.

99.1 Press Release, dated February 25, 2010

SIGNATURES

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 hereunto duly authorized.

	NUMEREX CORP.
Date:  February 25, 2010	/s/ Alan B. Catherall
	Alan B. Catherall Chief Financial Officer

Exhibit Index

99.1 Press Release, dated February 25, 2010

EX-99.1

Numerex Corp. Contact:

Alan Catherall

770 485-2527

Investor Relations Contact:

Seth Potter

646 277-1230

       Exhibit 99.1

Press Release

For Immediate Release

Numerex Reports Fourth Quarter and Full Year 2009 Financial Results

Digital M2M Subscriptions Increase 34% Year over Year

$14 Million in Revenues Generates Positive Operating Earnings in Q4

ATLANTA, Ga. – February 25, 2010 - Numerex Corp. (NASDAQ:NMRX),a leading single source provider of secure machine-to-machine (M2M) products and services, today announced financial results for its fourth quarter and full year ended December 31, 2009.

Key metrics for the fourth quarter and full year of 2009 include:

·   Digital subscriptions increased to 937,000 at the end of the 2009. This compares with 701,000 recorded at the end of 2008, reflecting a 34% growth rate. 93,000 net subscriptions were added during the fourth quarter and 236,000 during the full year 2009.

·   Total consolidated revenues during the fourth quarter and full year of 2009 were $14.0 million and $50.8 million, respectively.

·   During the fourth quarter and full year 2009, service revenues as a percent of total M2M revenues were 57.6% and 58.5%, respectively, compared to 50.1% and 39.2% during the same periods last year.

·   Gross margins improved to 44.6% and 44.0% during the fourth quarter and full year of 2009, respectively.

·   Adjusted EBITDA, excluding stock-based compensation expense and legal fees related to litigation, during the fourth quarter and full year of 2009 was $1.6 million and $4.4 million, respectively, compared to $0.8

 million and $5.2 million during the same periods last year. A reconciliation of GAAP to non-GAAP results has been provided in the financial tables included in this press release.

·   Numerex ended 2009 with $5.3 million in cash equivalents and $0.5 million in structured debt. In January 2010, the remaining $0.5 million in structured debt was repaid.

·   Net cash position and debt-to-equity ratio improved during the full year 2009 after retirement of $10 million in structured debt.

“Numerex has built one of the largest M2M subscription bases for enterprise customers in the industry closing the year with over 900,000 subscriptions,” stated Stratton Nicolaides, Numerex chairman and CEO. “We believe the Company’s strategy of annually increasing its recurring subscriptions and service revenues, which it has achieved for several years, will enhance shareholder value in the long term. The Company is better positioned today to accomplish its goals as a result of actions it took in 2009 that included:  strengthening its balance sheet by shedding its structured debt, realigning its organization to more effectively execute its strategy while adding talent and expertise, introducing best in class technology, and expanding its product lines with secure network and application platforms that are designed to improve existing services and to open new market opportunities.”

-continued-

The Company’s 2009 highlights include:

·   AT&T agreement extension to provide turnkey services for M2M enterprise markets. The expanded agreement gives Numerex the possibility to offer its M2M solutions to AT&T's business customers as the carrier looks to drive its wireless capabilities into a wide variety of devices.

·   Widening the range of Numerex services provided to the Federal Emergency Management Agency (FEMA) in partnership with QinetiQ, one of the world's leading defense and security technology companies.

·   Wholesale data agreement with Sprint to allow Numerex to offer additional CDMA based network capabilities to its customer base. This agreement builds on Sprint's recent formation of its Emerging Solutions business unit.

·   Broadening our M2M capabilities in Canada through a long-term agreement with Rogers Wireless, Canada’s largest wireless operator.

·   Introduction of “Numerex Foundation Application Software Technology” or Numerex FAST™.  Numerex customers are now able to take advantage of a scalable hosting environment for the rapid creation and support of Web-based M2M applications. Numerex FAST uses an Open Platform as a Service (OPaaS) framework, based on “cloud computing”, which Numerex believes solves many of the technical and cost barriers of an M2M solution.

·   Extension of our international footprint to the United Kingdom and elsewhere in Europe through an agreement with Vodafone Ltd, the world’s leading international mobile communications group.

·   Launch of our M2M Developer Exchange ™ to promote Numerex capabilities and foster innovation within the M2M community.

·   Enhancement of the capabilities of the company’s scalable hosting environment for the rapid creation and support of Web-based M2M applications. The announcement, in early April, of an expanded partnership with Geoforce is an example of the customer acquisition potential of these attributes.

·   Selection by iControl Networks, a software and services company providing solutions for the broadband home management market focusing on next generation home protection and connectivity, using IP or wireless.

For the fourth quarter ended December 31, 2009, Numerex reported consolidated revenue of $14.0 million compared to $15.5 million in the fourth quarter of 2008.  During the quarter, the company reported service revenues of $8.3 million and hardware revenues of $5.7 million compared to $8.2 million in service revenues and $7.3 million in hardware revenues, respectively, during the same period last year.  The year-over-year decrease in hardware revenues was due primarily to the completion of the transition from analog to digital service and the Company’s strategy to reduce its emphasize on hardware only sales.

Gross margin for the three months ended December 31, 2009 was 44.6% compared to 39.8% during the same period last year.  The continuing increase in M2M service revenues drives an overall margin improvement since service revenues have a significantly higher gross margin than those achieved through the sale of hardware.

Total operating expenses were $4.9 million during the quarter ended December 31, 2009 compared to $6.8 million during the fourth quarter of 2008.  Excluding litigation-related legal fees and non-cash stock option compensation charges selling and administrative expenses were 14% lower during the quarter compared to the same period last year reflecting reductions in administrative headcount as well as related costs.

GAAP income from operations was $471,000 compared to a GAAP loss from operations of $6.8 million in the fourth quarter of 2008 which included $5.3 million of goodwill impairments.

For the quarter ended December 31, 2009, adjusted EBITDA, which excludes stock-based compensation expense and legal fees associated with litigation was $1.6 million compared to $0.8 million in the same period last year.

-continued-

Interest expense for the fourth quarter of 2009 included non-cash charges of over $1.3 million primarily due to the requirement under ASC 470-20 (formerly FAS 84) that an adjustment to the conversion price associated with the debt converted to equity in the quarter is recorded as additional interest expense.

Non-GAAP basic/diluted net income per share was $0.03 for the quarter ended December 31, 2009 compared to a loss per share of $0.03 in the same period last year.  A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release.

Numerex ended the fourth quarter of 2009 with cash and equivalents balance of $5.3 million compared to $8.9 million in the fourth quarter of 2008. The decrease in cash was primarily due to debt repayments during the year.

Mr. Nicolaides concluded, “As a result of the growth experienced in the fourth quarter across all of our M2M business lines, robust sales pipelines, and traction from strategic alliances forged last year, we are reaffirming our 2010 subscription growth expectations of between 30% and 40%.”

Quarterly Conference Call

Numerex will discuss its quarterly results via teleconference today at 9:00 a.m. Eastern Time. Please dial (866) 792-1873 or if outside the U.S., (904) 520-5760 to access the conference call at least five minutes prior to the 9:00 a.m. ET start time. A live webcast and replay of the call will also be available at http://www.numerex.com under the Investor Relations section.  An audio replay will be available via the Numerex web site beginning two hours after the call end.

About Numerex

Numerex Corp. (NASDAQ: NMRX) is the single source machine-to-machine (M2M) product and service provider to some of the world's largest organizations delivering the foundational components of device, network, and application, used by its customers in the development of their M2M solutions. Customers typically subscribe to Numerex network and application services that are delivered through its hosted platforms. The Company's offerings and expertise enable its customers to efficiently build reliable and secure solutions that are used to monitor and manage assets remotely whenever and wherever needed, while simplifying and speeding up development and deployment. Numerex DNA™ offerings include hardware Devices, Network services, and software Applications that are delivered through its Numerex FAST™ (Foundation Application Software Technology) platform. Numerex is the first M2M service provider in North America to carry the ISO 27001 information security certification. "Machines Trust Us®" represents the Company's focus on M2M data security, service reliability, and round-the-clock support of its customers' M2M solutions. For additional information, please visit www.numerex.com.

This press release contains, and other statements may contain, forward-looking statements with respect to Numerex future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities in the wireless data business. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "assume," "strategy," "plan," "outlook," "outcome," "continue," "remain," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. Numerex cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and Numerex assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: our inability to reposition our platform to capture greater recurring service revenues; the risks that a substantial portion of Orbit One's revenues are derived from government contracts that may be terminated by the government at any time; variations in quarterly operating results; delays in the development, introduction, integration and marketing of new wireless services; customer acceptance of services; economic conditions resulting in decreased demand for our products and services; the risk that our strategic alliances and partnerships will not yield substantial revenues; changes in financial and capital markets, and the inability to raise growth capital;the inability to attain revenue and earnings growth in our wireless data business; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the inability to realize revenue enhancements; and extent and timing of technological changes. Numerex SEC reports identify additional factors that can affect forward-looking statements.

-continued-

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended												Twelve Months Ended
	December 31,												December 31,
	2009			2008			Change			% Change			2009			2008			Change			% Change
Net sales:
Hardware	$	5,726		$	7,303		$	(1,577	)		(22	%)	$	20,283		$	43,048		$	(22,765	)		(53	%)
Service		8,295			8,159			136			2	%		30,554			29,271			1,283			4	%
Total net sales		14,021			15,462			(1,441	)		(9	%)		50,837			72,319			(21,482	)		(30	%)
Cost of hardware sales		4,707			6,631			(1,924	)		(29	%)		17,318			37,469			(20,151	)		(54	%)
Cost of services		3,054			2,675			379			14	%		11,171			9,430			1,741			18	%
Gross Profit		6,260			6,156			104			2	%		22,348			25,420			(3,072	)		(12	%)
Selling & marketing expenses		2,714			2,847			(133	)		(5	%)		10,130			10,579			(449	)		(4	%)
Engineering & development expenses		678			710			(32	)		(5	%)		2,421			2,198			223			10	%
General & administrative expenses		1,514			3,276			(1,762	)		(54	%)		8,056			10,636			(2,580	)		(24	%)
Depreciation and amortization		883			818			65			8	%		3,398			3,107			291			9	%
Goodwill & long-lived asset impairment		-			5,289			(5,289	)		(100	%)		-			5,289			(5,289	)		(100	%)
Operating earnings (loss)		471			(6,784	)		7,255			(107	%)		(1,657	)		(6,389	)		4,732			(74	%)
Interest expense		(1,418	)		(389	)		(1,029	)		265	%		(3,930	)		(1,531	)		(2,399	)		157	%
Other income		-			(10	)		10			(100	%)		43			(8	)		51			(638	%)
Loss before tax		(947	)		(7,183	)		6,236			(87	%)		(5,544	)		(7,928	)		2,384			(30	%)
Provision for income tax		189			3,468			(3,279	)		(95	%)		285			3,047			(2,762	)		(91	%)
Net loss	$	(1,136	)	$	(10,651	)	$	9,515			(89	%)	$	(5,829	)	$	(10,975	)	$	5,146			(47	%)
Basic loss per common share	$	(0.08	)	$	(0.75	)							$	(0.40	)	$	(0.78	)
Diluted loss per common share	$	(0.08	)	$	(0.75	)							$	(0.40	)	$	(0.78	)
Number of shares used in per share calculation
Basic		14,947			14,160									14,409			14,144
Diluted		14,947			14,160									14,409			14,144

-continued-

Numerex Corp.
Supplemental Sales Information
(in thousands)
	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
Net Sales:	2009		2008		Change			2009		2008		Change
M2M Services (1)
Hardware	$	5,579	$	7,099	$	(1,520	)	$	19,655	$	40,197	$	(20,542	)
Service		7,583		7,122		461			27,727		25,952		1,775
Sub-total		13,162		14,221		(1,059	)		47,382		66,149		(18,767	)
Wireline Services (2)
Hardware		147		203		(56	)		628		2,851		(2,223	)
Service		712		1,038		(326	)		2,827		3,319		(492	)
Sub-total		859		1,241		(382	)		3,455		6,170		(2,715	)
Total
Hardware		5,726		7,303		(1,577	)		20,283		43,048		(22,765	)
Service		8,295		8,159		136			30,554		29,271		1,283
Total net sales	$	14,021	$	15,462	$	(1,441	)	$	50,837	$	72,319	$	(21,482	)

(1)   Formerly known as Wireless M2M Data Communications

(2)   Formerly known as Digital Multimedia, Networking and Wireline Services

                                                                                                                                                                                                                                                         - -continued-

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended									Twelve Months Ended
	December 31, 2009									December 31, 2009
	GAAP						Non-GAAP			GAAP						Non-GAAP
	Results			Adjustments			Results			Results			Adjustments			Results
Net sales:
Hardware	$	5,726					$	5,726		$	20,283					$	20,283
Service		8,295						8,295			30,554						30,554
Total net sales		14,021						14,021			50,837						50,837
Cost of hardware sales		4,707						4,707			17,318						17,318
Cost of services		3,054						3,054			11,171						11,171
Gross Profit		6,260			-			6,260			22,348			-			22,348
		44.6	%					44.6	%		44.0	%					44.0	%
Selling & marketing expenses		2,714			-			2,714			10,130			-			10,130
Engineering & development expenses		678						678			2,421						2,421
General & administrative expenses		1,514			(221	)		1,293			8,056			(2,632	)		5,424
Earnings before interest, depreciation and amortization		1,354			221			1,575			1,741			2,632			4,373
Depreciation and amortization		883			-			883			3,398			-			3,398
Operating earnings (loss)		471			221			692			(1,657	)		2,632			975
Interest expense		(1,418	)		1,359			(59	)		(3,930	)		2,936			(994	)
Other income		-						-			43						43
Earnings (loss) before tax		(947	)		1,580			633			(5,544	)		5,568			24
Provision for income tax		189			-			189			285			-			285
Net earnings (loss)	$	(1,136	)	$	1,580		$	444		$	(5,829	)	$	5,568		$	(261	)
Basic earnings (loss) per common share	$	(0.08	)				$	0.03		$	(0.40	)				$	(0.02	)
Diluted earnings (loss) per common share	$	(0.08	)				$	0.03		$	(0.40	)				$	(0.02	)
Number of shares used in per share calculation
Basic		14,947						14,947			14,409						14,409
Diluted		14,947						15,097			14,409						14,409

(a)   These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP.  The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated Statement of Operations exclude stock option expense, legal fees associated with litigation and non-cash interest expense associated with conversion of debt.

-continued-

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended									Twelve Months Ended
	December 31, 2008									December 31, 2008
	GAAP						Non-GAAP			GAAP						Non-GAAP
	Results			Adjustments			Results			Results			Adjustments			Results
Net sales:
Hardware	$	7,303					$	7,303		$	43,048					$	43,048
Service		8,159						8,159			29,271						29,271
Total net sales		15,462						15,462			72,319						72,319
Cost of hardware sales		6,631						6,631			37,469						37,469
Cost of services		2,675						2,675			9,430						9,430
Gross Profit		6,156			-			6,156			25,420			-			25,420
		39.8	%					39.8	%		35.1	%					35.1	%
Selling & marketing expenses		2,847						2,847			10,579						10,579
Engineering & development expenses		710						710			2,198						2,198
General & administrative expenses		3,276			(1,454	)		1,822			10,636			(3,170	)		7,466
Earnings (loss) before interest, depreciation and amortization		(677	)		1,454			777			2,007			3,170			5,177
Depreciation and amortization		818						818			3,107						3,107
Goodwill & long-lived asset impairment		5,289			(5,289	)		-			5,289			(5,289	)		-
Operating earnings (loss)		(6,784	)		6,743			(41	)		(6,389	)		8,459			2,070
Interest expense		(389	)					(389	)		(1,531	)					(1,531	)
Other income		(10	)					(10	)		(8	)					(8	)
Earnings (loss) before tax		(7,183	)		6,743			(440	)		(7,928	)		8,459			531
Provision (benefit) for income tax		3,468			(3,468	)		-			3,047			(3,047	)		-
Net earnings (loss)	$	(10,651	)	$	10,211		$	(440	)	$	(10,975	)	$	11,506		$	531
Basic earnings (loss) per common share	$	(0.75	)				$	(0.03	)	$	(0.78	)				$	0.04
Diluted earnings (loss) per common share	$	(0.75	)				$	(0.03	)	$	(0.78	)				$	0.04
Number of shares used in per share calculation
Basic		14,160						14,160			14,144						14,144
Diluted		14,160						14,160			14,144						14,495

(a)   These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in accordance with GAAP.  The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated Statement of Operations exclude stock option expense, legal fees associated with litigation, goodwill and long-lived asset impairment expense and the tax impact of change in deferred tax valuation allowance.

-continued-

NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	December 31,			December 31,
	2009			2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,306		$	8,917
Accounts receivable, less allowance for doubtful accounts of $548
at December 31, 2009 and $1,010 at December 31, 2008:		6,341			9,159
Inventory		6,290			8,506
Prepaid expenses and other current assets		1,569			1,508
Deferred tax asset		-			-
TOTAL CURRENT ASSETS		19,506			28,090
Property and equipment, net		1,603			1,765
Goodwill, net		23,787			23,771
Other intangibles, net		4,985			5,796
Software, net		2,747			2,796
Other assets - long term		119			288
Deferred tax asset - long term		-			-
TOTAL ASSETS	$	52,747		$	62,506
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	5,888		$	7,289
Other current liabilities		2,555			2,943
Note payable		493			2,568
Deferred revenues		1,261			1,134
Obligations under capital leases		24			29
TOTAL CURRENT LIABILITIES		10,221			13,963
LONG TERM LIABILITIES
Note payable - net of current portion		-			7,629
Obligations under capital leases and other long-term liabilities		489			520
TOTAL LONG TERM LIABILITIES		489			8,149
COMMITMENTS AND CONTINGENCIES		-			-
SHAREHOLDERS’ EQUITY
Preferred stock - no par value; authorized 3,000,000; none issued		-			-
Class A common stock - no par value, authorized 30,000,000, issued 16,307,963
shares at December 31, 2009 and 15,349,327 shares at December 31, 2008;
outstanding 15,082,154 shares at December 31, 2009 and 14,163,518 shares
at December 31, 2008		57,431			50,801
Class B common stock – no par value; authorized 5,000,000; none issued		-			-
Additional paid-in-capital		5,582			4,587
Treasury stock, at cost, 1,225,809 shares on December 31, 2009 and
1,185,809 shares on December 31, 2008		(5,214	)		(5,053	)
Accumulated other comprehensive earnings (loss)		-			(8	)
Retained deficit		(15,762	)		(9,933	)
TOTAL SHAREHOLDERS' EQUITY		42,037			40,394
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	52,747		$	62,506

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