U.S. Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission File number 333-5862
Net Lnnx, Inc.
(Exact name of small business issuer
as specified in its charter)
Pennsylvania 23-1726390
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
324 Datura St., Suite. 200, West Palm Beach, FL 33401
(Address of principal executive office and zip code)
(561) 659-1196
(Issuer's telephone number)
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the Issuer (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 at least the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: On
August 10, 1998, there were outstanding approximately 2,434,927
shares of common stock, no par value.
Transitional Small Business Disclosure Format (check one); Yes
__ No _X__
<PAGE>
NET LNNX, INC.
Form 10-QSB Index
June 30, 1998
Page
Part I: Financial Information............................... 2
Item 1. Financial Statements ..........................
Balance Sheets Unaudited at June 30, 1998.............. 3
Unaudited Statements of Operations for the
Period ended June 30, 1998............................. 4
Unaudited Statements of Cash Flow for the
Period Ended June 30, 1998............................. 5
Notes to Unaudited Financial Statements ............... 6
Item 2. Management's Discussion and Analysis or Plan
of Operation .......................................... 7
Part II: Other Information ............................... 7
Item 1. Legal Proceedings .......................... 7
Item 2. Changes in Securities ...................... 7
Item 3. Defaults Upon Senior Securities ............ 7
Item 4. Submission of Matters to a Vote of
Security Holders ........................... 7
Item 5. Other Information .......................... 7
Item 6. Exhibits and Reports on Form 8-K ........... 8
Signatures ................................................. 9
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
NET LNNX, INC.
CONDENSED BALANCE SHEET
June 30, 1998
(Unaudited)
ASSETS
Current assets:
Cash $ 279
Prepaid expenses 1,550
Total current assets 1,829
Property and equipment (net) 6,725
Note receivable - related party 4,648
$ 13,202
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 47,850
Stockholders' equity:
Common stock 1,000
Additional paid-in capital 1,697,936
Retained deficit (1,733,584)
Total stockholders' equity ( 34,648)
$ 13,202
See Accompanying Notes
<PAGE>
NET LNNX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1998 1997
<S> <C> <C>
Sales, net $ - $ -
Cost of sales - -
Gross profit (loss) - -
General and administrative expenses 54,208 61,072
Loss from operations ( 54,208) ( 61,072)
Other income (expense)
Interest earned - 7,827
Installment gain -
sale of subsidiary - 402
Total other income (expense) - 8,229
Net loss from continuing operations - ( 52,843)
Discontinued operations:
Estimated loss from disposal of
subsidiaries - ( 118,002)
Net loss ( 54,208) ( 170,845)
Retained earnings(deficit),
beginning (1,679,376) ( 462,479)
Retained earnings(deficit),
end of period $(1,733,584) $( 633,324)
Net loss per share - continuing
operations $( 0.00) $( 0.03)
Net loss per share - disposal
of subsidiaries $( 0.00) $( 0.09)
Total $( 0.00) $( 0.12)
Number of shares used in earnings
per share computation 2,203,199 2,044,555
</TABLE>
See Accompanying Notes
<PAGE>
NET LNNX, INC.
CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $( 54,208) $( 170,845)
Changes in assets and liabilities 43,593 64,065
Net cash provided (used) for
operations (10,615) ( 106,780)
Investments activities:
Receipts from installment
sale note - 4,173
Cash used for investment
activities - 4,173
Financing activities:
Proceeds from issuance of paid
in capital 10,000 100,000
Loan payable shareholders - -
Net cash provided by financing
activities 10,000 100,000
Net increase (decrease) in cash ( 615) ( 2,607)
Cash, beginning of period 894 73,409
Cash, end of period $ 279 $ 70,802
Supplemental disclosure:
Cash paid for interest $ - $ -
Income taxes paid $ - $ -
</TABLE>
See Accompanying Notes
<PAGE>
NET LNNX, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Net Lnnx, Inc.
(the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. 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 three month period ended
June 30, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998.
Loss per Share - The Company has adopted Financial Accounting
Standards No. 128, "Earnings per Share" ("FAS 128"), effective
October 1, 1997. FAS 128 requires presentation of earnings or
loss per share on basic and diluted earnings per share. The
company has potentially dilutive shares, however, because the
Company has a loss, the shares are deemed anti-dilutive and only
basic loss per share is presented. Loss per share is computed by
dividing net income by the weighted average number of shares
outstanding during the period. Restatement of the prior period
for this pronouncement had no effect on the loss per share
amount.
2. STOCK OPTION PLAN
A summary of the stock option activity for 1998 under the current
plan is as follows:
<TABLE>
<CAPTION>
Option Price Per Share
Stock Weighted
Option Range Average
<S> <C> <C> <C> <C>
Balance at January 1, 1998 400,000 $ 0.200 to $ 0.875 $ 0.706
Redeemed (175,000) $ 0.200 - $ 0.200
Balance at June 30, 1998 225,000 $ 0.200 $ 0.875 $ 0.706
</TABLE>
3. CONTINUING OPERATIONS
The accompanying financial statements have been presented in
accordance with generally accepted accounting principles, which
assume the continuity of the Company as a going concern. The
Company has no operations but continues to incur expenses. Its
ability to continue is dependent on obtaining a merger partner.
The Company has entered into negotiations to merge, but no
agreement has been signed as of the date of this financial
statement.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation.
(a) Plan of Operation
The registrant is presently a holding company conducting
virtually no business operation, other than its efforts to seek
merger partners or acquisition candidates. It presently receives
no cash flow from any source. As of the date of this report, no
definitive binding reorganization agreement has been entered into
between the registrant and any other company, and no assurance
can be made that any such agreement will be entered into in the
near future.
In the event a merger or acquisition does not occur, the
registrant may not be in a position to meet its cash requirements
for the remainder of its fiscal year unless the registrant
receives an additional capital infusion. Although the Company is
presently seeking a capital infusion, and has been some what
successful in this endeavor, the registrant presently has no
binding commitments to obtain a capital infusion in a sufficient
amount to assist it in meeting it cash requirements for the
remainder of its fiscal year. The registrant can make no
assurances that such a sufficient capital infusion will occur, or
that if such a capital infusion does occur, that it will not be
on terms that could adversely affect the registrant or its
shareholders.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Change in Securities
On June 4,1998, the registrant sold 30,479 shares of common
stock at $0.328 per share pursuant to a private placement
transaction. The exemptions the registrant relied upon were
Sections 4(2), 4(6) and Regulation D of the Securities Act of
1933, as amended. The stock was sold to an individual who
qualified as an accredited investor as that term is defined in
Regulation D. The net proceeds to the registrant for the sale of
said 30,479 shares was $10,000.
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter
ended June 30, 1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NET LNNX, INC.
Registrant
/s/ Ronald W. Hayes, Jr.
Ronald W. Hayes, Jr.
President.
/s/ Ronald W. Hayes, Jr.
Ronald W. Hayes, Jr.
President.
/s/William R. Colucci
William R. Colucci,
Vice President and
Secretary
Date: August 10, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto
incorporated in Part I., Item 1. of this Form 10-QSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 279
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,829
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 47,850
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 1,697,936
<TOTAL-LIABILITY-AND-EQUITY> 13,202
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 54,208
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (54,208)
<INCOME-TAX> 0
<INCOME-CONTINUING> (54,208)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (54,208)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
