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 March 31, 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 May 14, 1998, there were
outstanding approximately 2,200,000 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
March 31, 1998
Page
Part I: Financial Information
Item 1. Financial Statements........................ 3
Balance Sheets Unaudited at March 31, 1998.......... 4
Unaudited Statements of Operations for the
Period ended March 31, 1998......................... 5
Unaudited Statements of Cash Flow for the
Period Ended March 31, 1998......................... 6
Notes to Unaudited Financial Statements............. 7
Item 2. Management's Discussion and Analysis
or Plan of Operation ............................... 8
Part II: Other Information
Item 1. Legal Proceedings ....................... 9
Item 2. Changes in Securities.................... 9
Item 3. Defaults Upon Senior Securities ......... 9
Item 4. Submission of Matters to a Vote
of Security Holders...................... 9
Item 5. Other Information........................ 9
Item 6. Exhibits and Reports on Form 8-K......... 9
Signatures............................................... 9
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
NET LNNX, INC.
CONDENSED BALANCE SHEET
March 31, 1998
(Unaudited)
ASSETS
Current assets:
Cash $ 894
Prepaid expenses 1,550
Total current assets 2,444
Property and equipment (net) 7,140
Note receivable - related party 4,648
$ 14,232
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 4,672
Stockholders' equity:
Common stock 1,000
Additional paid-in capital 1,687,936
Retained deficit (1,679,376)
Total stockholders' equity 9,560
$ 14,232
See Accompanying Notes
<PAGE>
NET LNNX, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
<S> <C> <C>
Sales, net $ - $ -
Cost of sales - -
Gross profit (loss) - -
General and administrative
expenses 68,787 15,944
Loss from operations (68,787) (15,944)
Other income (expense)
Interest earned 452 2,625
Installment gain -
sale of subsidiary - 4,953
Total other income (expense) 452 7,578
Net loss (68,335) (8,366)
Retained earnings(deficit),
beginning (1,611,041) (454,113)
Retained earnings(deficit),
end of period (1,679,376) $ (462,479)
Net loss per share $ ( 0.03) $ ( 0.00)
Number of shares used in
earnings per share computation 2,200,000 2,190,935
</TABLE>
See Accompanying Notes
<PAGE>
NET LNNX, INC.
CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ (68,335) $ (8,366)
Adjustments for non-cash items 265 (4,538)
Changes in assets and liabilities 31,145 (66,956)
Net cash provided (used) for
operations (36,925) (79,860)
Investments activities:
Receipts from installment sale note - 26,375
Cash used for investment activities - 26,375
Financing activities:
Proceeds from issuance of
paid in capital - 100,050
Loan payable shareholders 4,648 1,800
Net cash provided by financing
activities 4,648 101,850
Net increase (decrease) in cash (32,277) 48,365
Cash, beginning of period 33,171 25,044
Cash, end of period $ 894 $ 73,409
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 March 31, 1998
are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998.
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 March 31, 1998 225,000 $ 0.200 $ 0.875 $ 0.706
</TABLE>
3. CONTINUING OPERATION
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, 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 disclosed in the registrant's press release dated November 11, 1997,
the registrant entered into a non-binding letter of intent for a reverse
merger with R.F. Scientific, Inc., an Orlando, Florida based corporation
("RFS"). RFS is a satellite communications company which specializes in
preparing and constructing satellite communications vehicles for a wide
variety of commercial broadcasters, private networks and voice data users.
The registrant has been actively negotiating an
agreement with RFS for the registrant to acquire all of the outstanding shares
of RFS pursuant to a reorganization agreement. As of the date of this report;
however, no definitive binding
reorganization agreement has been entered into between the registrant and RFS,
and since the letter of intent is non-binding, no assurance can be made that
any such agreement will be entered into and that the RFS acquisition will
occur.
In the event the RFS 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. The
registrant presently has no binding commitments to obtain a capital infusion
in a sufficient amount, or any 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.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending of which the
registrant is a party.
Item 2. Change in Securities
Not Applicable
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
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 March 31, 1998.
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: May 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 894
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 894
<PP&E> 12,441
<DEPRECIATION> 5,301
<TOTAL-ASSETS> 14,232
<CURRENT-LIABILITIES> 4,672
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 1,687,936
<TOTAL-LIABILITY-AND-EQUITY> 14,232
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 68,787
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (68,335)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49,633)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49,633)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.00)
</TABLE>
