U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14962
MORLEX, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1028977
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
P.O. Box 3755, Englewood, CO 80155
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (303) 699-8784
No change
------------------------------------------
(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 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 No X .
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: 314,200,000 shares of
Common Stock, par value $ .001 per share, outstanding as of December 10 , 1998.
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
MORLEX, INC.
For the Quarter ended September 30, 1998
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I- FINANCIAL INFORMATION
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Page of
Form 10-QSB
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Item 1. Financial Statements:
Condensed Balance Sheets -- September 30, 1998 (unaudited) and
December 31, 1997 3
Condensed Statements of Income (unaudited) for the three and nine months ended
September 30, 1998 and 1997 4
Condensed Statement of Cash Flows (unaudited) for the three and nine months ended
September 30, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
2
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MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1998 1997
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH $ 157 $ -
------------------- -----------------
TOTAL ASSETS $ 157 $ -
=================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 3,493 $ -
Accrued Expenses-Shareholder 819 -
------------------- -----------------
TOTAL CURRENT LIABILITIES 4,312 -
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SHAREHOLDERS' EQUITY
Common Stock, $.0001 par value-authorized,
1,000,000,000; shares issued and outstanding
314,200,000 and 89,710,000 respectively 31,420 12,568
Additional paid-in capital 291,728 291,728
Deficit (327,303) (304,296)
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TOTAL SHAREHOLDERS' EQUITY
(4,155) -
------------------- -----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 157 $ -
=================== =================
</TABLE>
See Notes To Unaudited Condensed Financial Statements
3
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
CONDENSED STATEMENTS OF INCOME
(Unaudited)
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<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ -
----------------- ---------------- ----------------- ----------------
EXPENSES
Consulting 6,578 900 19,430 2,400
General and Administrative 2,758 471 3,577 1,555
----------------- ---------------- ----------------- ----------------
Total Expenses 9,336 1,371 23,007 3,955
----------------- ---------------- ----------------- ----------------
NET LOSS $ (9,336) $ (1,371) (23,007) (3,955)
================= ================ ================= ================
NET LOSS PER COMMON SHARE $ NIL $ NIL $ NIL $ NIL
================= ================ ================= ================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 125,680,000 89,710,000 125,680,000 89,710,000
================= ================ ================= ================
</TABLE>
See Notes To Unaudited Condensed Financial Statements
4
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
CASH FLOWS USED IN OPERATING
ACTIVITIES:
Net Loss $ (9,336) $ (1,371) $ (23,007) $ (3,955)
Adjustments to reconcile net loss
to cash used in operating activities:
Changes in operating assets and Liabilities:
(Decrease) increase in accounts payable 3,493 - 3,493 -
(Decrease) increase in accrued expenses (12,852) - 819 -
------------ ------------- ------------- -------------
Net cash flow used in operating
Activities: (18,695) (1,371) (18,695) (3,955)
------------ ------------- ------------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from issuance of stock 18,852 - 18,852 -
Shareholder Advances - 1,371 - 3,955
------------ ------------- ------------- -------------
Net cash provided by financing
Activities: 18,852 1,371 18,852 3,955
------------ ------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH 157 - 157 -
CASH, BEGINNING OF THE PERIOD - - - -
------------ ------------- ------------- -------------
CASH, END OF THE PERIOD $ 157 $ - $ 157 $ -
============ ============= ============= =============
</TABLE>
See Notes To Unaudited Condensed Financial Statements
5
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 1998 AND 1997
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
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 accruals)
considered necessary for fair presentation have been included. The unaudited
condensed financial statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997.
6
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
The Company incurred a net loss of $ 3,955 for the nine months ended
September 30, 1997, and $ 9,336 for the nine months ended September 30, 1998.
Combined with the fact that the Company has virtually no working capital and
an accumulated deficit of $ 327,303, it is management's assertion that these
circumstances may hinder the Company's ability to continue as a going concern.
The Company completed two private placements of its Common Stock, par
value $.0001 per share, in December 1997 and July 1998. In December 1997,
Charles T. Gould, a director and the Company's President, purchased 35,970,000
shares of Common Stock in exchange for the cancellation of $49,191 of
indebtedness of the Company to Mr. Gould. In August 1998, Steven J. Goodman and
Lawrence E. Kaplan, both directors of the Company, each purchased 94,260,000
shares of Common Stock in exchange for $3,000 each in cash and $6,246 each in
previous services rendered, or an aggregate of 188,520,000 shares of Common
Stock with an aggregate purchase price of $6,000 in cash and $12,852 in previous
services rendered. The Company currently has virtually no cash or other assets.
Plan of Operation. The Company has not realized any revenues from
operations in the past two fiscal years, and its plan of operation for the next
twelve months shall be to continue its efforts to locate suitable acquisition
candidates. The Company can provide no assurance that it can continue to satisfy
its cash requirements for at least the next twelve months.
Liquidity and Capital Resources. As of September 30, 1998, the Company
had no virtually no assets. This compares to no assets for the year ended
December 31, 1997.
Results of Operations. The Company has not conducted any active
operations in the past two fiscal years, except for its efforts to locate
suitable acquisition transactions. No revenue has been generated by the Company
during such two-year period. It is unlikely the Company will have any revenues
unless it is able to effect an acquisition of or merger with an operating
company, of which there can be no assurance.
7
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. To the best knowledge of the officers and
directors, the Company is not party to any legal proceeding
or litigation.
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No. Description
27.1 Financial Data Schedule
(b) Reports on Form 8-K. None.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: December 12, 1998
MORLEX, INC.
By: /s/ Lawrence Kaplan
Lawrence Kaplan, President
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 157
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 157
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 157
<CURRENT-LIABILITIES> 4312
<BONDS> 0
0
0
<COMMON> 31420
<OTHER-SE> (35575)
<TOTAL-LIABILITY-AND-EQUITY> 157
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9336
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9336)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9336)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9336)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
