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, 1999
[ ] 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
(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: 389,200,000 shares of
Common Stock, par value $ .0001 per share, outstanding as of November 10, 1999.
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
MORLEX, INC.
For the Quarter ended September 30, 1999
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I- FINANCIAL INFORMATION
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<CAPTION>
Page of
Form 10-QSB
Item 1. Financial Statements:
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Balance Sheets -- September 30, 1999 (unaudited) and December 31, 1998 3
Statement of Stockholders' Equity (unaudited) as at September 30, 1999 and
December 31, 1998 and 1997 4
Statements of Operations (unaudited) for the three and nine months ended
September 30, 1999 and 1998 5
Statement of Cash Flows (unaudited) for the three and nine months ended
September 30, 1999 and 1998 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 8
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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
BALANCE SHEET
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<CAPTION>
September 30 December 31
1999 1998
(Unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 3,248 $ 3,664
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 1,150 $ 476
--------- ----------
TOTAL LIABILITIES 1,150 476
--------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value
1,000,000,000 shares authorized;
314,200,000 shares issued and outstanding 31,420 31,420
Additional paid-in capital 308,228 298,728
Deficit (337,550) (326,960)
-------- -------
TOTAL STOCKHOLDERS' EQUITY 2,098 3,188
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,248 $ 3,664
========= =========
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3
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MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid in Stockholders'
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 125,680,000 $ 12,568 $ 291,728 $( 304,296) $ 0
Issuance of common stock 188,520,000 18,852 0 0 18,852
Capital contributed 0 0 7,000 0 7,000
Net loss for the year
ended December 31, 1998 0 0 0 ( 22,664) ( 22,664)
----------- -------- ------------ --------- -------
Balance, December 31, 1998 314,200,000 31,420 298,728 (326,960) 3,188
Capital contributed 0 0 9,500 0 9,500
Net loss for the nine months
ended September 30, 1999 (unaudited) 0 0 0 ( 10,590) ( 10,590)
----------- -------- ------------ --------- -------
Balance, September 30, 1999 (unaudited) 314,200,000 $ 31,420 $ 308,228 $(337,550) $ 2,098
=========== ======== ============ ========= ========
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4
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1999 1998 1999 1998
REVENUE NONE NONE NONE NONE
EXPENSES
<S> <C> <C> <C> <C>
Professional $ 232 $ 0 $ 4,300 $ 0
Consulting 0 6,578 0 19,430
General and administrative 375 2,758 470 3,577
Filing and transfer fees 4,052 0 5,820 0
------------ ------------ ---------- -------------
TOTAL 4,659 9,336 10,590 23,007
------------ ------------ ---------- -------------
NET LOSS $ ( 4,659) $ ( 9,336) $ ( 10,590) $ ( 23,007)
------------ ------------ ---------- -------------
------------ ------------ ---------- -------------
LOSS PER SHARE:
Net loss per share NIL NIL NIL NIL
Weighted average number
of common shares outstanding 314,200,000 125,680,000 314,200,000 125,680,000
============ ============ ============ =============
</TABLE>
5
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three For the Nine
Months Ended Months Ended
September 30, September 30,
1999 1998 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $( 4,659) $( 9,336) $(10,590) $(23,007)
Increase in accounts payable 0 3,493 0 3,493
(Decrease) increase in accrued expenses ( 945) (12,852) 674 819
-------- --------- -------- --------
NET CASH USED BY OPERATING ACTIVITIES ( 5,604) (18,695) ( 9,916) (18,695)
-------- --------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributed 8,500 0 9,500 0
Net proceeds from issuance of stock 0 18,852 0 18,852
Shareholder advances 0 0 0 0
-------- --------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,500 18,852 9,500 18,852
-------- --------- -------- --------
NET INCREASE (DECREASE) IN CASH 2,896 157 ( 416) 157
BEGINNING CASH BALANCE 352 0 3,664 0
-------- --------- -------- --------
ENDING CASH BALANCE $ 3,248 $ 157 $ 3,248 $ 157
======== ========= ======= =========
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6
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MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 1999 AND 1998
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
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, 1998.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company incurred a net loss of $10,590 for the nine months ended
September 30, 1999. Combined with the fact that the Company has no virtually no
working capital and an accumulated deficit of $337,550, 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 $6,426 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.
On August 16, 1999, Steven J. Goodman, Lawrence Kaplan and Charles T.
Gould each purchased 25,000,000 shares of common stock in exchange for $2,500
each in cash previously advanced to the Company.
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. The Company has
filed, on June 14, 1999, a registration statement under the Securities Exchange
Act of 1934 (the "Exchange Act"), on Form 10-SB, pursuant to which the Company
is seeking to register its common stock under the Exchange Act. The registration
statement became effective on August 14, 1999, and now the Company intends to
seek a listing of its common stock on the NASD Bulletin Board. The Company
believes that it can enhance its opportunities to acquire or merge with an
operating company if its securities are listed on the Bulletin Board. There can
be no assurance that the Company's securities will be listed on the Bulletin
Board.
Liquidity and Capital Resources. As of September 30, 1999, the Company
had assets consisting of $3,248 in cash. This compares to assets of $3,664 in
cash for the fiscal year ended December 31, 1998.
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.
8
<PAGE>
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.
9
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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: November , 1999
MORLEX, INC.
By: /s/ LAWRENCE KAPLAN
----------------------------
Lawrence Kaplan, President
10
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Morlex, Inc.
financial statements for the nine months ended September 30, 1999 and is
qualified in its entirety be reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,248
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,248
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,248
<CURRENT-LIABILITIES> 1,150
<BONDS> 0
<COMMON> 31,420
0
0
<OTHER-SE> (29,322)
<TOTAL-LIABILITY-AND-EQUITY> 3,248
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,590)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,590)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,590)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
