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 March 31, 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.
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(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
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(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 June 1, 1999.
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
MORLEX, INC.
For the Quarter ended March 31, 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
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Item 1. Financial Statements:
Balance Sheets -- March 31, 1999 (unaudited) and December 31, 1998 3
Statement of Stockholders' Equity (unaudited) as at March 31, 1999 and
December 31, 1998 and 1997 4
Statements of Operations (unaudited) for the three months ended
March 31, 1999 and 1998 5
Statement of Cash Flows (unaudited) for the three months ended
March 31, 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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MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
BALANCE SHEET
<TABLE>
<CAPTION>
March 31 December 31
1999 1998
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,163 $ 3,664
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 2,061 $ 476
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TOTAL LIABILITIES 2,061 476
------- ---------
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 299,728 298,728
Deficit (330,046) (326,960)
-------- -------
TOTAL STOCKHOLDERS' EQUITY 1,102 3,188
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,163 $ 3,664
======== ========
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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 1,000 0 1,000
Net loss for the three months
ended March 31, 1999 (unaudited) 0 0 0 ( 3,086) ( 3,086)
----------- ----------- ----------- -------- -------
Balance, March 31, 1999 (unaudited) 314,200,000 $ 31,420 $ 299,728 $(330,046) $ 1,102
=========== ======= ======= ======= =======
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4
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three
Months Ended
March 31,
1999 1998
REVENUE NONE NONE
---- ----
<S> <C> <C>
EXPENSES
Professional $ 1,223 $ 0
Consulting 0 6,426
General and administrative 95 312
Filing and transfer fees 1,768 0
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TOTAL 3,086 6,738
------- -------
NET LOSS $( 3,086) $( 6,738)
======= =======
LOSS PER SHARE:
Net loss per share $ NIL $ NIL
======== ========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 314,200,000 125,680,000
=========== ===========
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5
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three
Months Ended
March 31,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 3,086) $( 6,738)
Increase in accrued expenses 1,585 0
------ ---------
NET CASH USED BY OPERATING ACTIVITIES ( 1,501) ( 6,738)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributed 1,000 0
Shareholder advances 0 6,738
------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,000 6,738
------- --------
NET INCREASE (DECREASE) IN CASH ( 501) 0
BEGINNING CASH BALANCE 3,664 0
------ --------
ENDING CASH BALANCE $ 3,163 $ 0
======= ========
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6
<PAGE>
MORLEX, INC.
(FORMERLY AMERICA ONLINE, INC.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE 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 $ 3,086 for the three months ended
March 31, 1999. Combined with the fact that the Company has virtually no
working capital and an accumulated deficit of $ 330,046, 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. The Company has
filed, on June 14, 1999, a registation statement under the Securities Exchange
Act of 1934 (the "Exchange Act"), on Form 10-SB, purusant to which the Company
is seeking to regster its common stock under the Exchange Act. Upon granting of
effectiveness of the registration statement by the Securities and Exchange
Commission, as to which there can be no assurance, the Company intends to seek a
listing of its common stock on the NASD Bulleting 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 March 31, 1999, the Company had
assets consisting of $3,163 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
<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: June 14, 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 three months ended March 31, 1999 and is qualified
in its entirety be reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3163
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3163
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3163
<CURRENT-LIABILITIES> 2061
<BONDS> 0
<COMMON> 31420
0
0
<OTHER-SE> (30318)
<TOTAL-LIABILITY-AND-EQUITY> 3163
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3086)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3086)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3086)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
