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SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended 02/29/96
Commission file number 0-21210
NELX, INC.
(Exact name of registrant as specified in its charter)
Kansas 84-0922335
- ------ -----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10200 W. 44th Ave. #400, Wheat Ridge, CO 80033
-----------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(303) 422-9497
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No ____
As of February 29, 1996, there were 15,894,300 outstanding shares of common
stock, par value $.0001 were outstanding.
<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
- ---------------------
The Company has experienced increased operating expenses for the three
month period of $178,681. The revenues for the period totaled $26,512 from oil
and gas operations compared with $25,953 for same period in 1995. The Company
recorded a combined net loss of $162,375 for the period as compared to a $26,759
loss for the same period in fiscal year 1995. Other Revenues and Expenses (Real
Estate Rental) showed a net loss for the period of ($10,206) as compared to
($25,275) net loss for same period in 1995. The Company losses on operations
will continue until more income from oil and gas operations or real estate sales
and development can be achieved. While the Company is seeking capital sources
for investment in its real estate development, there is no assurance that
sources can be found. The increase in operating expenses result f rom start up
expenses for its AeroSearch Products, and fees from professionals, consultants
and advisors related to its real estate, oil and gas and product development
efforts.
Liquidity and Capital Resources
- -------------------------------
The Company had inadequate cash capital at the end of the period. The
Company will be forced to either borrow against or sell assets or make private
placements of stock in order to fund operations continuance. No assurance exists
as to the ability to achieve sales of assets or loans against the assets, or
make private placements of stock.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal proceedings - None.
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 -
At February 28, 1996, the company was losing
approximately $6,000 per month on its domestic oil
and gas operations. It made a decision to write off
its domestic oil and gas assets, and conveyed its
well interests to Applied Mechanics, Inc. (a
non-affiliate) in exchange for assumption of
liabilities and plug/abandon obligations, and
concellation of Max Sommer's employment contract with
the Company, by virtue of Applied Mechanics agreeing
to employ Max Sommer.
Item 6. Exhibits and reports on Form 8-K
(a) The following are filed as Exhibits to this
Quarterly Report. The numbers refer to the
Exhibit Table of Item 601 of Regulation S-K:
None.
(b) Reports on Form 8-K filed during the three
months ended February 29, 1996: (incorporated
by reference)
None.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NELX, Inc.
-----------------------------------
(Registrant)
Date: May 17, 1996 /s/ WESLEY F. WHITING
-----------------------------------
President
<PAGE>
NELX, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheet
(Unaudited)
ASSETS February May
29, 1996 31, 1995
-------- --------
CURRENT ASSETS:
Cash and Cash 11,663 11,104
Equivalents
Prepaid Expenses 22,523 22,524
Accounts Receivable 32,329 31,829
Accrued Interest 0 56,100
Receivable
Intercompany Receivable 0 0
-------- --------
Total Current Assets 66,515 121,556
FIXED ASSETS: (Note 1)
Land 3,437,576 3,240,027
Gas Plant 1,000,000 1,000,000
Vehicles 0 0
Equipment 7,742 5,742
Real Estate 543,548 501,088
--------- ---------
4,988,866 4,746,857
Less Accumulated (317,923) (260,651)
--------- ---------
Depreciation
Total Net Fixed Assets 4,670,943 4,486,207
OTHER ASSETS:
Lease and Royalty 876,623 770,140
Interests
Note Receivable 765,003 735,000
Deposits 3,950 3,950
Invest in Subsidiary 187,500 0
Common Stock Subscribed 70,000 0
--------- ---------
Total Other Assets 1,903,076 1,509,090
TOTAL ASSETS 6,640,534 6,116,853
========= =========
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
February May
29, 1996 31, 1995
-------- --------
CURRENT LIABILITIES: 26,153 29,586
Accounts Payable 81,704 85,897
Accounts Payable - 29,000 35,000
Related Parties
Advance Payable 137,784 149,515
Current Portion LTD 406,478 363,135
------- -------
Total Current 681,120 663,133
Liabilities
LONG TERM DEBT
Note Payable 1,285,063 1,376,857
--------- ---------
STOCKHOLDER'S EQUITY
(DEFICIT):
Common Stock, $.0001 par 1,589 1,011
value - 5,000,000 shares
authorized, 10,437,581 and
15,894,,300 issued and
outstanding at May 31, 1995
and February 29, 1996
Additional Paid in Capital 6,373,390 5,195,611
Retained Earnings (1,700,628) (1,119,759)
Total Stockholder's 4,674,351 4,076,863
--------- ---------
Equity
TOTAL LIABILITIES & 6,640,534 6,116,853
========= =========
STOCKHOLDER'S EQUITY
The accompanying notes are considered an integral part these financial
statements.
<PAGE>
NELX, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
Nine Months
Ended February 28
1996 1995
---- ----
OPERATING REVENUES
Oil & Gas Sales 57,428 55,407
Cost of Sales 27,436 46,222
------ ------
Gross Profit 29,992 9,185
OPERATING EXPENSES
Salaries 48,332 29,960
Office Expense 61,062 28,957
Travel 17,312 7,226
Professional Fees 356,034 117,868
Telephone & Utilities 16,269 9,153
Depreciation & 57,271 6,668
Depletion
Miscellaneous 24,970
Interest Expense 35,580 7,735
-------- -------
Total Operating Costs 616,831 207,567
Other Revenues & (Expenses)
Net Rental Expense (14,740) (18,986)
Interest Income 4,652 393
Miscellaneous Income 16,057 631
------- -------
Total Other Revenues & 5,969 (17,962)
Expenses
NET INCOME (LOSS) (580,869) (216,344)
========== =========
Weighted average number of 15,894,300 9,129,780
shares outstanding-see note
Net Loss Per Share (0.04) (0.02)
<PAGE>
NELX, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months
Ended February 28
1996 1995
---- ----
Cash Flows From
Operating Activities:
Net Profit (Loss) (580,869) (216,345)
Depreciation 57,272 9,098
Stock issued for services 295,636
(Increase) decrease in Accts 55,600
Receivable
(Increase) decrease in Prepaids
(Increase) decrease in Deposits
(Decrease) Increase in Accrued (11,731) (20,453)
Expenses
(Decrease) Increase in Accts Payable (9,433) 16,568
(Decrease) Increase in Accts Payable (4,193) 28,757
------- -------
Related Parties
Net Cash Flows Used for (197,718) (182,375)
Operating Activities
Cash Flows from investing activities
(Purchase) sale of fixed assets (45,017) 4,000
(Purchase) Sale of Note receivable (30,003)
(Purchase) Sale of Investment
(Purchase) Sale of Lease interests 35,000
------- -------
Total cash used for investing (75,020) 39,000
Cash flows from financing activities
Increase (Decrease) in Note Payable 8,643 98,020
Sale of Common stock 264,654 41,200
------- -------
Total cash from financing activities 273,297 139,220
Increase (Decrease) in cash 559 (4,155)
Cash and cash equivalents - 11,104 4,761
------- ------
beginning of period
Cash and cash equivalents 11,663 606
======= =======
end of period
<PAGE>
NELX, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
Three Months
Ended February 28
1996 1995
---- ----
Cash Flows From
Operating Activities:
Net Profit (Loss) (162,375) (26,762)
Depreciation 18,374 10,023
Stock issued for services 46,136 0
(Increase) decrease in Accts 100 398
Receivable
(Increase) decrease in Prepaids 0 126,285
(Increase) decrease in Deposits 0 0
(Decrease) Increase in Accrued 6,125 (5,979)
Expenses
(Decrease) Increase in Accts Payable 0 6,513
(Decrease) Increase in Accts Payable 0 0
Related Parties (5,850) 23,335
(Decrease) increase in advance payable 0 (20,000)
Net Cash Flows Used for (97,490) 113,813
Operating Activities
Cash Flows from investing activities
(Purchase) sale of fixed assets (23,494) (87,561)
(Purchase) Sale of Note receivable (30,003) 0
(Purchase) Sale of Lease interests 0 (35,000)
Total cash used for investing (53,497) (122,561)
Cash flows from financing activities
Increase (Decrease) in Note Payable (38,996) 136,055
Sale of Common stock 197,397 (99,319)
------- -------
Total cash from financing activities 158,401 36,736
Increase (Decrease) in cash 7,314 27,988
------- -------
Cash and cash equivalents - 4,349 607
------- -------
beginning of period
Cash and cash equivalents 11,663 28,595
====== ======
end of period
<PAGE>
NELX, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Income and Expense
(Unaudited)
Three Months
Ended February 28
1996 1995
---- ----
OPERATING REVENUES
Oil & Gas Sales 26,512 25,953
Consulting Fees 0 4,630
OPERATING EXPENSES
Rent 7,560 4,730
Office 17,079 9,257
Travel 8,264 1,361
Lease expenses 0 0
Professional fees 16,304 (6,304)
Telephone & Utilities 8,005 2,101
Miscellaneous 24,970 0
Taxes & Licenses 0 (253)
Consultants 81,862 699
Oil & Gas Operating (3,028) (9,520)
Wages 16,174 14,261
Interest expense 1,491 15,735
----- ------
Total Operating Expenses 178,681 32,067
OTHER REVENUES & EXPENSES
Rental & Miscellaneous (860) (5,781)
Interest Income (98) 393
Depreciation 25,042 25,616
Sale of Assets (15,000) 0
Sale of lease interests 0 167
Rental Expenses 1,122 4,880
----- -----
Total Other Revenues & 10,206 25,275
Expenses
NET INCOME (LOSS) (162,375) (26,759)
======== =======
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 11,663
<SECURITIES> 0
<RECEIVABLES> 54,852
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 66,515
<PP&E> 6,891,942
<DEPRECIATION> (317,923)
<TOTAL-ASSETS> 6,640,534
<CURRENT-LIABILITIES> 681,120
<BONDS> 1,285,063
0
0
<COMMON> 1,589
<OTHER-SE> 4,672,762
<TOTAL-LIABILITY-AND-EQUITY> 6,640,534
<SALES> 57,428
<TOTAL-REVENUES> 78,137
<CGS> 27,436
<TOTAL-COSTS> 42,176
<OTHER-EXPENSES> 581,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,580
<INCOME-PRETAX> (580,869)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (580,869)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
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