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 02/28/97
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
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(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 28, 1997, there were 22,017,942 outstanding shares of common
stock, par value $.0001 were outstanding.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
NELX, INC. AND SUBSIDIARY
Consolidated Balance Sheet
(Unaudited)
February May
ASSETS 28, 1997 31, 1996
---------- ----------
CURRENT ASSETS:
Cash and Cash Equivalents (10,949) 8,701
Prepaid Expenses 0 0
Accounts Receivable 500 500
Accrued Interest Receivable 0 0
Intercompany Receivable 0 0
---------- ----------
Total Current Assets (10,449) 9,201
FIXED ASSETS: (Note 1)
Land 3,816,952 3,716,801
Gas Plant 1,000,000 1,000,000
Vehicles 0 0
Equipment 12,479 8,654
Real Estate 472,088 678,063
---------- ----------
5,301,519 5,403,518
Less Accumulated Depreciation (159,797) (132,725)
---------- ----------
Total Net Fixed Assets 5,141,722 5,270,793
OTHER ASSETS:
Lease & Royalty Interests
Note Receivable 3 0
Deposits 3,950 3,950
Investments 10,000 10,000
Common Stock Subscribed 0 0
Total Other Assets 13,953 13,950
---------- ----------
TOTAL ASSETS 5,145,227 5,293,944
========== ==========
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts Payable 138,649 139,649
Advance Payable 29,000 29,000
Current Portion LTD 368,214 368,214
---------- ----------
Total Current Liabilities 535,863 536,863
LONG TERM DEBT
Note Payable 1,614,645 1,594,733
---------- ----------
STOCKHOLDER'S EQUITY (DEFICIT):
Common Stock, $.0001 par value
- 500,000,000 2,183 1,895
---------- ----------
shares authorized, 10,437,581
and 15,894,300 issued and
outstanding at May 31, 1996
and February 28, 1997
Additional Paid In Capital 7,365,965 7,183,780
Retained Earnings (4,373,430) (4,023,327)
---------- ----------
Total Stockholder's Equity 2,994,718 3,162,348
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY 5,145,226 5,293,944
========== ==========
The accompanying notes are considered an integral part
these financial statements
<PAGE>
<TABLE>
<CAPTION>
NELX, INC. AND SUBSIDIARY
Consolidated Statement of Income and Expense
(Unaudited)
3 Months 9 Months
Ended February 28 Ended February 28
1996 1997 1996 1997
-------------------------- ------------------------------
OPERATING REVENUES
<S> <C> <C> <C> <C>
Oil & Gas Sales 26,512 0 57,428 0
Cost of Sales (3,028) 0 27,436 50,000
-------- -------- -------- --------
Gross Profit 29,540 0 29,992 (50,000)
OPERATING EXPENSES
Salaries 16,174 0 48,332 0
Office 24,639 15,228 61,063 35,550
Travel 8,264 0 17,312 0
Professional fees 98,166 7,137 356,034 126,279
Telephone & Utilities 8,005 6,027 16,269 13,320
Depreciation 25,042 11,790 57,271 36,640
Miscellaneous 24,970 0 24,970 0
Interest expense 1,491 22,858 35,580 22,858
-------- -------- -------- --------
Total Operating Expenses 206,751 63,040 616,831 234,647
OTHER REVENUES & (EXPENSES)
Net Rental Income (Expense) 262 15,071 (14,740) (685)
Interest income (98) 0 4,653 0
Sale of Assets (15,000) (62,775) 0 0
Gain (Loss) on disposal 0 0 0 (64,775)
Miscellaneous Income 0 0 16,057 0
-------- -------- -------- --------
Total Other Revenues & Expenses (14,836) (47,704) (5,970) (65,460)
NET INCOME (LOSS) (162,375) (15,336) (580,869) (350,107)
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, Inc. AND SUBSIDIARY
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Nine months
Ended February 28 Ended February 28
1996 1997 1996 1997
--------- -------- --------- --------
Cash Flows From
Operating Activities:
<S> <C> <C> <C> <C>
Net Profit (Loss) (85,262) (110,744) (637,963) (350,107)
Depreciation 11,780 2,222 27,072 57,272
Stock issued for services 0 0 155,440 352,730
(Increase) decrease in Accts Receivable 0 0 55,600 0
(Increase) decrease in Prepaids 0 0 0 0
(Increase) decrease in Deposits 0 0 0 0
(Decrease) increase in Accrued Expenses 3,433 0 0 0
(Decrease) increase in Accts Payable (15,175) 0 (25,357) (1,000)
(Decrease) increase in advance payable 20,000 0 0 0
-------- -------- -------- --------
Net Cash Flows Used for
Operating Activities (65,224) (108,522) (197,718) (168,595)
Cash Flows from investing activities
(Purchase) sale of Fixed Assets 0 100,478 (45,017) 101,999
(Purchase) sale of Note Receivable 0 1 (30,003) 1
(Purchase) Sale of Lease Interests (1) 0 0 0
-------- -------- -------- --------
Total cash used for investing (1) 100,479 (75,020) 102,000
Cash flows from financing activities
Increase (Decrease) in Note Payable 11,965 (3,911) 8,643 19,912
Sale of Common Stock 41,200 (4) 264,654 27,033
-------- -------- -------- --------
Total cash from financing activities 53,165 (3,915) 273,297 46,945
Increase (Decrease) in cash (12,060) 11,958) 559 (19,650)
-------- -------- -------- --------
Cash and cash equivalents -
beginning of period (4,221) 1,009 11,104 8,701
-------- -------- -------- --------
Cash and cash equivalents -
end of period (16,281) (10,949) 11,663 (10,949)
======== ======== ======== ========
</TABLE>
<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Results of Operations
- ---------------------
The Company has experienced continuing operating expenses for the three
month period of $63,040 compared to $118,481 in the same period in 1996. The
revenues for the period totaled $0 from oil and gas operations compared with
$29,540 for same period in 1996. The Company recorded a net loss of $(15,336)
for the period as compared to a $(162,375) loss for the same period in fiscal
year 1996. Other Revenues and Expenses (Real Estate Rental) showed a net loss
for the period of (47,704) as compared to (14,836) net loss for same period in
1996. The Company losses on operations will continue until income from oil and
gas operations and real estate sales and development can be achieved. While the
Company is seeking capital sources for investment in oil and gas wells and real
estate development, there is no assurance that sources can be found. The Company
has only minimal real estate revenues and has no other income.
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 -
NELX, Inc. has been named as a Defendant in a case captioned:
Allan E. Pezoldt and the Allan E. Pezoldt Revocable Living Trust vs. NELX,
Inc., f/k/a Nelson Exploration, Inc., a Kansas corporation,
Goodnight/Lowery, Inc., a Colorado corporation, Enviro Research Group,
Inc., a Colorado corporation, William L. Goodnight, Individually, and
Dennis H. Skelton, Individually.
The case involves 240 acres of land owned by NELX, Inc. in Weld County,
Colorado. A Lis Pendens has been filed against the property. Claims against
NELX, Inc. include breach of contract, interference with contractual
relations, misrepresentation/fraud, and claims are made for rescission and
restitution. NELX, Inc. has filed a counterclaim against the Plaintiffs for
slander of title. NELX, Inc. believes it has valid defenses to the claims
in this case, and is having settlement discussions with the Plaintiff. A
trial date has not been set. Although NELX, Inc. believes it has valid
defenses, in the event a judgment were rendered against the Company, it
could result in loss of an asset on its books of up to $1,200,000, a very
material loss. Outcome of the litigation cannot be predicted.
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 -
Three Unit apartment building at 61-65 Quitman Ct., Denver, Colorado was
lost in a foreclosure sale in January 1997. Depreciated asset book value to
NELX, Inc. was at $90,906 by virtue of the foreclosure a $57,000 loan from
Chrysler First Financial plus a second loan of $40,000 to Standard Financial was
retired.
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
28, 1997: (incorporated by reference)
February 14, 1997.
<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 14, 1997 /S/ WESLEY F. WHITING
------------------------------------
Wesley F. Whiting, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-28-1997
<CASH> (10,949)
<SECURITIES> 0
<RECEIVABLES> 500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,301,519
<DEPRECIATION> (159,797)
<TOTAL-ASSETS> 5,141,722
<CURRENT-LIABILITIES> 535,863
<BONDS> 1,614,645
0
0
<COMMON> 2,183
<OTHER-SE> 2,994,718
<TOTAL-LIABILITY-AND-EQUITY> 5,145,226
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 50,000
<TOTAL-COSTS> 284,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,858
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (350,107)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
