SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year
Ended May 31, 1998
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.)
Route 1, Box 4J, Bridgeport, WV 26330
------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (304) 622-9599
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act
COMMON STOCK $.0001 PAR VALUE
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
-- --
Indicate by check mark if disclosure of delinquent filers in Response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of Registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Yes No X
-- --
<PAGE>
Registrants gross revenues for its most recent fiscal year were $0, and
operations expenses totaled ($184,932) for a net loss of ($184,932).
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant: $1,181,341 as of May 31, 1998 (a $.045/share average bid at May
31, 1998).
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock: 46,352,042 common shares as of May 31, 1998.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Business .................................. 1
Item 2. Properties ................................ 3
Item 3. Legal Proceedings.......................... 3
Item 4. Submission of Matters to a Vote of
Security Holders.......................... 3
PART II
Item 5. Market for Registrant's Common Stock and
Security Holder Matters .................. 4
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 5
Item 7. Financial Statements and Supplementary Data.. 6
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure..... 6
PART III
Item 9. Directors and Executive Officers of the
Registrant................................. 7
Item 10. Executive Compensation...................... 9
Item 11. Security Ownership of Certain Beneficial
Owners and Management...................... 11
Item 12. Certain Relationships and Related
Transactions............................... 11
PART IV
Item 13. Exhibits, Financial Statement Schedule
and Reports on Form 8-K.................... 12
<PAGE>
PART I
ITEM 1. BUSINESS
General
- -------
The Registrant was incorporated in the State of Kansas in March
1983 as Nelson Exploration, Inc. In October 1991, the Registrant acquired
Westwind Production Company, a Nevada corporation, which owned certain
non-producing oil and gas properties and related assets. The Registrant
currently has no business operations and it has been unsuccessful in achieving
any oil or gas production. All mineral leases have been sold or terminated and
written off. The company has divested all real estate held for investment,
development and resale, except for a small commercial property in Kansas. For
financial information see "Financial Statements and Supplementary Data."
Parent (Registrant)
- ------
NELX, Inc.
Wholly owned Subsidiaries
- -------------------------
1. MS Oil Company, Inc. (a Colorado corporation)
Operations: None
Oil and Gas Producing Activities.
- ---------------------------------
None. All attempts at production activities were terminated.
Patents, Trademarks, Licenses, Etc.
- -----------------------------------
The Registrant does not hold any patents, trademarks, licenses, etc.,
with respect to, nor are patents significant in regard to, the Registrant's
activities.
Governmental Regulation
- -----------------------
General - The Registrant's activities may be subject to extensive
regulation by numerous federal, state and local governmental authorities, if the
Company engages in either the oil and gas or real estate business. Regulation of
the Registrant's development activities, if they ever develop, will have a
significant effect on the Registrant and its operating results.
<PAGE>
Oil and Gas Activities - The Company currently has no oil and gas
----------------------
activities or operations.
Real Estate Business
- --------------------
The Company originally acquired real estate as capital assets to form a
base from which to grow. Due to the continuing lack of capital partners for oil
and gas exploration, the Company, in 1997, turned its attention to efforts to
liquidate its real estate capital assets and has done so. The Company now owns
only one small commercial property in Kansas.
Market factors: Real estate markets are greatly influenced by economic
cycles, availability of development, construction loans, competitive properties,
oversupply and other matters over which the registrant has no control.
Registrant intends to maintain these market factors in perspective and develop
on a basis that would allow the company and properties to be liquidated in a
cyclical market, to reduce debt.
Capital: The Company has no commitments for capital at this time for any
real estate development projects.
Competition and Markets
- -----------------------
There are many companies and individuals engaged in the real estate
business. Some are very large and well established with substantial capabilities
and long earnings records. The registrant is at a competitive disadvantage with
other firms and individuals in marketing real properties since they have greater
financial resources and larger technical staffs than the Registrant. In
addition, in recent years a number of small companies have been formed which
have objectives similar to those of the Registrant and which present substantial
competition to the Registrant.
A number of factors, beyond the Registrant's control and the effect of
which cannot be accurately predicted, affect the development of real estate.
These factors include area growth, interest rates, transportation routes, the
marketing of competitive properties and other matters affecting the availability
of a ready market, such as fluctuating supply and demand.
Industry Segments
- -----------------
Real Estate Rental Income & Expense
- -----------------------------------
Income $ 0
Expenses $ 0
Net Income (Loss) $ 0
<PAGE>
Oil & Gas Income and Expense (Operations discontinued)
- ----------------------------
Income $ 0
Cost of Sales $ 0
Expenses $ 0
Net Income $ 0
Employees
- ---------
The Registrant retains consultants with respect to any activities for which
consulting services may be necessary. The Registrant from time to time retains
independent engineering and geological consultants in connection with its
operations. The company President, Charles L. Stout, is on a part time basis as
President of NELX, Inc.
ITEM 2. PROPERTIES
Oil and Gas Properties
- ----------------------
None
REAL PROPERTY
- -------------
None
ITEM 3. LEGAL PROCEEDINGS
There are presently no material pending legal proceedings which would
result in any uninsured liability, other than routine litigation incidental to
the business, to which the Registrant is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None in Fiscal Year ended May 31, 1998.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
(a) The Registrant's common stock is traded in the over-the-
<PAGE>
counter market under the symbol NLXI (OTC Bulletin Board Symbol). The table
below sets forth the high and low bid prices of the Registrant's common stock
for the periods indicated. Such prices are inter-dealer prices, without mark-up,
mark-down or commissions and do not necessarily represent actual sales.
FY 1997 (Ended May 31, 1998):
High Bid Low Bid
-------- -------
1st quarter .06 .025
2nd quarter .075 .03
3rd quarter .06 .03
4th quarter .045 .03
High Bid Low Bid
-------- -------
FY 1996:
1st quarter .24 .09
2nd quarter .125 .055
3rd quarter .13 .045
4th quarter .11 .03125
High Bid Low Bid
-------- -------
FY 1995:
1st quarter 1.125 .63
2nd quarter .938 .375
3rd quarter .688 .219
4th quarter .469 .141
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions.
The Company has not declared or paid any cash dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.
(b) As of May 31, 1998, there were 749 holders of record of the
Registrant's common stock.
(c) The Registrant has neither declared nor paid any cash dividends on its
common stock, and it is not anticipated that any such dividend will be declared
or paid in the foreseeable future.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Registrant was unable to satisfy all of its general working capital
requirements with cash flow generated from oil and gas and real estate
operations during the current fiscal year. This deficit in working capital was
financed by loans, and capital contributions through private placement of stock.
In view of the current economic conditions within the industries in which the
Registrant participates, the Registrant anticipates that cash flow from
operations for fiscal 1995 will be insufficient to satisfy all of its general
working capital requirements necessitating additional capital infusions from
affiliates, from sale of assets, borrowing, equity participation or Fairmout
Agreements.
The Registrant will continue a deficit working capital position in the
future if sustaining revenues and growth capital are not generated by the
Registrant.
Changes in Financial Conditions - Loss of Assets
------------------------------------------------
In Fiscal Year 1997 ending May 31, 1998, the Company reconveyed 320 acres
of property in Adams County, Colorado to a lender for debt reduction, of which
resulted in debt reduction of approximately $500,000. The Company settled a
lawsuit by Allan E. Pezoldt by conveying 240 acres of Weld County, Colorado
property in consideration of $60,000 in cash and payoff of debt totaling
approximately $500,000. The Company had previously written down the asset to the
debt owed upon it.
Results of Operations for 1997 Fiscal Year Compared to 1996 Fiscal Year
-----------------------------------------------------------------------
NELX, Inc. incurred operating expenses for fiscal year 1997 in the
amount of $184,932 as compared with operating expenses of $786,976 for fiscal
year 1996. In fiscal year 1996, the Company determined, that due to defaulted
mortgage obligations on its real estate, it would write down its assets to the
balance outstanding on its mortgage obligations, since there appeared to be
sufficient equity in the real estate to satisfy the obligations. In fiscal year
1996, the Company wrote off a note receivable and returned real estate held to
the senior mortgage holder on two of its real estate parcels, since both
mortgages were in default. In fiscal year 1996, an apartment triplex owned by
the Company was lost in foreclosure, but it resulted in the extinguishment of
approximately $111,000 in debt. 1996 write-offs of real estate and a note
receivable totaled $3,266,994. In the 1997 fiscal year, the Company conveyed two
undeveloped acreage tracts to settle debt and lawsuits resulting in over
$1,000,000 in debt elimination. The property conveyed had previously been
written down. The Registrant expects that its operating expenses will
substantially decrease in fiscal year 1998 over 1997. The net loss on operations
for year ended May 31, 1998 was ($184,932) compared to ($826,089) for year end
May 31, 1997. The Company's total net loss after write-offs on assets for year
ended May 31, 1998, was ($184,932) as compared to ($4,093,083) for the year
ended May 31, 1997. The per share loss for year ended May 31, 1997 was ($.004)
compared to ($.20) for the year ended May 31, 1996.
<PAGE>
Registrant had no oil and gas operating revenues in fiscal year 1997 and
no oil and gas operating revenues in fiscal year 1996.
Registrants monthly revenue for operations is insufficient to cover its
normal operating costs and debt service.
Liquidity and Capital Resources
-------------------------------
Registrants liquidity is limited by its ownership of undeveloped real
estate, which is not readily marketable. The Company has no cash flow from any
other source.
Registrant will be forced to seek venture partners for capital, or in the
alternative, borrow money upon its real estate, which may not be possible or
practical under current market conditions.
Registrant had no significant cash reserves or deposits at year end, and
was totally illiquid and without any operating funds.
Registrant will be forced to and will seek private placements of its stock
and loans to make up the lack of operating revenues.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is included as a separate Exhibit to this
report. Please see pages F-1 through F-12.
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
a) No changes in accountants have been made.
b) In connection with audits of two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused him to
make reference in connection with his report to the subject matter of the
disagreement(s).
c) The principal accountant's report on the financial statements for the
past two years contained no adverse opinion or a disclaimer of opinion nor was
qualified as to uncertainty, audit scope, or accounting principles except for
the "going concern" qualification.
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The names of the directors and information about them, as
furnished by the directors themselves, are set forth below:
Name Age Relationship Term of Director
---- --- ------------ ------- --------
With Company Office Since
------------ ------------
Charles L. Stout ..........48 President & Annual Oct. 1997
Director
Harry Bullock .............65 Vice President Annual Oct. 1997
Kenneth L. Curry ..........38 Director Annual Oct. 1997
Officers and Directors
The term of office for each director is one (1) year, or until his/her
successor is elected at the Company's annual meeting and qualified. The term of
office for each officer of the Company is at the pleasure of the board of
directors.
The board of directors has no nominating, auditing, or compensation
committee. Therefore, the selection of person or election to the board of
directors was neither independently made nor negotiated at arm's length.
Business Experience
-------------------
Harry Bullock, age 65
Director and Secretary, received his B.S. in Civil Engineering in 1952 from
the University of Wyoming. From 1970 to 1980, he was President and principal in
Bullock Engineering and Development Co. of Denver. From 1983 to 19986, he was
chairman of the Board of Interguer, Inc., a public company. Since 1971, he has
been principal and chairman of the Board of Bullock Exploration, Inc., a natural
resource exploration and mining contractor. He is a member of the National
society of Professional Engineers and the Colorado Society of Professional
Engineers.
<PAGE>
Charles L. Stout, age 48
President and Director, obtain a B.S. in Mechanical Engineering Technology
from Fairmont State College. He has post graduate study at West Virginia
University. He is President and Director of Applied Mechanics Corporation which
he founded in 1983, a West Virginia Oil and Gas producer. From 1984 to present,
he has been President of Appalachian Labor and Economic Development Corps., Ltd.
He is a director of Square Roots, Inc. and is owner of Applied Machining, Inc.,
a tool and die shop.
Kenneth L. Curry, age 38
Director, attended West Virginia University for a year studying forestry.
He is a Certified Logger in West Virginia. He is principal in and President of
Square Roots, Inc., a logging and lumber company in Bridgeport, West Virginia.
Family Relationships
--------------------
There are no family relationships among any of the company's officers
and directors.
Involvement in Certain Legal Proceedings
----------------------------------------
During the past five years there have been no filing of petitions under
the federal bankruptcy laws, or any state insolvency laws, by or against any
partnership in which any director or executive officer of Registrant was a
general partner or executive officer at the time or within two years before the
time of such a filing.
No director or executive officer of Registrant has, during the past five
years, been convicted in a criminal proceeding or is the named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses).
During the past five years no director or executive officer of
Registrant has been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated by any court of competent
jurisdiction permanently or temporarily enjoining him from or otherwise limited
in his involvement in any type of business, securities or banking activities.
During the past five years no director or executive officer of
Registrant has been found by a court of competent jurisdiction in a civil
action, nor by the Securities and Exchange Commission nor the Commodity Futures
Trading Commission to have violated any federal or state securities or
commodities law, which judgment or finding has not been subsequently reversed,
suspended or vacated.
<PAGE>
The Executive Officers of the Registrant are elected annually for term
terminating at such time as their respective successors are elected and
qualified.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers and any persons who own more
than ten percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Directors, officers and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) report files.
The Company has requested that its officers and directors and
greater-than-ten-percent shareholders comply with the Section 16(a) by filing
Form 5.
The following persons had not filed Form 5 as of May 31, 1998:
Charles L. Stout
Harry Bullock
Kenneth L. Curry
ITEM 10. EXECUTIVE COMPENSATION
Summary
a) Set forth in the following table is information as to the cash
compensation paid or set aside directly or indirectly during the fiscal year
ended May 31, 1997, to or for the benefit of any executive officer whose cash
compensation exceeded $60,000.00, and all executive officers as a group:
Name of Individual Capacities in Salary
or Number of Group Which Served and fees
- ------------------ -------------- --------
Charles L. Stout President & Director $0
Harry Bullock Vice President $0
Kenneth L. Curry Director $0
Directors $0
All Executive Officers
as a Group (3 persons) - $0
b) Compensation paid by the Company for all services provided
<PAGE>
during the fiscal year ended May 31, 1998, (1) to each of the Company's
directors whose cash compensation exceeded $60,000 and (2) to all directors as a
group is set forth below:
<PAGE>
ANNUAL COMPENSATION ($$)
------------------------
Name and Position Year Fees Bonus
- ----------------- ---- ----- -----
Charles L. Stout, President & Dir. 1997 $0 $0
Harry Bullock, Vice President 1997 $0 $0
Kenneth L. Curry, Director 1997 $0 $0
Directors 1997 $0 $0
LONG TERM COMPENSATION
----------------------
Options
Restricted & SARs
Stock LTIP LTIP Other
Other Awards Payouts Payouts Compensation
Charles L. Stout None None None None
Harry Bullock None None None None
Kenneth L. Curry None None None None
All directors and officers as a group received no shares as additional
compensation
Option/SAR Granted During the Last Fiscal Year
----------------------------------------------
Registrant does not have a stock option or stock appreciation rights
plan. Therefore this section is not applicable.
Long Term Incentive Plans/Awards in Last Fiscal Year
Registrant has no long-term incentive plans and consequently has made no
such awards, except as set forth under Long Term Compensation above.
Compensation of Directors
-------------------------
(1) Standard Arrangements. None
(2) Other Arrangements. There are no other arrangements for the
compensation of directors of the Registrant.
Employment Contracts and Termination of Employment and Change-in-Control
---------------------------------------------------------------------------
Arrangements. None.
- ------------
<PAGE>
Report on Repricing of Options/SARs
-----------------------------------
No options or stock appreciation rights are outstanding or were repriced
during the fiscal year ended May 31, 1998, or subsequently.
Employee Stock Compensation Plan - No open plans.
-------------------------------------------------
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following table sets forth, as of May 31, 1998, the
beneficial ownership (as defined by the rules of the Securities and Exchange
Commission) of common stock of the Registrant by each person owning more than 5%
of Registrants Common Stock and each officer and director and by all officers
and directors as a group, together with the percentage of the outstanding shares
of such class which such ownership represents. Unless otherwise indicated, such
persons have sole voting and investment power with respect to such shares.
Amount and Nature Percent
of Beneficial of
Name of Beneficial Owner Ownership Class
- ------------------------ --------- -----
Charles L. Stout 20,000,000 46%
Harry Bullock 0 0.002%
Kenneth L. Curry 0 0%
Total owned by Officers and Directors 20,100,000 46.2%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions
--------------------
On October 9, 1997, Charles L. Stout purchased 20,000,000 shares of common
stock for $20,000 and a commitment to fund additional payables. Charles L. Stout
was then appointed President and Director.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules. The following financial statements
and schedules for NELX, Inc., as of May 31, 1998, and 1997 are filed as part of
this report.
<PAGE>
Page
----
(1) Financial statements of NELX, Inc:
Reports of Independent Accountants
Report of Michael B. Johnson & Co.
years ended May 31, 1998 and May 31, 1997 F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Cash Flow F-5 - F-6
Statements of Shareholders' Equity F-7
Notes to Financial Statements F-8 - F-12
(2) Financial Statement Schedules:
(a) None
(b) Reports on Form 8-K:
7/7/97 Incorporated by reference as
filed with Securities and
Exchange Commission
9/30/97 Incorporated by reference as
filed with Securities and
Exchange Commission
10/30/97 Incorporated by reference as
filed with Securities and
Exchange Commission
(c) Exhibits
Item No.
(under 601)
4.1* Articles of Incorporation and By-Laws:
Incorporated by Reference as filed with Form 10 with the
Securities and Exchange Commission
13.1* Quarterly Report of NELX, Inc. 10-QSB for Period ended August 31, 1997.
13.2* Quarterly Report of NELX, Inc. 10-QSB for Period ended November 30, 1997.
13.3* Quarterly Report of NELX, Inc. 10-QSB for Period ended February 28, 1998.
22.1* Subsidiaries of Registrant
* Previously filed
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DATE NELX, INC.
November 12, 1998 by:_________________________
Charles L. Stout, President
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
______________________ President November 12, 1998
Charles L. Stout and Director
______________________ Vice President November 12, 1998
Harry Bullock
______________________ Director November 12, 1998
Kenneth L. Curry
<PAGE>
NELX, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997
NOTE 4 - ASSET DISSOLUTION:
On April 17, 1998, the Company conveyed the 240 acres of land in Weld County to
Allan Pezoldt in exchange for the $450,000 shown in 1997 as an outstanding
mortgage.
On May 8, 1998, the Company conveyed the 320 acres of land in Adams County to
Meheen Engineering in exchange for the $500,000 shown in 1997 as an outstanding
mortgage.
On October 9, 1997, the Board of Directors accepted an offer from Charles Stout
to acquire 20 million shares of common stock of NELX, Inc., in consideration for
his agreement to contribute $20,000 in immediate cash and to contribute such
additional funding to settle accounts payable and commitments up to $250,000.
Subsequently, on October 17, 1997, the initial cash contribution of $20,000 was
made. The 20 million shares represents 46% of the outstanding stock of NELX,
Inc. Mr. Charles Stout was appointed President on October 9, 1997.
NOTE 5 - PRIOR YEAR ADJUSTMENT
During fiscal year ending May 31, 1997, NELX, Inc. wrote off $3,266,994 of
non-producing assets. In 1998, NELX, Inc.'s new management returned assets and
restructured debt obligations. NELX, Inc. also received discounts from creditors
on debts, which allowed the Company to remain in business. Management's prior
year write-off of non-producing assets of $3,266,994, due to debt restructuring
and creditor discounts was overstated by $635,156.
<PAGE>
NELX, Inc.
Consolidated Balance Sheets
May 31,
1998 1997
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,662 $ -
---------- ----------
Total Current Assets 1,662 -
Fixed Assets:
Land - 950,000
Plant & Plant Equipment 100,000 100,000
Equipment 8,654 12,479
Buildings 82,000 82,000
------ ------
190,654 1,144,479
Less Accumulated Depreciation (114,266) (106,154)
-------- --------
Net Fixed Assets $ 76,388 $ 1,038,325
========== ===========
Other Assets:
Deposits - 3,950
----- -----
Total Other Assets - 3,950
----- -----
TOTAL ASSETS $ 78,050 $ 1,042,275
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Bank Overdraft $ - $ 8,533
Accounts Payable 78,765 489,424
Accrued Expenses 10,036 374,149
Current Portion of Long-Term Debt 158,984 812,252
------- -------
Total Current Liabilities 247,785 1,684,358
Long-Term Liabilities:
Notes Payable 25,841 30,617
------ ------
Total Long-Term Liabilities 25,841 30,617
------ ------
TOTAL LIABILITIES 273,626 1,714,975
STOCKHOLDERS' EQUITY:
Common Stock, $.0001 par value 500,000,000
shares authorized, 46,352,042 and 25,477,042
issued and outstanding at May 31, 1998
and 1997, respectively 4,635 2,548
Additional paid-in capital 7,465,975 7,441,162
Prior Year Adjustment 635,156 -
Retained Deficit (8,301,342) (8,116,410)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (195,5576) (672,700)
--------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 78,050 $1,042,275
The accompanying notes are considered an integral part of these financial
statements.
<PAGE>
NELX, INC.
CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS
For the Year Ended May 31,
1998 1997
REVENUES:
- ---------
Oil & gas sales $ - $ -
Gross Profit - -
EXPENSES:
- ---------
Consulting 39,662 303,975
Office Expense 4,527 8,276
Travel 3,939 2,635
Lease Expense 2,049 52,580
Repairs & Maintenance - 195
Professional Fees 33,872 137,310
Telephone & Utilities 6,323 87,233
Depreciation & Depletion 8,112 19,103
Miscellaneous 5,708 25,559
Taxes 2,318 -
Interest Expense 78,422 150,110
------ -------
Total Expenses 184,932 786,976
------- -------
OTHER REVENUES & (EXPENSES):
- ----------------------------
Net Rental Expense - (39,113)
------- -------
Total Other Revenue & (Expenses) - (39,113)
NET LOSS BEFORE DISCONTINUED OPERATIONS $ (184,932) $ (826,089)
DISCONTINUED OPERATIONS:
- ------------------------
Loss on Write Off of Non-Producing Assets - (3,266,994)
---------- ----------
NET LOSS $ (184,932) $ (4,093,083)
============ ============
Loss per Common Shares:
Loss Before Discounted Operations (0.01) (0.04)
Loss on Discontinued Operations - (0.16)
----- -----
Net Loss Per Share $ (0.01) $ (0.20)
------------ ------------
Weighted Average Number of
Shares Outstanding 21,327,974 20,084,742
The accompanying notes are considered an integral part of these financial
statements.
<PAGE>
NELX, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended May 31,
1998 1997
Cash Flows from Operating Activities:
Net Profit (Loss) $ (184,932) $(4,093,083)
Amortization and Depreciation 8,112 19,103
Issuance of Common Stock for Services - 248,771
(Decrease) Increase in Accounts Payable (635,156) 349,775
(Decrease) Increase in Bank Draft (8,533) 8,533
(Decrease) Increase in Accrued Expenses (66,177) 66,177
(Increase) Decrease in Accrued Interest Receivable (3,950) 500
------ ---
Net Cash Flows Used for Operating Activities (890,636) (3,400,224)
Cash Flows From Investing Activities:
Purchase of Fixed Assets (55,081) (5,476)
Retirements/Repossession of Fixed Assets 953,825 3,379,202
------- ---------
Net Cash Flow Used for Investing Activities 898,744 3,373,726
Cash Flows From Financing Activities:
Issuance of Common Stock: 2,087 9,264
----- -----
Net Cash Flows Provided by Financing Activities 2,087 9,264
Increase (Decrease) in cash 10,195 (17,234)
------ -------
Cash and Cash Equivalents -- Beginning
of Year (8,533) 8,701
------ -----
Cash and Cash Equivalents -- End of Year $ 1,662 $ (8,533)
========== ===========
Supplemental Disclosure of Cash Flow
Information Cash Paid During the Year for:
Interest $ 20,327 $ 22,860
Income Taxes $ - $ -
The accompanying notes are considered an intetral part of these financial
statements.
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
May 31, 1998
Common Stock Additional
Paid-In Accumulated
# of Shares Amount Capital Deficit
----------- ------ ------- -------
<S> <C> <C> <C> <C>
Balance at May 31, 1995 10,437,581 $1,044 $5,195,578 $(1,119,758)
Issuance of Common Stock
for Cash 1,520,100 152 382,068 -
Issuance of Common Stock
for Services Rendered 4,058,619 406 917,520 -
Issuance of Common Stock
for Assets Acquired or Reduction
in Liabilities 2,931,000 293 688,596 -
May 31, 1996 Net Loss - - - (2,903,569)
-----------------------------------------------
Balance at May 31, 1996 18,947,300 1,895 7,183,780 (4,023,327)
Issuance of Common Stock
for Cash 185,280 19 9,245 -
Issuance of Common Stock
for Services Rendered 6,344,462 634 248,137 -
May 31, 1997 Net Loss - - - (4,093,083)
------------------------------------------------
Balance at May 31, 1997 25,477,042 2,548 7,441,162 (8,116,410)
Issuance of Common Stock
for Cash 20,875,000 2,087 24,813 -
May 31, 1998 Net Loss - - - (184,932)
------------------------------------------------
46,352,042 4,635 7,465,975 (8,301,342)
================================================
The accompanying notes are considered an integral part of these financial
statements.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 1,662
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 190,654
<DEPRECIATION> (114,266)
<TOTAL-ASSETS> 78,050
<CURRENT-LIABILITIES> 273,626
<BONDS> 0
0
0
<COMMON> 8,105,766
<OTHER-SE> (8,301,342)
<TOTAL-LIABILITY-AND-EQUITY> 78,050
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 184,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
