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 February 28, 1999
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.)
Rt. #1, Box 4-J, Bridgeport, WV 26330
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (304) 622-9599
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, 1999, there were 46,352,042 outstanding shares of common
stock, par value $.0001.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
NELX, INC.
Consolidated Balance Sheet
(Unaudited)
<S> <C> <C>
February February
28, 1999 28, 1998
ASSETS
Current Assets
Cash & Cash Equivalents $ 774 $ 7,002
Property, Plant and Equipment
Plant and Plant Equipment 100,000 100,000
Equipment 8,654 12,479
Land 450,000
Buildings 54,175 82,000
162,829 644,479
Less Accumulated Depreciation 114,266 106,154
Net Fixed Assets 48,563 538,325
TOTAL ASSETS $ 49,337 $ 545,326
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 24,255 $ 173,468
Accrued Expenses 10,037 203,712
Note Payable - Stockholder 61,650 139,950
Current Portion of Long-Term Debt 3,000 3,000
Total Current Liabilities 98,941 520,130
Long Term Liabilities
Notes Payable 334,769
Total Liabilities 98,941 854,899
Stockholders' Equity
Common Stock. $0.0001 par value, 500,000,000 shares authorized
46,352,042 issued and outstanding at May 31, 1998 and November 30,
1998, respectively 4,635 4,635
Additional paid-in capital 7,623,975 7,465,975
Retained Deficit (7,678,214) (7,780,182)
TOTAL STOCKHOLDERS' DEFICIT (49,605) (309,573)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 49,337 $ 545,326
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended February 28,
(Unaudited)
<S> <C> <C>
1999 1998
---- ----
REVENUES
Gain/Loss on Sale of Assets 875 176,474
Consulting Fees 11,000
Misc Income 211,463
Cost of Sales (2,049)
-------
--------------- ---------------
Gross Profit 875 396,888
EXPENSES
Interest 4,542 1,450
Office Expense 3,314 12,741
Professional Fees 4,450 35,837
Telephone & Utilities 597 5,632
---- -----
Total Operating Expenses 12,903 55,660
NET INCOME (LOSS) $ (12,028) $ 341,228
=============== ===============
Profit (Loss) per common share (0.00) 0.01
Weighted average number of shares outstanding 46,352,042 46,352,042
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
Consolidated Statement of Cash Flows
(Unaudited)
<S> <C> <C>
Nine Months
Ended February 28,
1999 1998
---- ----
Cash Flows from Operating Activities:
Net Profit (Loss) $(12,028) $341,228
Depreciation
(Decrease) Increase in Accounts Payable (54,510) (315,956)
(Decrease) Increase in Accrued Expenses (170,437)
(Increase) Decrease in Other Assets 3,950
(Increase) Decrease in Accounts Receivable
------------- -------------
Net Cash Flows Used for Operating Activities (66,538) (141,215)
Cash Flows from Investing Activities
(Purchase) Sale of Fixed Assets 27,825 500,000
(Purchase) Sale of Note Receivable
(Purchase) Sale of Investment
------------- -------------
Net Cash (Used by) From Investing Activities 27,825 500,000
Cash Flows from Financing Activities
Increase (Decrease) in Note Payable (120,175) (365,150)
Sale of Common Stock 158,000 21,900
Sale of Treasury Stock
------------- -------------
Total Cash from (Used by) Financing Activities 37,825 (343,250)
Increase (Decrease) in Cash (888) 15,535
------
Cash and Cash Equivalents - Beginning of Period 1,662 (8,533)
-------
Cash and Cash Equivalents - end of Period 774 7,002
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended February 28,
(Unaudited)
<S> <C> <C>
1999 1998
---- ----
REVENUES
Gain/(Loss) on Sale of Assets 875 176,474
Consulting Fees 11,000
Misc Income 114,720
Cost of Sales
---------------
Gross Profit 875 302,194
EXPENSES
Interest - 1,224
Office Expense 911 7,515
Professional Fees - (2,300)
Telephone & Utilities 106 1,036
---- -----
Total Operating Expenses 1,017 7,475
NET INCOME (LOSS) $ (142) $ 294,719
=============== ===============
Loss per Common Share (0.00) 0.01
Weighted average number of shares outstanding 46,352,042 46,352,042
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
Consolidated Statement of Cash Flows
(Unaudited)
<S> <C> <C>
Three Months
Ended February 28,
1999 1998
---- ----
Cash Flows from Operating Activities:
Net Profit (Loss) $ (142) $294,720
Depreciation
(Decrease) Increase in Accounts Payable (9,000) (189,254)
(Decrease) Increase in Accrued Expenses (180,474)
(Increase) Decrease in Other Assets
(Increase) Decrease in Accounts Receivable
------------- -------------
Net Cash Flows Used for Operating Activities (9,142) (75,008)
Cash Flows from Investing Activities
(Purchase) Sale of Fixed Assets 31,000 501,000
(Purchase) Sale of Note Receivable
(Purchase) Sale of Investment
------------- -------------
Net Cash (Used by) From Investing Activities 31,000 501,000
Cash Flows from Financing Activities
Increase (Decrease) in Note Payable (25,175) (440,050)
Sale of Common Stock (5,000)
Sale of Treasury Stock
------------- -------------
Total Cash from (Used by) Financing Activities (25,175) (445,050)
Increase (Decrease) in Cash (3,317) (19,058)
--------
Cash and Cash Equivalents - Beginning of Period 4,091 26,060
------
Cash and Cash Equivalents - end of Period 774 7,002
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
February 28, 1999
<S> <C> <C> <C> <C>
Common Stock Additional
Paid - In Accumulated
# of Shares Amount Capital Deficit
------------------------------------------------------------------------
Balance at May 31, 1995 10,437,581 $ 1,044 $ 5,195,578 $ (1,119,758)
Issuance of Common Stock
for Cash 1,520,100 152 382,086
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)
------------------------------------------------------------------------
Balance at May 31, 1998 46,352,042 4,635 7,465,975 (8,301,342)
Sale of Treasury Stock
for Cash 158,000
Prior Year Adjustment 635,156
February 28, 1999 Net Loss (12,028)
------------------------------------------------------------------------
Balance at February 28, 1999 46,352,042 4,635 7,623,975 (7,678,214)
========================================================================
</TABLE>
<PAGE>
NELX, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of NELX, Inc.'s (Company) significant
accounting policies:
BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the three- and nine-month periods ended
February 28, 1999 are not necessarily indicative of the results to be
expected for the full year.
Organization
The Company was incorporated March 25, 1983 under the laws of Kansas
for the purpose of acquiring, dealing in and, if warranted, developing
oil and gas properties. The Company may also engage in other businesses
or activities unrelated to natural resources which management believes
hold potential for profit. On October 25, 1983, the Company amended its
Articles of Incorporation increasing its authorized shares of 0.0001
par value common stock from 200,000,000 to 500,000,000 shares.
On October 30, 1993, a special meeting of Shareholders was held.
Stockholders approved a name change of the Company from Nelson
Exploration, Inc., to NELX, Inc.
On November 30, 1993 the Board approved a "reverse split" of the issued
and outstanding shares of common stock based upon issuance of one (1)
new common share in exchange for each 30 shares of (old) common stock
issued and outstanding effective as of December 31, 1993.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, cash and cash equivalents
include cash in banks and money market accounts.
<PAGE>
NELX, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CON'T:
Income taxes:
None.
Reclassifications:
None.
Use of Estimates in the Preparation of Financial Statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - LONG-TERM DEBT:
Following is a summary of long-term debt at February 28, 1999
1999
============================================================================
Various Unsecured notes payable to
% others on various dates through
February 28, 1999 at interest
rates from 8% - 10% $64,650
NOTE 3 - GOING CONCERN:
The Company incurred a net loss of $184,932 for fiscal year ended May
31, 1998 and has retained earnings (losses) of ($7,678,214) at February
28, 1999. At February 28, 1999, current liabilities exceed current
assets by $49,605. These factors indicate that the Company has
substantial doubt about its ability to continue in existence. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the event
the company cannot continue in existence.
<PAGE>
NELX, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - ASSET REVALUATION:
In September of 1995 the company exchanged 350,000 shares of common
stock for a mini mall located in Kansas subject to a note for $31,875.
The company is in default on this note and the company has deeded this
property in lieu of foreclosure to the mortgagee for relief of debt.
NOTE 5 - CHANGE OF CONTROL - ISSUANCE OF STOCK
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 up to $250,000
to settle accounts payable and commitments. 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 6 - 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>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Results of Operations for nine month period ended February 28, 1999 compared to
same period in 1998.
The Company has experienced continuing operating expenses for the nine
month period of $12,903 compared to $55,660 in the same period in 1998. The
revenues for the period totaled $0 from oil and gas operations compared with $0
for same period in 1998. Miscellaneous revenues totalled $875 in the period in
1999 and in the period in 1998 miscellaneous income was $396,888. The Company
recorded net loss of ($12,028) for the period as compared to $341,228 net income
for the same period in fiscal year 1998. The Company losses on operations will
continue until income from any operations can be achieved. While the Company is
seeking capital sources for investment, there is no assurance that sources can
be found. The Company has no revenues and has no other income except
miscellaneous.
Results of Operations for the three month period ended February 28, 1999
compared to same period in 1998.
The Company has experienced continuing operating expenses for the three
month period of $1,017 compared to $7,475 in the same period in 1998. The
revenues from operations for the period totaled $0 compared with $0 for same
period in 1998. In the three month period in 1999, the Company had miscellaneous
income of $875 compared to $302,194 in miscellaneous income in 1998. The Company
recorded a net loss of ($142) for the period as compared to $294,719 net income
for the same period in fiscal year 1998. The Company losses on operations will
continue until income from any operations can be achieved. While the Company is
seeking capital sources for investment, there is no assurance that sources can
be found. The Company has no revenues and has no other income except
miscellaneous.
Liquidity and Capital Resources
The Company had minimal cash capital at the end of the period. The
Company will be forced to either borrow or make private placements of stock in
order to fund any operations. No assurance exists as to the ability to achieve
sales of assets or loans against the assets, or make private placements of
stock.
Analysis of Financial Condition
At February 28, 1999, there were current liabilities payable of $98,941.
The Company had no source of income. Long term debt was $0. The Company had, at
<PAGE>
period end, $774 in current assets, and the deficit in current assets to current
debts and liabilities was ($98,167).
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 - None.
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, 1999:
(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 6, 1999 /s/ Charles L. Stout
---------------------------------
Charles L. Stout, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 774
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 162,829
<DEPRECIATION> 114,266
<TOTAL-ASSETS> 49,337
<CURRENT-LIABILITIES> 98,941
<BONDS> 0
0
0
<COMMON> 4,635
<OTHER-SE> (54,239)
<TOTAL-LIABILITY-AND-EQUITY> 49,337
<SALES> 0
<TOTAL-REVENUES> 875
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,361
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,542
<INCOME-PRETAX> (12,028)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,028)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,028)
<EPS-PRIMARY> .0
<EPS-DILUTED> .0
</TABLE>
