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 08/31/98
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 41J, Bridgeport, WV 26330
(Address of principal executive offices) (Zip Code)
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 August 31, 1998, there were 46,352,042 outstanding shares of common stock,
par value $.0001.
<PAGE>
PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NELX, INC.
Consolidated Balance Sheet
(Unaudited)
<S> <C> <C>
August May
31, 1998 31, 1998
ASSETS
Current Assets
Cash & Cash Equivalents $15,063 $1,662
Property, Plant and Equipment
Plant and Plant Equipment 100,000 100,000
Equipment 8,654 8,654
Buildings 85,175 82,000
------------ -----------
193,829 190,654
Less Accumulated Depreciation 114,266 114,266
------------ -----------
Net Fixed Assets 79,563 76,388
TOTAL ASSETS $94,626 $78,050
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $40,255 $78,765
Accrued Expenses 10,036 10,036
Current Portion of Long-Term Debt 62,984 158,984
----------- -----------
Total Current Liabilities 113,275 247,785
Long Term Liabilities
Notes Payable 25,841 25,841
Total Liabilities 139,116 273,626
Stockholders' Equity
Common Stock. $0.0001 par value, 500,000,000 shares authorized
46,352,042 issued and outstanding at May 31, 1998 and August 31,
1998, respectively 4,635 4,635
Additional paid-in capital 7,623,975 7,465,975
Retained Deficit (7,673,100) (7,666,186)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (44,490) (195,576)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $94,626 $78,050
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended August 31
(Unaudited)
<S> <C> <C>
1998 1997
REVENUES
Oil & gas sales - -
Sale of ORRI 25,000
Misc Income 11,000
Cost of Sales (1,944)
--------- ---------
Gross Profit - 34,056
EXPENSES
Interest 4,541
Office Expense 937 3,031
Professional Fees 1,050 23,700
Telephone & Utilities 386 (199)
Total Operating Expenses 6,913 26,532
--------- ---------
NET INCOME (LOSS) $(6,913) $7,524
Loss per Common Share (0.00) 0.00
Weighted average number of
shares outstanding 46,352,042 25,477,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
Consolidated Statement of Cash Flows
(Unaudited)
<S> <C> <C>
Three Months
Ended August 31,
1998 1997
Cash Flows from Operating Activities:
Net Profit (Loss) (6,913) $7,524
Depreciation
(Decrease) Increase in Accounts Payable (38,510)
(Decrease) Increase in Accrued Expenses
(Increase) Decrease in Accounts Receivable
--------- ---------
Net Cash Flows Used for Operating Activities (45,423) 7,524
Cash Flows from Investing Activities
(Purchase) Sale of Fixed Assets (3,176)
(Purchase) Sale of Note Receivable
(Purchase) Sale of Investment
---------- ---------
Net Cash (Used by) From Investing Activities (3,176) 0
Cash Flows from Financing Activities
Increase (Decrease) in Note Payable (96,000) 2,500
Sale of Common Stock
Sale of Treasury Stock 158,000
---------- ---------
Total Cash from (Used by) Financing Activities 62,000 2,500
Increase (Decrease) in Cash 13,401 10,024
---------- ---------
Cash and Cash Equivalents - Beginning of Period 1,662 (8,533)
---------- ---------
Cash and Cash Equivalents - end of Period 15,063 1,491
</TABLE>
<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Results of Operations for quarter ended August 31, 1998 compared to same period
in 1997.
The Company has experienced continuing operating expenses for the three
month period of $6,913 as compared to $26,532 in the same period for 1997. The
revenues for the period totaled none from operations compared with $34,056 for
same period in 1997. The Company recorded a net loss of $(6,913) for the period
as compared to a $(7,524) loss for the same period in fiscal year 1997. The
Company losses on operations will continue until income from any operations can
be achieved. While the Company is seeking capital sources for investment, there
is no assurance that sources can be found. The loss per share for the period in
1998 was ($.0001) compared to ($.0003) for the same period in 1997.
Liquidity and Capital Resources
The Company had inadequate cash capital at the end of the period for any
significant operations. The Company will be forced to either borrow against or
sell assets or make private placements of stock in order to fund operations. 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 - There are presently no material pending legal
proceedings which would result in any uninsured liability.
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
a. The Board approved entering into a Plan and Agreement of Reorganization
with Applied Mechanics, Inc. of West Virginia for ninety (90) million shares.
The Plan will not be formally executed by NELX, Inc. pending due diligence
review. Applied Mechanics, Inc. owns oil and gas production in West Virginia of
over 200 producing stripper wells and feeder pipelines for gas. Applied
Mechanics is an operator and workover specialist for wells in the West Virginia
area. Gross revenues for 1997 were $600,000.
b. The prior Board of Directors members have agreed to return for a
cancellation a total of two (2) million shares of common stock.
c. Charles and Marilyn Stout have returned a total of six (6) million
shares of common stock to the treasury to reduce dilution.
d. Bruce Bowler, a newly appointed director, purchased two (2) million
shares of common stock for $.08 per share ($160,000).
e. The Board approved the issuance of 1,000,000 shares of common stock each
to directors, Harry Bullock, Bruce Bowler, and John Cowan, for a purchase price
of $1,000 and the agreement to serve as directors and officers of the company
for a period of two years without further compensation.
f. The Board approved the issuance of one (1) million shares of common
stock to Mind2Market, Inc. in consideration of full settlement of all claims
against NELX, Inc. and pursuant to a prior agreement between Mind2Market, Inc.
and NELX, Inc.
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 August 31,
1998:
8-K filed July 31, 1998
<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.
Date: February 5, 1998
/s/ Charles L. Stout
By:-------------------------------
Charles L. Stout, President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000857501
<NAME> Nelx, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> AUG-31-1998
<CASH> 15,063
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<RECEIVABLES> 0
<ALLOWANCES> 0
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<PP&E> 193,829
<DEPRECIATION> 114,266
<TOTAL-ASSETS> 94,626
<CURRENT-LIABILITIES> 113,275
<BONDS> 0
0
0
<COMMON> 4,635
<OTHER-SE> (50,875)
<TOTAL-LIABILITY-AND-EQUITY> (44,490)
<SALES> 0
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<NET-INCOME> (6,913)
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</TABLE>
