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 11/30/98
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.)
Rt. #1, Box 4-J, 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 November 30, 1998, 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>
November May
30, 1998 31, 1997
ASSETS
Current Assets
Cash & Cash Equivalents $4,091 $1,662
Property, Plant and Equipment
Plant and Plant Equipment 100,000 100,000
Equipment 8,654 8,654
Land
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 $83,654 $78,050
======== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $33,256 $78,765
Accrued Expenses 10,036 100,366
Note Payable - Stockholder 57,950
Current Portion of Long-Term Debt 6,034 158,984
-------- -------------
Total Current Liabilities 107,276 338,115
Long Term Liabilities
Notes Payable 25,841 25,841
Total Liabilities 133,117 273,626
Stockholders' Equity
Common Stock. $0.0001 par value, 500,000,000
shares authorized 46,352,042 issued and
outstanding at May 31, 1998 and November 30,
1998, respectively 4,635 4,635
Additional paid-in capital 7,623,975 7,465,975
Prior year adjustment 635,156
Retained Deficit (7,678,072) (8,301,342)
----------- ------------
TOTAL STOCKHOLDERS' DEFICIT (49,463) (195,576)
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $83,654 $78,050
=========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended November 30,
(Unaudited)
<S> <C> <C>
1998 1997
REVENUES
Oil & gas sales -
Sale of ORRI
Misc Income 96,743
Cost of Sales (2,049)
--------
Gross Profit - 94,694
EXPENSES
Interest 4,542 226
Office Expense 2,403 5,226
Professional Fees 4,450 38,137
Telephone & Utilities 491 4,596
Total Operating Expenses 11,886 48,186
-------- ------
NET INCOME (LOSS) $(11,886) $46,508
======== ======
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>
Six Months
Ended November 30
1998 1997
Cash Flows from Operating Activities:
Net Profit (Loss) (11,886) $46,508
Depreciation
(Decrease) Increase in Accounts Payable (45,510) (126,702)
(Decrease) Increase in Accrued Expenses 10,037
(Increase) Decrease in Other Assets 3,950
(Increase) Decrease in Accounts Receivable
-------- --------
Net Cash Flows Used for Operating Activities (57,396) (66,207)
Cash Flows from Investing Activities
(Purchase) Sale of Fixed Assets (3,175) (1,000)
(Purchase) Sale of Note Receivable
(Purchase) Sale of Investment
-------- --------
Net Cash (Used by) From Investing Activities (3,175) (1,000)
Cash Flows from Financing Activities
Increase (Decrease) in Note Payable (95,000) 74,900
Sale of Common Stock 26,900
Sale of Treasury Stock 158,000
-------- --------
Total Cash from (Used by) Financing Activities 63,000 101,800
Increase (Decrease) in Cash 2,429 34,593
--------
Cash and Cash Equivalents - Beginning of Period 1,662 (8,533)
Cash and Cash Equivalents - end of Period 4,091 26,060
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended November 30,
(Unaudited)
<S> <C> <C>
1998 1997
REVENUES
Oil & gas sales -
Sale of ORRI
Misc Income 60,743
Cost of Sales (105)
-------
Gross Profit - 60,638
EXPENSES
Interest 226
Office Expense 1,468 2,195
Professional Fees 3,400 14,437
Telephone & Utilities 105 4,795
--------- ------
Total Operating Expenses 4,973 21,654
NET INCOME (LOSS) $(4,973) $38,984
========= ======
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 November 30
1998 1997
Cash Flows from Operating Activities:
Net Profit (Loss) (4,973) $62,384
Depreciation
(Decrease) Increase in Accounts Payable (7,000) (34,548)
(Decrease) Increase in Accrued Expenses
(Increase) Decrease in Other Assets 3,950
(Increase) Decrease in Accounts Receivable
------- --------
Net Cash Flows Used for Operating Activities (11,973) 31,786
Cash Flows from Investing Activities
(Purchase) Sale of Fixed Assets 1 (1,000)
(Purchase) Sale of Note Receivable
(Purchase) Sale of Investment
------- --------
Net Cash (Used by) From Investing Activities 1 (1,000)
Cash Flows from Financing Activities
Increase (Decrease) in Note Payable 1,000 (33,117)
Sale of Common Stock 26,900
Sale of Treasury Stock
------- --------
Total Cash from (Used by) Financing Activities 1,000 (6,217)
Increase (Decrease) in Cash (10,972) 24,569
--------
Cash and Cash Equivalents - Beginning of Period 15,063 1,491
--------
Cash and Cash Equivalents - end of Period 4,091 26,060
======= ========
</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 six-month periods ended
November 30, 1998 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 November 30, 1998
1997
============================================================================
Various Unsecured notes payable to
% others on various dates through
1998 at interest rates from 8% -
10%
$83,797
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 ($7,678,072) at November
30, 1998. At November 30, 1998, current liabilities exceed current
assets by $49,463. 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 revalued
this property down to the amount of the outstanding mortgage of
$31,000.
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 six month period ended November 30, 1998 compared to
same period in 1997.
The Company has experienced continuing operating expenses for the six
month period of $11,886 compared to $48,186 in the same period in 1997. The
revenues for the period totaled $0 from oil and gas operations compared with $0
for same period in 1997. Miscellaneous revenues totalled $0 in the period in
1998, but in the period in 1997 miscellaneous income was $94,694. The Company
recorded net loss of ($4,973) for the period as compared to $38,984 net income
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 Company has no revenues and has no other income.
Results of Operations for the three month period ended November 30, 1998
compared to same period in 1997.
The Company has experienced continuing operating expenses for the three
month period of $4,973 compared to $10,339 in the same period in 1997. The
revenues for the period totaled $0 from operations compared with $0 for same
period in 1997. In the three month period in 1998, the Company had no
miscellaneous income compared to $60,743 in miscellaneous income in 1997. The
Company recorded a net loss of ($4,973) for the period as compared to $38,984
net income 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 Company has no revenues and has no other income.
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 November 30, 1998, there were current liabilities payable of
$107,276. The Company had no source of income. The current portion of the long
term debt was $6,034. Long term debt was $25,841. The Company had, at period
end, $83,654 in current assets, and the deficit in current assets to current
debts and liabilities was ($49,463).
<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 -
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 November 30, 1998:
(incorporated by reference)
None.
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: February 12, 1999
------------------------------------
Charles L. Stout, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<CASH> 4,091
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 193,829
<DEPRECIATION> 114,266
<TOTAL-ASSETS> 83,654
<CURRENT-LIABILITIES> 107,276
<BONDS> 0
0
0
<COMMON> 4,635
<OTHER-SE> (54,097)
<TOTAL-LIABILITY-AND-EQUITY> 83,654
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,886
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,886)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,886)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,886)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
