UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended August 31, 2004


                                   NELX, INC.
                           -------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                      <C>                                   <C>
======================================== ===================================== =====================================
                Kansas                                 0-21210                              84-0922335
                ------                                 -------                              ----------
---------------------------------------- ------------------------------------- -------------------------------------
    (State or other jurisdiction of            (Commission File Number)         (IRS Employer Identification No.)
            incorporation)
======================================== ===================================== =====================================
</TABLE>


                         300 Summers Street, Suite 970,
                              Charleston, WV 25301
                      ------------------------------------
               (Address of principal executive offices) (Zip Code)


       Registrant's telephone number, including area code: (304) 343-8171
                                                           --------------



      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

                121,785,360 common shares as of October 12, 2004



<PAGE>






                         PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The following financial statements are included herein in response to Item 1:


                                                                           Page
                                                                           ----
      Financial Statements (Unaudited)

      Consolidated Condensed Balance Sheet                                  F-1
      Consolidated Condensed Statement of Operations                        F-2
      Consolidated Condensed Statement of Cash Flows                        F-3
      Notes to Consolidated Condensed Financial Statements                  F-4


















                                       2
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)


ASSETS                                                                    August 31, 2004   May 31, 2004
                                                                          ---------------   ------------

CURRENT ASSETS
<S>                                                                       <C>               <C>
    Cash and cash equivalents                                             $          232    $        621
    Receivables                                                                   39,467          41,983
    Prepaid and other                                                              5,689           7,796
                                                                          ---------------   ------------
      Total current assets                                                        45,388          50,400


FURNITURE AND EQUIPMENT,
    net of accumulated depreciation of $88,912 and $87,525, respectively          12,122          13,509

Deposits                                                                          15,000          15,000
                                                                          ---------------   ------------

      Total assets                                                              $ 72,510        $ 78,909
                                                                          ===============   ============


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
    Current maturities of notes payable                                   $    1,004,867    $    971,922
    Current maturities of notes payable - related parties                      1,324,596       1,282,020
    Accounts payable                                                             330,759         279,333
    Accrued interest payable                                                     100,268          55,058
    Accrued expenses                                                             636,314         588,334
                                                                          ---------------   ------------
      Total current liabilities                                                3,396,804       3,176,667

NOTES PAYABLE, less current maturities - related parties                          47,883          42,824
                                                                          ---------------   ------------

      Total liabilities                                                        3,444,687       3,219,491
                                                                          ---------------   ------------

STOCKHOLDERS' EQUITY (DEFICIT)
    Common stock, $.0001 par value par value; 500 million shares
      authorized: 120,709,510 shares issued and outstanding                       12,071          12,071
    Additional paid-in capital                                                 1,080,696       1,080,696
    Accumulated deficit                                                       (4,464,944)     (4,233,349)
                                                                          ---------------   ------------
      Total stockholders' equity (deficit)                                    (3,372,177)     (3,140,582)
                                                                          ---------------   ------------

      Total liabilities and stockholders' equity (deficit)                $       72,510    $     78,909
                                                                          ===============   ============
</TABLE>















                            See accompanying notes.
                                      F-1

<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
                                                                          Three Months Ended August 31,
                                                                         --------------------------------
                                                                              2004             2003
                                                                         ----------------  --------------


<S>                                                                      <C>               <C>
REVENUE                                                                  $       78,510    $     85,961
                                                                         ----------------  --------------

EXPENSES
    General and administrative                                                  174,494         197,925
    Mutual fund costs                                                            40,286          29,004
    Interest                                                                     93,938          43,730
    Depreciation and amortization                                                 1,387           1,278
                                                                         ----------------  --------------
      Total expenses                                                            310,105         271,937
                                                                         ----------------  --------------


NET (LOSS)                                                               $     (231,595)   $   (185,976)
                                                                         ================  ==============


BASIC AND DILUTIVE NET (LOSS) PER SHARE:

    NET (LOSS) PER SHARE                                                 $            -    $          -
                                                                         ================  ==============

    WEIGHTED AVERAGE SHARES OUTSTANDING                                     120,709,510     120,709,510
                                                                         ================  ==============
</TABLE>



















                            See accompanying notes.
                                      F-2
<PAGE>
<TABLE>
<CAPTION>
NELX, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
                                                                          Three Months Ended August 31,
                                                                         --------------------------------
                                                                              2004             2003
                                                                         ----------------  --------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                      <C>               <C>
    Net (loss)                                                           $      (231,595)  $    (185,976)
    Adjustments to reconcile net (loss) to
      net cash provided by (used in) operating activities:
         Depreciation and amortization                                             1,387           1,278
         Changes in operating assets and liabilities:
           Receivables                                                             2,516          23,836
           Prepaid and other current assets                                        2,107           4,289
           Accounts payable                                                       51,426         174,031
           Accrued expenses and other liabilities                                 93,190          45,004
                                                                         ----------------  --------------
            Net cash flows provided by (used in)operating activities             (80,969)         62,462
                                                                         ----------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase furniture and equipment                                                   -            (504)
                                                                         ----------------  --------------
            Net cash flows (used in) investing activities                              -            (504)
                                                                         ----------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from related party debt                                             108,596         120,836
    Repayment of related party debt                                             (157,016)       (205,729)
    Proceeds from debt obligations                                               144,100          65,000
    Repayment of debt obligations                                                (15,100)        (25,000)
                                                                         ----------------  --------------

            Net cash flows provided by (used in)financing activities              80,580         (44,893)
                                                                         ----------------  --------------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS                                     (389)         17,065

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                                            621             824
                                                                         ----------------  --------------

CASH AND EQUIVALENTS, END OF PERIOD                                      $           232   $      17,889
                                                                         ================  ==============


SUPPLEMENTAL DISCLOSURES:
    Interest paid                                                        $        48,728   $      43,428
    Income taxes paid                                                                  -               -

</TABLE>














                            See accompanying notes.
                                      F-3
<PAGE>

NELX, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note A - Basis of Presentation

The accompanying  unaudited financial statements of NELX, Inc. (the "Company" or
"NELX")  were  prepared  in  accordance  with  generally   accepted   accounting
principles for interim  financial  information and Article 10 of Regulation S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments  considered  necessary for a fair
presentation  of the  results of  operations  and  financial  condition  for the
periods presented have been included. Such adjustments are of a normal recurring
nature.  The results of operations for the  three-month  period ended August 31,
2004, are not  necessarily  indicative of the results of operations  that can be
expected for the fiscal year ending May 31, 2005. For further information, refer
to the Company's audited financial  statements and footnotes thereto included in
Item 7. of Form 10-KSB filed by NELX on September 30, 2004.

Note B - Recent Accounting Pronouncements

In June 2003, the FASB approved SFAS No. 150,  "Accounting for Certain Financial
Instruments with  Characteristics of both Liabilities and Equity".  SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. This
Statement is effective for financial  instruments entered into or modified after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period  beginning  after June 15, 2003.  SFAS No. 150 is not expected to have an
effect on the Company's financial position.

Note C - Notes Payable

At August 31, 2004, related party borrowings amounted to $1,372,479.  During the
three month  period  ended August 31,  2004,  borrowings  from  related  parties
amounted  to  $108,596  and  repayments  of  principal  on  such  related  party
borrowings  amounted to  $157,016.  Additionally,  $144,100  was borrowed by the
Company from three unrelated parties from the issuance of convertible promissory
notes.  The notes are, in some cases,  guaranteed  by an officer  with  interest
generally at 10%, with principal due on demand. The principal is convertible, in
whole or in part,  into common shares of NELX,  Inc. on or before the earlier of
i) payment  thereof and retirement of the notes,  or ii) a Qualified  Financing.
Any such  conversion  is at the rate of $.10 per share  (or the lower  price per
share  implicit in a Qualified  Financing).  Repayments  of principal of $15,100
were made on such unrelated party borrowings during the three-month period ended
August 31, 2004.  The  resulting  unpaid  balance of notes  payable to unrelated
parties amounted to $1,004,867.

On or about June 29,  2004,  the Company  agreed to issue  shares of NELX common
stock to certain holders of predominantly demand promissory notes of the Company
in consideration of the continuing forbearance granted by such note holders. The
aggregate  number of shares committed to such note holders was 1,075,850 and the
price per share as of such date was $.025. The shares were  subsequently  issued
early in October 2004. To account for this agreement and the issuance of shares,
the Company  recorded a liability and additional  interest expense of $26,896 on
June 29, 2004 and then settled the  liability and reflected the shares in equity
upon their issuance in October 2004.

                                      F-4
<PAGE>
NELX, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note D - Subsequent Event

During September 2004, the Company received a total of $57,750 from the issuance
of  convertible  promissory  notes.  The notes are guaranteed by an officer with
interest  generally  at 10%,  with  principal  due on demand.  The  principal is
convertible,  in whole or in part, into common shares of NELX, Inc. on or before
the  earlier  of i)  payment  thereof  and  retirement  of the  notes,  or ii) a
Qualified  Financing.  Any such  conversion is at the rate of $.10 per share (or
the lower price per share implicit in a Qualified Financing).



























                                      F-5


<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Critical Accounting Policies and Estimates

The Company  prepares its consolidated  financial  statements in accordance with
accounting principles generally accepted in the United States of America.  These
principles permit choices among  alternatives and require numerous  estimates of
financial  matters.  The Company believes the accounting  principles  chosen are
appropriate  under the  circumstances,  and that the  estimates,  judgments  and
assumptions involved in its financial reporting are reasonable.

Revenue Recognition

Fees for investment  advisory  services are based on an agreed percentage of the
value of client  assets  under  management  and are accrued  based on the market
value of client assets on the accrual date. Commissions for surety bond services
are based on a percentage  of premiums  charged for bonds placed with  insurance
companies,  and are recorded  upon the issuance or effective  date of the bonds.
The  Company  is  not  responsible  for  any  significant   continuing  services
subsequent to the issuance or renewal of bonds.

Allowance for Doubtful Accounts

Management  believes that substantially all accounts receivable are collectible,
and therefore  has not  established  an allowance  for  estimated  uncollectible
accounts.

Use of Estimates

Accounting estimates are based on historical  experience and information that is
available to management about current events and actions the Company may take in
the future.

Long-Lived Assets

When facts and circumstances  indicate that the cost of long-lived assets may be
impaired,  comparing the carrying  value of the assets to the  projected  future
cash flows performs an evaluation of the  recoverability.  Upon  indication that
the carrying value of such assets may not be recoverable, the Company recognizes
an impairment  loss by a charge against current  operations  based on discounted
projected future cash flows.

Income Taxes

We currently have net operating loss ("NOL") carry-forwards that can be utilized
to  offset  future  income  for  federal  and  state  tax  purposes.  These  NOL
carry-forwards  generate a  significant  deferred  tax asset.  However,  we have
recorded  a  valuation  allowance  against  this  deferred  tax asset as we have
determined  that it is more  likely  than  not that we will not be able to fully
utilize the NOL carry-forwards. Should our assumptions regarding the utilization
of these NOL carry-forwards  change, we may reduce some or all of this valuation
allowance, which would result in the recording of a deferred income tax benefit.

                                       3
<PAGE>

Contractual Obligations and Commercial Commitments

The Company has $2,377,346 of long-term debt, including current installments and
excluding  fair  value  adjustments,  outstanding  at August  31,  2004.  Future
payments required under these and other obligations are as follows:
<TABLE>
<CAPTION>
<S>                                       <C>           <C>        <C>      <C>        <C>        <C>             <C>
----------------------------------------- ------------- ---------- -------- ---------- ---------- --------------- -------------
Certain Contractual Obligations           Current       2005       2006     2007       2008       Thereafter      Total
----------------------------------------- ------------- ---------- -------- ---------- ---------- --------------- -------------
Long-term debt, including current         2,329,463     13,398     9,742    10,756     11,888            2,099    2,377,346
installments
----------------------------------------- ------------- ---------- -------- ---------- ---------- --------------- -------------
Operating lease commitments                   4,794      1,598         0         0          0                0        6,392
----------------------------------------- ------------- ---------- -------- ---------- ---------- --------------- -------------
</TABLE>

Results of Operations for the Three Month Period Ended August 31, 2004

The Company  experienced a loss for the three-month period ended August 31, 2004
in the  amount  of  $231,595  as  compared  with  a loss  of  $185,976  for  the
corresponding period ended August 31, 2003.

Revenues  for the  three-month  period  ended  August 31,  2004 were  $78,510 as
compared  with  $85,961 for the  corresponding  period  ended  August 31,  2003,
representing an 8.7% decrease. This decrease is attributable to a combination of
continued tightening of the availability of bonding in the surety segment of the
Company's  business and  fluctuations in the securities  markets  resulting in a
reduction in the value of assets under the investment  management segment of the
Company's business.

Quarterly  revenues  from the  investment  management  segment,  net of advisory
referral fees, were $66,292 for the three-month  period ended August 31, 2004 as
compared  with  $71,351 for the  corresponding  period  ended  August 31,  2003,
representing a decrease of $5,059. As investment  advisory fees are based on the
market  value of assets under  management,  some  fluctuation  will occur due to
overall market conditions. For the most part, however, such revenues will remain
relatively  constant from quarter to quarter with any large  fluctuations  being
attributable to the growth or loss of assets under management.

Quarterly  revenues  from the surety  segment  were  $5,686 for the  three-month
period  ended  August 31, 2004 as compared  with  $12,565 for the  corresponding
period  ended August 31, 2003,  representing  a decrease of $6,879.  Revenue for
this segment of the business is more "seasonable"  from quarter to quarter,  due
merely to the timing of the  issuance or renewal of bonds placed by the Company.
Due to the  nature of surety  bonds,  fluctuations  in  revenue  for  comparable
periods largely reflect the overall growth or loss of business.

Operating  expenses  for the  three-month  period  ended  August  31,  2004 were
$310,105 as compared  with $271,937 for the  comparable  period ended August 31,
2003, representing an increase of $38,168. This increase is largely attributable
to an increase in interest expense and mutual fund costs.

Interest expense for the three-month period ended August 31, 2004 was $93,938 as
compared  with  $43,730 for the  corresponding  period  ended  August 31,  2003,
representing  an  increase  of $50,208.  The  increase  in  interest  expense is
attributable to the increases in the Company's short and long-term  indebtedness
incurred to fund ongoing operations.

                                       4
<PAGE>

Future Direction of Company

The Company is focusing  its efforts on the  expansion  of the ongoing  business
activities  of Jacobs &  Company,  namely  investment  management  and  advisory
services,  and of  the  insurance  (surety)  business  of  NELX's  wholly  owned
subsidiary FS Investments, Inc. (FSI).

Traditional  surety  programs have become  largely  unavailable  to the coal and
other regulated industries. In conjunction with a publicly traded regional bank,
FSI has developed and is now marketing an alternative to surety bonds, involving
the bank's issuance of letters of credit to secure the obligations traditionally
secured  by surety  bonds.  The  letters  of credit  are  themselves  secured by
investment  accounts  holding  shares  of the  Jacobs & Company  Mutual  Fund or
otherwise  managed by Jacobs & Company.  This program is a natural  outgrowth of
the collateralized bonding programs marketed by Triangle Surety Agency and holds
promise for growth of the Company's businesses.

FSI is also reviewing a possible Insurance Company acquisition. If financing can
be secured, management believes that the Company will be able to accomplish such
acquisition and, with appropriate regulatory approvals, will be in a position to
promote and distribute  surety products,  including the  collateralized  bonding
programs  developed by FSI and marketed by Triangle  Surety Agency,  to the coal
and other regulated industries. Such an acquisition holds a tremendous potential
for growth.

The collateral accounts,  which are required,  as a condition of the issuance of
such surety bonds will be managed by Jacobs & Company.  If the Insurance Company
is acquired,  revenue  sources will be created for  Triangle  Surety  Agency and
Jacobs & Company.  This will be in addition  to the  revenues  generated  by the
Insurance Company directly from surety bond issuance premiums.

The  Company  has  identified  an  Insurance   Company  that  is  available  for
acquisition.  On May 28, 2004, the Company entered into an Exclusivity Agreement
with the current owner of the Insurance  Company granting the exclusive right to
the  Company to acquire the  Insurance  Company  within a set period of time.  A
condition of the acquisition is that the Company is to arrange financing. If the
Company is able to arrange such  financing,  the  opportunity in the marketplace
for an Insurance  Company offering surety products,  combined with the synergies
created for the  businesses  of -- Triangle  Surety  Agency and Jacobs & Company
should  dramatically  enhance the overall  business  prospects  of the  Company.
However,  if the  Company  is unable to  arrange  the  necessary  financing  and
complete  the  acquisition,  its  prospects  for  growth and  viability  will be
significantly diminished.

Analysis of Liquidity, Capital Resources and Financial Position

Management  remains  optimistic  with  respect  to the  growth of the  Company's
business as described  above.  However,  as of August 31, 2004, a deficiency  in
working capital exists as the Company's current  liabilities  exceed its current
assets by approximately $3,350,000.

Management has funded operating deficits for the three-month period ended August
31, 2004 through  borrowings,  predominantly from shareholders and other related
parties. During the three-month period ended August 31, 2004, borrowings totaled
$252,696  ($108,596 from related  parties) and  repayments of principal  totaled
$172,116  ($157,016  to related  parties).  Management  will  attempt to utilize

                                       5
<PAGE>

similar  debt  and  non-dilutive   equity  financing   alternatives  to  sustain
operations.  Whether such financing will be available as needed and the ultimate
form of such financing is uncertain.

As mentioned above,  the Company is actively  attempting to obtain financing for
the  acquisition  of  Insurance  Company.  If  such  financing  is  successfully
accomplished,  holders of the Company's  indebtedness  who have been granted the
right to convert such  indebtedness  into common  shares will be  encouraged  to
exercise their conversion  rights. If the Company is unable to arrange financing
for the acquisition, it may not survive.

Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal course of business.  From  inception to date, the
Company  has  incurred  significant  outstanding  current  obligations  and  has
incurred substantial net losses. This factor,  among others,  raises substantial
doubt as to the Company's ability to continue as a going concern.

Management's  mitigating plans include seeking  additional capital and / or debt
financing. There is no guarantee that additional capital and / or debt financing
will be available when needed and to the extent required. If the opportunity for
additional capital and / or debt financing becomes available, it will have to be
on terms acceptable to the Company.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Internal and Disclosure Controls

The  management of the Company has evaluated the  effectiveness  of the issuer's
disclosure  controls  and  procedures  as of a date  within 90 days prior to the
filing  date  of the  report  (evaluation  date)  and  has  concluded  that  the
disclosure  controls and procedures are adequate and effective  based upon their
evaluation  as of the  evaluation  date.  There were no  significant  changes in
internal controls or in other factors that could  significantly  affect internal
controls subsequent to the date of the most recent evaluation of such, including
any  corrective  actions with regard to  significant  deficiencies  and material
weaknesses.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.


ITEM 2. CHANGE IN SECURITIES

None.

                                       6
<PAGE>

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

     31.1 Certification  of Chief  Executive  Officer  and  Principal  Financial
          Officer  pursuant to  Rule13a-146.1  promulgated  under the Securities
          Exchange Act of 1934

     32.1 Certification  pursuant to 18 U.S.C. Section 1950, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002














                                       7

<PAGE>




SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                                     NELX, Inc.
                                                    (Registrant)

Dated:  October 20, 2004              By:      /s/  John M. Jacobs
                                      ----------------------------------------
                                                    John M. Jacobs, President






























                                       8