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