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 February 28, 2002


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

<TABLE>
<CAPTION>
<S>                                      <C>                                   <C>
======================================== ===================================== =====================================
                KANSAS                                 0-21210                              84-092235
                ------                                 -------                              ---------
---------------------------------------- ------------------------------------- -------------------------------------
    (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:

                120,577,744 common shares as of April 12, 2002

<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>
NELX, INC.
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
<S>                                                                                  <C>                   <C>
                                                                                     February 28, 2002     May 31, 2001
                                                                                     -----------------     ------------
ASSETS

CURRENT ASSETS
    Cash and cash equivalents                                                        $             -       $     771,886
    Receivables                                                                               25,062              42,857
    Prepaid and other                                                                         13,450              27,866
                                                                                     ---------------       -------------
      TOTAL CURRENT ASSETS                                                                    38,512             842,609
                                                                                     ---------------       -------------

INVESTMENT IN UNDEVELOPED MINERAL LEASE                                                      116,661             116,661
                                                                                     ---------------       -------------

FURNITURE AND EQUIPMENT,
    net of accumulated depreciation of $74,790 and $69,990, respectively                      21,636              12,745
                                                                                     ---------------       -------------

      TOTAL ASSETS                                                                   $       176,809       $     972,015
                                                                                    ================      =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Demand and short-term notes payable                                              $       518,789       $     474,463
    Current maturities of term notes payable                                                 147,698             243,476
    Accounts payable                                                                         152,361             163,522
    Accrued other expenses                                                                   202,590              27,850
    Other current liabilities                                                                 21,681              19,307
    Accrued income taxes                                                                      10,750              10,750
    Accrued interest payable                                                                  12,819              72,426
                                                                                     ---------------       -------------
      TOTAL CURRENT LIABILITIES                                                            1,066,688           1,011,794
                                                                                     ---------------       -------------

NOTES PAYABLE, less current maturities                                                       236,229             331,524
                                                                                     ---------------       -------------

STOCKHOLDERS' EQUITY
    Common stock, $.0001 par value par value; 500 million shares
      authorized: 120,577,744 shares issued and outstanding                                   12,058              12,058
    Additional paid-in capital                                                             1,034,155           1,034,155
    Accumulated deficit                                                                   (2,172,321)         (1,417,516)
                                                                                     ---------------       -------------
      TOTAL STOCKHOLDERS' EQUITY                                                          (1,126,108)           (371,303)
                                                                                     ---------------       -------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $       176,809       $     972,015
                                                                                     ===============       =============
</TABLE>







                                                  See accompanying notes.
                                                            F-1
<PAGE>
NELX, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                  Three Months Ended February 28,       Nine Months Ended February 28,
                                               ------------------------------------  -------------------------------------
                                                     2002               2001               2002                2001
                                               -----------------  -----------------  -----------------   -----------------
<S>                                            <C>                <C>                <C>                 <C>
REVENUE                                        $        68,264    $        59,619    $       249,281     $       193,436
                                               ----------------   -----------------  -----------------   -----------------

EXPENSES
    General and administrative                         299,790            129,187            812,146             320,647
    Costs attributable to unconsummated
      acquisitions                                      68,715             57,753            165,420             206,367
    Interest                                            21,025             55,638             49,366             148,091
    Depreciation and Amortization                        2,400                914              4,800               2,744
                                               ----------------   -----------------  -----------------   -----------------

      TOTAL EXPENSES                                   391,930            243,492          1,031,732             677,849
                                               ----------------   -----------------  -----------------   -----------------

OTHER INCOME                                                49                 58             27,648                  58
                                               ----------------   -----------------  -----------------   -----------------

NET INCOME (LOSS)                              $      (323,617)   $      (183,815)   $      (754,803)    $      (484,355)
                                               ================   =================  =================   =================


BASIC AND DILUTIVE NET INCOME (LOSS) PER SHARE:

    NET INCOME (LOSS) PER SHARE                $             -    $             -    $         (0.01)    $         (0.01)
                                               ================   =================  =================   =================


    WEIGHTED AVERAGE SHARES OUTSTANDING            120,577,744         74,999,987        120,577,744          74,999,987
                                               ================   =================  =================   =================

</TABLE>

                                                  See accompanying notes.
                                                            F-2
<PAGE>
NELX, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                  Three Months Ended February 28,       Nine Months Ended February 28,
                                               ---------------------------------------------------------------------------
                                                     2002               2001               2002                2001
                                               -----------------  -----------------  -----------------   -----------------
<S>                                                <C>            <C>                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                              $   (323,617)  $       (183,815)  $       (754,803)   $       (484,355)
    Adjustments to reconcile net income (loss) to
      net cash provided by operating activities
        Salary imputed to shareholder                         -             30,000                  -              90,000
        Depreciation and amortization                     2,400                914              4,800               2,744
        Cancellation of accounts payable
          per settlement agreement                                                            (24,255)
        Changes in operating assets and liabilities:
          Receivables                                    24,027             18,759             17,795              19,855
          Prepaid and other current assets                4,377             (5,273)            14,416              (8,573)
          Accounts payable                              (44,537)           (20,970)            13,093             (19,311)
          Accrued expenses and other liabilities         74,564            (80,969)           117,505              69,162
                                               -----------------  -----------------  -----------------   -----------------
Net cash flows from (used) operating activities        (262,786)          (241,354)          (611,449)           (330,478)
                                               -----------------  -----------------  -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase furniture and equipment                    (10,479)              (699)           (13,691)             (9,499)
                                               -----------------  -----------------  -----------------   -----------------
      Net cash flows (used) investing activities        (10,479)              (699)           (13,691)             (9,499)
                                               -----------------  -----------------  -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Convertible note borrowings                               -            200,000                  -             412,500
    Repayment of short-term borrowings                 (200,201)                 -           (707,577)                  -
    Advances from (to) shareholder, net                       -            (63,872)                 -            (281,383)
    Short-term borrowings                               437,904            130,000            751,904             210,000
    Long-term borrowings                                 75,000                                75,000
    Repayment of term notes payable                     (82,334)                -            (266,073)             (5,063)
                                               -----------------  -----------------  -----------------   -----------------
Net cash flows (used) from financing activities         230,369            266,128           (146,746)            336,054
                                               -----------------  -----------------  -----------------   -----------------

NET INCREASE IN CASH                                    (42,896)            24,075           (771,886)             (3,923)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                42,896             (4,930)           771,886              23,068
                                               -----------------  -----------------  -----------------   -----------------

CASH AND EQUIVALENTS, END OF PERIOD                $          -   $         19,145   $              -    $         19,145
                                               =================  =================  =================   =================

SUPPLEMENTAL DISCLOSURES:
    Interest paid                                  $     13,935   $        154,756   $        108,973    $        173,678
    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 and nine month  periods ended
February 28, 2002, are not  necessarily  indicative of the results of operations
that can be  expected  for the fiscal  year  ending May 31,  2002.  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 13, 2001.

The Condensed Consolidated Statements of Operations and Cash Flows for the three
and nine month periods ended February 28, 2001 have been restated to reflect the
May 29, 2001  reverse  acquisition  wherein  NELX is treated as the acquiree for
accounting  purposes,  even though it is the legal acquirer as further described
in Form 10-KSB.

Note B - Notes Payable

In the nine month period ended February 28, 2002, notes payable to an officer in
the  aggregate  amount of  $516,001  were repaid in full.  Subsequently,  in the
nine-month  period ended February 28, 2002 short-term demand borrowings (from an
officer to Jacobs & Company, a wholly owned subsidiary)  amounted to $451,904 of
which $272,951 has been repaid,  resulting in an unpaid balance of $178,953.  An
additional  $375,000  was  borrowed  by the Company  and its  subsidiaries  from
unrelated  third  parties and,  except for $75,000,  is  short-term in nature or
payable  on demand.  With the  exception  of the  $75,000  interest-only  single
payment note that matures on December 31, 2003,  such notes have been classified
as short-term debt as of February 28, 2002.

Note C -- Litigation

During 2000, the Company's subsidiary, FS Investments,  Inc. ("FSI"), negotiated
for the  acquisition  of a company  located in  Kentucky.  Prior to closing  the
transaction, the sellers refused to go forward with the transaction. FSI brought
a cause of action in the United States  District Court for the Eastern  District
of Kentucky  for breach of  contract  seeking  damages.  The  defendant  filed a
counterclaim   against   FSI  for  fraud  in  the   inducement   and   negligent
misrepresentation.  In March  2002,  the United  States  District  Court for the
Eastern District of Kentucky issued its opinion and order for summary  judgement
in favor of the  defendants.  In exchange  for the  Company's  agreement  not to
appeal the decision,  the defendants  have agreed to drop their  counterclaim in
the matter.

Note D - Reclassifications

Certain reclassifications have been made for consistent presentation.


                                       F-4


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

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED FEBRUARY 28, 2002
------------------------------------------------------------------------

The Company  experienced a loss for the  three-month  period ended  February 28,
2002 in the amount of  $323,617  as  compared  with a loss of  $183,815  for the
corresponding  period  ended  February  28, 2001.  Although  revenues  increased
compared to the corresponding  periods,  the Company's  operating  expenses have
increased as the  infrastructure  to support  increased growth has been put into
place. In addition, the Company has incurred certain other expenses attributable
to a cause of action  initiated  by the Company  arising  from an  unconsummated
acquisition.

Revenues  for the  three-month  period  ended  February 28, 2002 were $68,264 as
compared  to $59,619 for the  corresponding  period  ended  February  28,  2001,
representing a 14.50% increase.  This increase is comprised of a 14.73% increase
in revenues  attributable  to the investment  management  segment while revenues
derived from the surety segment of the Company's  business  remained  relatively
flat,  increasing a modest 3.76%. As compared to the previous quarter,  revenues
were down by approximately $15,618 (from $83,882) due primarily to a decrease in
the revenues derived from the investment  management segment as well as a slight
decrease resulting from the seasonal nature of the surety segment.

Quarterly  revenues from the investment  management segment were $64,710 for the
three-month period ended February 28, 2002 as compared with $56,400 for the same
period in the previous year, an increase of $8,310. 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.  For the preceding  three-month period ended November 30, 2001, such
revenues amounted to $77,962. Gross revenues for the quarter from the investment
advisory segment were down  approximately  $10,900,  while  investment  advisory
referral and distribution fees were up by approximately $2,350.

Quarterly  revenues  from the surety  segment  were  $3,554 for the  three-month
period ended February 28, 2002 versus $3,220 for the same period in the previous
year,  and as compared with $5,920 for the previous  quarter ended  November 30,
2001. 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  February 28, 2002 were
$391,930 as compared with $243,492 for the comparable  period ended February 28,
2001, an increase of $148,438.  Such increase was  attributable  to increases in
general and administrative expense of $170,603, costs of $10,962 attributable to
an unconsummated  acquisition,  and depreciation expense of $1,486,  offset by a
decrease  in  interest   expense  of  $34,613.   The  increase  in  general  and
administrative  expense can be attributed to several  factors that are discussed
below.


                                       3
<PAGE>

In June 2001, the Jacobs & Company Mutual Fund (the "Fund") was launched. Jacobs
&  Company  ("Jacobs"),  a  wholly  owned  subsidiary  of  NELX,  is the  Fund's
investment  advisor.  The Fund was  launched to provide a vehicle for  capturing
investment  management  business  that, in years past has been referred to other
investment advisors due to account size not being large enough to provide proper
diversification.  While the Fund is responsible for its own operating  expenses,
Jacobs,  as the  advisor,  has  agreed  to limit  the  Fund's  aggregate  annual
operating expenses to 2.00% of the average net assets.  During the quarter,  the
Administrator of the Fund made significant  adjustments to the operating expense
accruals  due to the nature and amount of certain  fixed-income  holdings of the
Fund.  As a result,  operating  and other  related  expenses  incidental  to the
operation of the mutual fund amounted to  approximately  $69,675 for the quarter
ending February 28, 2002 as compared with approximately $26,000 for the previous
quarter.  In  February  and March 2002,  management  took  significant  steps to
restructure the fixed-income  holdings of the Fund's portfolio in order to bring
the Fund's  operating  expenses back in line with the initial budget provided by
the  Administrator.  Year-to-date  for the nine months ended  February 28, 2002,
approximately  $106,500 of the Fund's  operating  expense  has been  absorbed by
Jacobs since start-up of the Fund.

With the  changes  initiated  by  management  in February  and March  2002,  the
investment advisory fees earned by the Fund are currently expected to exceed the
costs being  absorbed  beginning in April 2002. If the Fund continues to grow in
size (of assets under management), expenses (in excess of the 2% level) absorbed
by Jacobs will decrease until such time as the Fund reaches  sufficient  size to
support its on-going  operating  costs.  If the Fund's  operating  expense ratio
falls below the 2.00% level,  the costs absorbed by the Company will be eligible
for reimbursement for a period of up to seven years.  Additionally,  if the Fund
grows in size, revenues from investment advisory fees will increase as well. For
the three-month period ended February 28, 2002, investment advisory fees derived
from the Fund  amounted to $24,698 as  compared  with  $17,228 for the  previous
quarter.

As compared  with the  corresponding  period of the previous  year,  the Company
incurred additional expense of approximately  $55,600 for the three-month period
ended  February  28,  2002  attributable  to  accounting,  legal and  consulting
services,  and other transitional expenses relating to its acquisition of Jacobs
and FS Investments,  Inc.  ("FSI").  In November 2001, the Company  retained the
services  of  The  Investor   Relations  Company,  a  20-year-old  full  service
international  investor  relations  consulting  firm,  to assist  management  in
communicating its message to current  shareholders and potential  investors.  In
addition to opening doors to potential capital markets, these contacts have also
opened  doors  to  potential  investment   management   opportunities  as  well.
Approximately  $24,675 of expense can be  attributed to these  activities,  with
$18,925 being  attributable to accounting and tax matters,  and $12,000 relating
to other transitional expenses.

Increases  of  other  general  and  administrative  costs  are  attributable  to
increased salaries,  benefits and related costs of approximately  $33,000,  with
the remaining  increase of $12,328  resulting from increased market research and
support services,  increased production costs in the nature of travel, marketing
and promotion, as well as a general increase in office costs attributable to the
increase in business.

As  compared  with the  previous  quarter,  general and  administrative  expense
increased by  approximately  $28,000,  from $271,671 for the three-month  period
ended  November 30, 2001 to $299,790 for the  three-month  period ended February
28, 2002.  Excluding the impact on expenses  attributable to the mutual fund, as
previously  discussed,  and  expenses  attributable  to  legal,  accounting  and


                                       4
<PAGE>

consulting  services,  general and  administrative  expenses for the three month
period ended  February  28, 2002 were  approximately  $185,750 as compared  with
$188,500 for the previous quarter.

Other  operating  expenses  include  costs  attributable  to a cause  of  action
initiated  by  the  Company  arising  from  the  unconsummated   acquisition  of
Van-American  Insurance Company. In March 2002, the United States District Court
for the Eastern  District  of Kentucky  issued its opinion and order for summary
judgement in favor of the  defendants.  While  disappointed  with the  decision,
management  has  chosen not to appeal the  decision,  but rather  focus its full
efforts  toward  the  growth of its  business.  In  exchange  for the  Company's
agreement not to appeal the decision,  the defendants  have agreed to drop their
counterclaim in the matter.

Interest expense for the three-month  period ended February 28, 2002 was $21,025
as compared with $55,638 for the  corresponding  period ended February 28, 2001.
The decrease in interest  expense is  attributable to the  restructuring  of the
Company's short and long-term indebtedness in connection with its acquisition of
Jacobs and FSI. In  comparison  to the previous  quarter's  interest  expense of
$12,624,  the increase is attributable to increased borrowings necessary for the
sustaining of on-going operations.

RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED FEBRUARY 28, 2002
------------------------------------------------------------------------

For the nine-month  period ended  February 28, 2002,  the Company  experienced a
loss of  $754,803  as compared  with a loss of  $484,355  for the  corresponding
period ended February 28, 2001.  Revenues for the corresponding  periods reflect
strong growth,  although  overshadowed  by the Company's  necessary  increase in
operating expense to provide the underlying  infrastructure to support continued
future growth.

Revenues for the nine-month  period ended February 28, 2002 were $249,281 versus
for $193,436 for the corresponding period ended February 28, 2001 representing a
28.9%  increase.  This  increase is  comprised  of a 17.9%  increase in revenues
attributable to the investment  management segment and a three-fold  increase in
revenues attributable to the surety segment of the business.

Revenues from the investment management segment were $215,276 for the nine-month
period ended  February 28, 2002 as compared with $182,551 for the same period in
the previous year, an increase of $32,725. 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 period to period with any large  fluctuations
being attributable to the growth or loss of assets under management.

Revenues from the surety  segment were $34,005 for the  nine-month  period ended
February  28, 2002 as compared  with $10,885 for the same period in the previous
year,  an increase of $23,120.  Revenue for this segment of the business is more
"seasonable" from period to period,  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.

                                       5
<PAGE>

Operating  expenses  for the  nine-month  period  ended  February  28, 2002 were
$1,031,732 as compared with $677,849 for the  comparable  period ended  February
28,  2001,  an increase of  $353,883.  Several  significant  factors have had an
impact in the make-up of  operating  expense for the periods  presented  and are
discussed as follows.

The launch of the Jacobs & Company  Mutual  Fund in June of 2001  resulted in an
increase  in  operating  expenses  resulting  primarily  from  Jacobs  having to
reimburse  the Fund for fund  operating  costs  in  excess  of 2% of the  Fund's
average net assets.  All costs  incidental  to the operation of the mutual fund,
including  legal,   marketing,   and  distribution   costs,   have  amounted  to
approximately  $124,700 for the nine months ended February 28, 2002. If the Fund
grows in size (of assets under management), expenses (in excess of the 2% level)
absorbed by Jacobs will decrease as the Fund reaches  sufficient size to support
its on-going operating costs. In contrast,  if the Fund grows in size,  revenues
from  investment  advisory  fees will  increase.  With the changes  initiated by
management in February and March 2002,  the  investment  advisory fees earned by
the Fund are currently  expected to exceed the costs being absorbed beginning in
April 2002.

As compared  with the  corresponding  period of the previous  year,  the Company
incurred additional expense of approximately  $155,725 for the nine-month period
ended February 28, 2002 attributable to accounting, legal, consulting, and other
transitional  expenses  relating  to its  acquisition  of Jacobs and FSI.  While
certain  of these  costs  are of a  routine  nature  and are  expected  to be an
on-going part of normal business operations, other costs (primarily legal costs)
are less predictable and tend to fluctuate based on needs and opportunities.

Increases  of  other  general  and  administrative  costs  are  attributable  to
increased  salaries,  benefits and related costs,  increased market research and
support services,  increased production costs in the nature of travel, marketing
and promotion, as well as a general increase in office costs attributable to the
increase in business.

Other  operating  expenses  include  costs  attributable  to a cause  of  action
initiated  by  the  Company  arising  from  the  unconsummated   acquisition  of
Van-American  Insurance  Company.  Expenses  for  the  nine-month  period  ended
February 28, 2002 include the costs of pursuing legal action as contrasted  with
the  corresponding  period of the previous year,  which include costs  primarily
attributable   to  due  diligence   efforts  in  anticipation  of  the  targeted
acquisition.

Interest  expense for the nine-month  period ended February 28, 2002 was $49,366
as compared with $148,091 for the corresponding  period ended February 28, 2001.
The decrease in interest  expense is  attributable to the  restructuring  of the
Company's short and long-term indebtedness in connection with its acquisition of
Jacobs and FSI.

Other income of $27,648 for the  nine-month  period  ended  February 28, 2002 is
comprised  of the  cancellation  of a trade  account  payable  in the  amount of
$24,255  pursuant to a settlement  agreement  first  reached in May 1998 but not
consummated until June 2001, and interest income in the amount of $3,393.

                                       6
<PAGE>

FUTURE DIRECTION OF COMPANY
---------------------------

The  Company  continues  to focus its  efforts on the  expansion  of the ongoing
business activities of FSI and Jacobs,  namely insurance (surety) and investment
management and advisory  services,  often directed to  participants in the coal,
oil, and gas industries.

Opportunities   for  increased   business  in  the  surety   markets   utilizing
collateralized  bonding  programs  remain very promising as  traditional  surety
programs continue to experience  significant problems.  Opportunities also exist
for the  generation  of income  from  consulting  services  in  relation  to the
Company's surety business.

Additionally,  recent  conditions  in the  financial  markets have resulted in a
renewed focus by individuals  and  institutions  on safety and  preservation  of
capital,  which are the  cornerstone  of the investment  strategies  employed by
Jacobs for its  clients.  In addition to growing the number of private  clients,
the  launch of the  Jacobs &  Company  Mutual  Fund  (which  mirrors  investment
strategies of Jacobs' private client  accounts) holds much promise for capturing
additional  investment  management  business.   Additionally,  the  mutual  fund
provides an ideal vehicle for the collateralized surety bonding programs offered
by FSI through its subsidiary Triangle Surety Agency, Inc. Management  continues
to believe this segment of its business holds much promise for growth.

ANALYSIS OF FINANCIAL CONDITION
-------------------------------

Management  remains  optimistic  with  respect  to the  growth of the  Company's
business  as  described  above,  but the rate of such  growth  is  difficult  to
predict.  As of February 28, 2002, a deficiency in working capital exists as the
Company's  current  liabilities  exceed  its  current  assets  by  approximately
$1,028,000.  Management  continues to meet operating  deficits through primarily
short-term  borrowings  and will attempt to utilize other 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.












                                       7

<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

                  During  2000,   FSI  entered  into  an  agreement  to  acquire
Van-American   Insurance  Company  and  its  affiliated  agency,  both  Kentucky
domiciled   companies,   from  Asset  Guaranty  Insurance  Company  ("AGI")  and
Van-American  Companies,  Inc.  ("VAC").  The sellers  refused to consummate the
transaction.  In January 2001, FSI filed a complaint  against AGI and VAC in the
United  States  District  Court for the Eastern  District  of Kentucky  alleging
breach  of  contract  and  seeking  damages  in  excess  of $13.0  million.  The
defendants  filed a  counterclaim  against FSI seeking  damages in the amount of
approximately  $1.3 million and  asserting  claims of fraud and  inducement.  In
March  2002,  the United  States  District  Court for the  Eastern  District  of
Kentucky  issued its  opinion and order for  summary  judgement  in favor of the
defendants.  In exchange for the Company's agreement not to appeal the decision,
the defendants have agreed to drop their counterclaim in the matter.

ITEM 2.           CHANGE 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)      None

                  (b)      None


                                       8
<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:  April  15, 2002            By:       /s/ John M. Jacobs
        ---------------            ----------------------------------------
                                             John M. Jacobs
                                             President and Director


Dated:  April 15, 2002             By:      /s/  Robert L. Neal
        --------------             ----------------------------------------
                                           Robert L. Neal
                                           Chief Financial Officer and Secretary



























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