SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10QSB


                  Quarterly Report under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


For Quarter Ended                                 Commission File Number
-----------------                                 ----------------------
August 31, 2000                                         000-21210



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


            COLORADO                                       84-0922335
--------------------------------                        -------------------
     (State of incorporation)                           (I.R.S. Employer
                                                        Identification No.)

                   10525 W. 23rd Place, Lakewood, CO        80215
            ---------------------------------------------------------
               (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
                                     -----        ------
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                   45,802,042 common shares as of May 31, 2000

<PAGE>

I.  FINANCIAL STATEMENTS


<TABLE>
<CAPTION>


                                                   NELX, INC.
                                           Consolidated Balance Sheet
                                                   (Unaudited)

<S>                                                                           <C>                        <C>

                                                                               August                      May
                                                                              31, 2000                   31, 2000
                                                                              --------                   --------

ASSETS

Current Assets
     Cash & Cash Equivalents                                                        $ 206                    $ 1,521

Property, Plant and Equipment
     Plant and Plant Equipment                                                    131,175                    131,175
     Equipment                                                                          -                          -
     Buildings                                                                          -                          -
                                                                              ------------               -----------
                                                                                  131,175                    131,175
     Less Accumulated Depreciation                                                  9,517                      9,517
                                                                                    ------                     -----
          Net Fixed Assets                                                        121,658                    121,658

TOTAL ASSETS                                                                     $121,864                   $123,179
                                                                           ===============            ===============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
     Accounts Payable                                                            $ 24,255                   $ 24,255
     Accrued Expenses                                                                   -                          -
     Current Portion of Long-Term Debt                                             66,650                     66,650
                                                                                   -------                    ------
          Total Current Liabilities                                                90,905                     90,905

Long Term Liabilities
     Notes Payable                                                                      -                          -

Total Liabilities                                                                  90,905                     90,905


Stockholders' Equity
     Common Stock. $0.0001 par value, 500,000,000 shares authorized
     45,802,042 issued and outstanding at May 31, 2000 and August 31,
     2000, respectively                                                             4,580                      4,580
     Additional paid-in capital                                                 7,718,330                  7,718,330
     Retained Deficit                                                          (7,691,951)                (7,690,635)
                                                                               -----------                -----------
TOTAL STOCKHOLDERS' DEFICIT                                                        30,959                     32,274
                                                                                   -------                    ------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                      $121,864                   $123,179
                                                                           ===============            ===============


</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                   NELX, INC.
                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                      For the Three Months Ended August 31
                                                   (Unaudited)

<S>                                                                            <C>                         <C>


                                                                                2000                        1999
                                                                                ----                        ----
REVENUES
     Oil & gas sales                                                                    -                           -
     Sale of ORRI
     Misc Income
     Cost of Sales

Gross Profit                                                                            -                           -

EXPENSES
     Interest                                                                           -                         500
     Office Expense                                                                   766                       1,773
     Professional Fees                                                                  -                       2,650
     Telephone & Utilities                                                            549                          44
                                                                                     ----                         --
Total Operating Expenses                                                            1,315                       4,967

NET INCOME (LOSS)                                                                $ (1,315)                   $ (4,967)
                                                                           ===============             ===============

Loss per Common Share                                                               (0.00)                      (0.00)

Weighted average number of shares outstanding                                   44,602,042                  46,352,042


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                   NELX, INC.
                                      Consolidated Statement of Cash Flows
                                                   (Unaudited)

<S>                                                                             <C>                      <C>


                                                                                        Three Months
                                                                                      Ended August 31,
                                                                                2000                      1999
                                                                                ----                      ----
Cash Flows from Operating Activities:
     Net Profit (Loss)                                                           $ (1,315)                $ (4,967)
     Depreciation
     (Decrease) Increase in Accounts Payable                                            -                   (1,000)
     (Decrease) Increase in Accrued Expenses
     (Increase) Decrease in Accounts Receivable
                                                                           ---------------            -------------

Net Cash Flows Used for Operating Activities                                       (1,315)                  (5,967)

Cash Flows from Investing Activities
     (Purchase) Sale of Fixed Assets                                                    -                        -
     (Purchase) Sale of Note Receivable
     (Purchase) Sale of Investment
                                                                           ---------------            -------------

Net Cash (Used by) From Investing Activities                                            -                        -

Cash Flows from Financing Activities
     Increase (Decrease) in Note Payable                                                -                    1,000
     Sale of Common Stock                                                               -                     7500
     Sale of Treasury Stock                                                             -                        0
                                                                           ---------------            -------------

Total Cash from (Used by) Financing Activities                                          -                    8,500

Increase (Decrease) in Cash                                                        (1,315)                  2,533
                                                                                                            -----

Cash and Cash Equivalents - Beginning of Period                                     1,521                     254
                                                                                                              ---

Cash and Cash Equivalents - end of Period                                             206                    2,787
                                                                           ===============            =============


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


NELX, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                                            Common Stock                   Additional
                                                            ------------                      Paid-In          Accumulated
                                                       Shares           Amount                Capital              Deficit
                                                    ------------    ------------        -------------        --------------
<S>                                                      <C>               <C>            <C>                 <C>
Balances, May 31, 1998                                   46,352,042        $ 4,635        $ 7,465,975         $ (7,666,186)

     Stock returned for re-issuance                      (6,000,000)          (600)                                      -

     Issuance of stock for cash                           4,000,000            400            158,000

     Net (loss)                                                  -               -                  -               (5,110)
                                                         ----------        -------          ---------         -------------

Balances, May 31, 1999                                   44,352,042          4,435          7,623,975           (7,671,296)

     Exercise of stock options                              350,000             35             17,465                    -

     Issued to buyout overriding royalty interests        1,100,000            110             76,890                    -

     Net (loss)                                                  -               -                  -              (19,339)
                                                        -----------       --------       ------------         -------------

Balances, May 31, 2000                                   45,802,042        $ 4,580        $ 7,718,330          $(7,690,635)
                                                        -----------       --------       ------------         -------------

     Net (loss)                                                   -              -                  -               (1,315)
                                                        -----------       --------       ------------         -------------

Balance August 31, 2000                                  45,802,042        $ 4,580        $ 7,718,330          $(7,691,950)
                                                        ===========       ========       ============         =============

</TABLE>

<PAGE>


         NELX, INC.
         Notes to Financial Statements


         Note A - Organization and Business
         Organization and Nature of Business
         -----------------------------------

         NELX,  INC. (the  "Company")  was  incorporated  in Kansas on March 25,
         1983.  As of August 31, 2000,  the Company had no business  operations.
         Its principal  asset is  a leasehold  interest  in undeveloped  mineral
         spring in Arkansas.  On July 26, 2000  the Company  acquired all of the
         stock  of  a  West Virginia  corporation  in the  business of producing
         dimensional lumber, crossties and landscaping timber (see Note H).

         The accompanying  consolidated financial statements have been presented
         assuming  that the  Company  will  continue as a going  concern,  which
         contemplates   the  realization  of  assets  and  the  satisfaction  of
         liabilities in the normal course of business.  The Company has incurred
         significant  recurring  losses and has a  substantial  working  capital
         deficit as of August 31,  2000.  In addition,  at August 31, 2000,  the
         Company had no substantial product, service or properties and  requires
         significant additional financing to satisfy its outstanding obligations
         and commence  operations.  Management's  plans to address these matters
         include  acquisitions,   private  placements  of  stock  and  obtaining
         short-term  loans.  Unless the Company  successfully  obtains  suitable
         significant  additional  financing there is substantial doubt about the
         Company's  ability  to  continue  as a  going  concern.  The  financial
         statements  do not include  any  adjustments  to reflect  the  possible
         future effect on the recoverability and classification of assets or the
         amounts  and  classification  of  liabilities  that may result from the
         outcome of this uncertainty.

         Note B - Summary of Significant Accounting Policies
         Principles of Consolidation
         ---------------------------

         The  financial  statements  include  the accounts  of Crystal  Mountain
         Water, Inc., a wholly owned subsidiary. All inter-company  transactions
         and balances have been eliminated.

         Use of Estimates
         ----------------

         Preparation of financial statements in conformity with generally accept
         -ed accounting  principles requires  management  to make  estimates and
         assumptions   that  affect  the  amounts   reported  in  the  financial
         statements and accompanying notes.  Significant areas requiring the use
         of management  estimates are valuation of stock issued for services and
         property  and  valuation  of  deferred  tax  benefits.  Actual  results
         inevitably will differ from those  estimates,  and such differences may
         be material to the financial statements.


<PAGE>

         NELX, INC.
         Notes to Consolidated Financial Statements


         Property
         --------

         Property,  including the Company's investment in an undeveloped mineral
         spring,  is recorded at cost.  Maintenance and repair costs are charged
         to expense as incurred,  and renewals and improvements  that extend the
         useful life of assets are  capitalized.  Amortization  of the leasehold
         cost of the mineral spring is computed using the  straight-line  method
         over the  remaining  term of the lease  (including  options  to extend,
         which ends October 28, 2026).

         Amortization  expense of $5,106 and $4,411 was  recorded in fiscal 2000
         and 1999, respectively.

         Income Taxes
         ------------

         The Company uses the asset and  liability  approach of  accounting  for
         income taxes. The asset and liability approach requires the recognition
         of  deferred  tax  assets  and  liabilities  for  the  expected  future
         consequences of temporary  differences  between the financial reporting
         basis and tax basis of assets and liabilities (see Note D).

         Statement of Cash Flows
         -----------------------

         Cash and cash equivalents include cash and short-term  investments with
         original maturities of three months or less.

         Basic Earnings (Loss) Per Share
         -------------------------------

         Basic earnings (loss) per share of common stock are computed  using the
         weighted  average  number of shares  outstanding  during  each  period.
         Diluted  earnings  per share are  computed  on the basis of the average
         number  of  common  shares  outstanding  plus the  dilutive  effect  of
         convertible debt, stock options and warrants.

         The basic and the  dilutive  earnings  per share are the same in fiscal
         2000 and 1999 since the Company had net losses and the inclusion of the
         effect of stock options would be anti-dilutive.

         Concentrations
         --------------

         The  principal  asset of the  Company  is a  leasehold  interest  in an
         Arkansas mineral spring.

<PAGE>

         NELX, INC.
         Notes to Consolidated Financial Statements


         Note D - Advances from Stockholders

         As of August 31, 2000, unsecured,  non-interest bearing advances total-
         ing $66,650 were due on demand to the Company's president.

         Note D - Income Taxes
         As of August 31, 2000, the accumulated net operating loss  carryforward
         that may be  offset  against  future  taxable  income,  if any,  totals
         approximately  $6.4 million.  The loss carryforward  expires in varying
         amounts from fiscal 2008 through fiscal 2020.

         In addition, as of August 31, 2000, the Company had  approximately $1.2
         million of capital  loss  carryovers,  which may be used only to offset
         capital gains. The capital losses carryforward expires from fiscal 2001
         through fiscal 2004.

         A tax  benefit  has not been  reported  in the  accompanying  financial
         statements for the operating and capital losses carried forward because
         the  Company  is  uncertain  as  to  the  likelihood  of   utilization.
         Accordingly, the approximate tax benefit of $1.1 million of the amounts
         carried  forward has been offset by a valuation  allowance  of the same
         amount, a decrease of approximately $3,000 in fiscal 2000.

         Note E - Stockholders' Equity
         Exercise of Stock Options
         -------------------------

         During fiscal 2000,  options were exercised covering a total of 350,000
         shares of common stock resulting in proceeds of $17,500.

         Stock Issued to Liquidate Overriding Royalty Interest in Mineral Spring
         -----------------------------------------------------------------------

         On May 5, 2000,  a total of 1.1  million  shares of  restricted  common
         stock,  with  an  estimated  value  of  $77,000  were  issued  to  five
         individuals to liquidate  overriding  royalty interests  totaling $.016
         per gallon in the Arkansas mineral spring.

         Note F - Commitments and Contingencies

         In fiscal 1998 an agreement  was reached to settle a $24,524  loan.  As
         part of the  agreement  the  creditor  was also to transfer  550,000 to
         third  parties  and return  166,667  shares to the  Company (a total of
         666,667  shares). As of August 31,  2000,  the agreement  has  not been
         executed.


<PAGE>

         NELX, INC.
         Notes to Consolidated Financial Statements


         Note G - Fair Value of Financial Instruments
         The  carrying  amounts for the  settlement  payable and  advances  from
         stockholder   approximates   fair  value  because  of  the   short-term
         maturities of these instruments.

         The  determinations  of fair value  discussed  above are  subjective in
         nature and involve  uncertainties  and significant  matters of judgment
         and do not include income tax  considerations.  Therefore,  the results
         cannot be  determined  with  precision and cannot be  substantiated  by
         comparison  to  independent  market  values and may not be  realized in
         actual sale or settlement of the instruments.

         Note H - Events Subsequent to August 31, 2000 (Unaudited)
         July 26, 2000,  the Company  acquired all of the voting stock of Square
         Roots Incorporated, a West Virginia corporation for 1 million shares of
         common stock.



<PAGE>



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

Results of Operations
---------------------

The Company has  experienced  $1,315 expenses for the three month period in 2000
and $4,967 for the three  month  period in 1999.  The Company had no revenues in
the three month period for either year. The Company will continue to have losses
until  adequate  income can be achieved to meet  expenses.  While the Company is
seeking capital  sources for investment;  there is no assurance that sources can
be found.


Liquidity and Capital Resources
-------------------------------

The  Company  had $206 in cash  capital  at the end of the  period  and  current
liabilities  exceeded  current assets by $90,699.  The Company will be forced to
either borrow or make private  placements of stock in order to fund  operations.
No  assurance  exists  as to the  ability  to  achieve  loans  or  make  private
placements of stock.


<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1.           LEGAL PROCEEDINGS

                  None

ITEM 2.           CHANGES IN SECURITIES

                  None

ITEM 3.           DEFAULT UPON SENIOR SECURITIES

                  None

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  None

ITEM 5.           OTHER INFORMATION

                    The  Company  agreed  to  acquire  100%  of the  issued  and
                    outstanding  stock of Square  Roots,  Inc.  for one  million
                    shares of common  stock.  The  transaction  is being held in
                    abeyance pending receipt of audited financial  statements of
                    Square Roots, Inc., which are in process.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

                        Reports on Form 8-K were  made for the  period for which
                  this  report is filed:

                        8-K August, 18, 2000
                        8-K August 28, 2000
                        8-K/A August 28, 2000


<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.

Date: November 14, 2000



                                              NELX, INC.


                                              /s/ Charles L. Stout
                                              -----------------------------
                                              Charles L. Stout, President