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, 2001


                                   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 October 19, 2001



<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.
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
<S>                                                                          <C>               <C>
ASSETS                                                                        August 31, 2001   May 31, 2001
                                                                              ---------------   ------------
CURRENT ASSETS
    Cash and cash equivalents                                                    $  135,938      $   771,886
    Receivables                                                                      44,520           42,857
    Prepaid and other                                                                15,622           27,866
                                                                                 -----------     ------------
      TOTAL CURRENT ASSETS                                                          196,080          842,609
                                                                                 -----------     ------------

INVESTMENT IN UNDEVELOPED MINERAL LEASE                                             116,661          116,661
                                                                                 -----------     ------------
FURNITURE AND EQUIPMENT,
    net of accumulated depreciation of $71,190 and $69,990 respectively              13,611           12,745
                                                                                 -----------     ------------

      TOTAL ASSETS                                                               $   326,352     $   972,015
                                                                                 ===========     ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Current maturities of notes payable                                          $   253,730     $   717,939
    Accounts payable                                                                 248,164         163,522
    Accrued other expenses                                                            88,969          27,850
    Other current liabilities                                                         12,908          19,307
    Accrued income taxes                                                              10,750          10,750
    Accrued interest payable                                                           3,440          72,426
                                                                                 ------------    ------------
      TOTAL CURRENT LIABILITIES                                                      617,961       1,011,794
                                                                                 ------------    ------------

NOTES PAYABLE, LESS CURRENT MATURITIES                                               255,631         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                                                           (1,593,453)     (1,417,516)
                                                                                  -----------     -----------
      TOTAL STOCKHOLDERS' EQUITY                                                    (547,240)       (371,303)
                                                                                  -----------     -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $  326,352      $  972,015
                                                                                  ===========    ============
</TABLE>

                            See accompanying notes.
                                      F-1

<PAGE>
NELX, INC.
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)

                                                                                THREE MONTHS ENDED AUGUST 31,
<S>                                                                           <C>               <C>
                                                                              -------------------------------
                                                                                   2001             2000
                                                                              ---------------   -------------
REVENUE                                                                       $       97,135    $     68,244
                                                                              ---------------   -------------
EXPENSES
    General and administrative                                                       240,686          96,061
    Costs attributable to unconsummated acquisition                                   42,883          50,285
    Interest                                                                          15,717          44,072
    Depreciation and amortization                                                      1,200             915
                                                                              ---------------   -------------
      TOTAL EXPENSES                                                                 300,486         191,333
                                                                              ---------------   -------------

OTHER INCOME                                                                          27,414               -
                                                                              ---------------   -------------

NET INCOME (LOSS)                                                             $     (175,937)   $   (123,089)
                                                                              ===============   =============

BASIC AND DILUTIVE NET INCOME (LOSS) PER SHARE:

    NET INCOME (LOSS) PER SHARE                                               $            -    $          -
                                                                              ===============   =============
    WEIGHTED AVERAGE SHARES OUTSTANDING                                          120,577,744      74,999,987
                                                                              ===============   =============
</TABLE>




                            See accompanying notes.
                                      F-2

<PAGE>
NELX, INC.
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

                                                                              THREE MONTHS ENDED AUGUST 31,
<S>                                                                           <C>               <C>
                                                                              -------------------------------
                                                                                   2001             2000
                                                                              ---------------   -------------

CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                                         $     (175,937)   $   (123,089)
    Adjustments to reconcile net income (loss) to
      net cash provided by operating activities
         Salary imputed to shareholder                                                     -          30,000
         Depreciation and amortization                                                 1,200             915
         Cancellation of accounts payable per settlement agreement                   (24,255)              -
         Changes in operating assets and liabilities:
           Receivables                                                                (1,663)          6,616
           Prepaid and other current assets                                           12,245           1,433
           Accounts payable                                                          108,896          88,300
           Accrued expenses and other liabilities                                    (14,267)         40,489
                                                                              ---------------   -------------
               Net cash flows from (used for) operating activities                   (93,781)         44,664
                                                                              ---------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES

    Purchase furniture and equipment                                                  (2,066)         (6,361)
                                                                              ---------------   -------------
               Net cash flows (used for) investing activities                         (2,066)         (6,361)
                                                                              ---------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Convertible note borrowings                                                            -         112,500
    Repayment of short-term borrowings                                              (434,626)              -
    Advances from (to) shareholder, net                                                    -        (203,758)
    Short-term borrowings                                                                  -          40,000
    Repayment of term notes payable                                                 (105,475)         (5,063)
                                                                              ---------------   -------------

               Net cash flows (used for) from financing activies                    (540,101)        (56,321)
                                                                              ---------------   -------------

NET DECREASE IN CASH                                                                (635,948)        (18,018)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                                            771,886          23,066
                                                                              ---------------   -------------
CASH AND EQUIVALENTS, END OF PERIOD                                           $      135,938    $      5,048
                                                                              ==============    =============


SUPPLEMENTAL DISCLOSURES:
    Interest paid                                                             $       84,704    $      7,159
    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,
2001, 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, Inc. on September 13, 2001.

The Condensed Consolidated Statements of Operations and Cash Flows for the three
months  ended  August 31,  2000 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 three month period  ended  August 31, 2001, a short-term  note payable to
officer in the amount of $434,626  was repaid in full.  Another  note payable to
officer in the original  amount of $81,375 was  curtailed  by $54,279  leaving a
balance of $27,095.  Such note has been  reclassified  as short-term  debt as of
August 31, 2001.  Other term notes have been curtailed in accordance  with their
scheduled repayments, with such principal repayments amounting to $51,196.

Note C -- Unconsummated Business Acquisition

During 2000, the Company's subsidiary, FS Investments,  Inc. ("FSI"), negotiated
the  acquisition  of a company  located in  Kentucky.  The  acquisition  was not
consummated due to the sellers' refusal to go forward with the transaction.  FSI
has  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  has filed a  counterclaim  against  FSI for fraud in the  inducement,
which FSI has denied and  intends to  vigorously  defend.  This civil  action is
presently  in the early  stages of  discovery.  Litigation  is  subject  to many
uncertainties  and the  outcome of this  dispute  cannot be  predicted  with any
certainty.

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 AUGUST 31, 2001
----------------------------------------------------------------------

The Company  experienced a loss for the three-month period ended August 31, 2001
in the  amount  of  $175,937  as  compared  with  a loss  of  $123,089  for  the
corresponding   period  ended  August  31,  2000.   Although  revenues  for  the
corresponding  periods reflect strong growth,  the Company's  operating expenses
have also increased as the  infrastructure  to support increased growth has been
put into place,  in  addition  to certain  other  expenses  attributable  to the
Company's  pursuit of legal action with regard to an  unconsummated  acquisition
target.

Revenues for the  three-month  period ended August 31, 2001 were $97,135  versus
for $68,244 for the  corresponding  period ended August 31, 2000  representing a
42.3%  increase.  This  increase is comprised  of an 18.3%  increase in revenues
attributable  to  the  investment  management  segment  and an  over  three-fold
increase in revenues attributable to the surety segment of the business.

Quarterly  revenues from the investment  management segment were $72,604 for the
three-month  period ended August 31, 2001 versus  $61,393 for the same period in
the previous  year,  an increase of $ 11,211.  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 May 31,  2001,  such
revenues amounted to $65,043.

Quarterly  revenues  from the surety  segment were  $24,531 for the  three-month
period ended  August 31, 2001 versus  $6,851 for the same period in the previous
year,  an increase of $17,680.  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,  2001 were
$300,486 as compared  with $191,333 for the  comparable  period ended August 31,
2000, an increase of $109,153.  The majority of the increase ($144,625) occurred
in general and administrative cost and can be attributed to several factors that
are discussed below.

In June 2001, the Jacobs & Company Mutual Fund (the "Fund") was launched. Jacobs
& Company, 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 & Company, as the
advisor,  has agreed to limit the Fund's aggregate annual operating  expenses to
2.00% of the  average  net  assets.  Incidental  to the  start-up  of the  Fund,
approximately  $25,700 of  expenses  has been  absorbed  during the  three-month
period  ended  August 31, 2001.  In October  2001,  the size of the Fund reached
sufficient  levels to substantially  alleviate the need to absorb such operating


                                       3
<PAGE>

costs on an on-going basis.  Additionally,  should the Fund's operating  expense
ratio fall  below the 2.00%  level,  such  costs  absorbed  by the  Company  are
reimbursable initially for a period of up to seven years.

As compared  with the  corresponding  period of the previous  year,  the Company
incurred additional expense of approximately  $27,000 for the three-month period
ended August 31, 2001  attributable to accounting,  legal and other  acquisition
related expense.  Of this increase,  approximately  $10,000 can be attributed to
its recent  acquisition of Jacobs & Company ("Jacobs & Co.") and FS Investments,
Inc. ("FSI") and will not be recurring expense.

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  the  unconsummated
acquisition of Van-American  Insurance Company (see Item 3. Legal Proceedings of
the Registrant's  Form 10-KSB for the fiscal year ended May 31, 2001).  Expenses
for the  three-month  period ended August 31, 2001 include the on-going costs of
the legal action being pursued as contrasted  with the  corresponding  period of
the previous year, which include costs  attributable to due diligence efforts in
anticipation of the targeted acquisition.

Interest expense for the three-month period ended August 31, 2001 was $15,717 as
compared with $44,072 for the  corresponding  period ended August 31, 2000.  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 & Co. and FSI.

Other income of $27,414 for the period ended August 31, 2001 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 $3,159.

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

The  Company  continues  to focus its  efforts on the  expansion  of the ongoing
business  activities  of FSI and Jacobs & Co.,  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,  leading to withdrawals of
competitors from the marketplace. 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 & Co. 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 & Co.'s  private  client  account)  holds much

                                       4
<PAGE>

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 as is reflected in the growth in revenues discussed above.

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

Management is 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
August 31, 2001, a deficiency in working capital exists as the Company's current
liabilities  exceeds its current assets by approximately  $422,000.  The Company
has  arranged  for  the  availability  of a  $500,000  line  of  credit  from  a
shareholder through June 30, 2002 to be available when, as and if needed to fund
any  liquidity  deficiencies.  Management  may  seek to raise  additional  funds
through  private  placements  of stock at prices  that will not be  dilutive  to
current shareholders.  Based on preliminary discussions with several individuals
and  institutions,  management  believes  that  opportunities  for such  private
placements exists,  although the Company can not be certain that it will be able
to obtain such funds.

                           PART II - OTHER INFORMATION

None


<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 22, 2001           BY:/s/  John M. Jacobs
        ----------------              ----------------------------
                                           John M. Jacobs
                                           President and Director

Dated:  October 22, 2001           BY:/s/  Robert L. Neal
        ----------------              ----------------------------
                                           Robert L. Neal
                                           Chief Financial Officer and Secretary







                                       6