U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)
[X]          QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

[  ]         TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                         Commission file number 0-14962

                                  MORLEX, INC.
-------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

Colorado                                                      84-1028977
-------------------------------                               -----------------
(State or other jurisdiction of                               (I.R.S. employer
incorporation or organization)                                identification
                                                              number)

P.O. Box 3755, Englewood, CO                                  80155
-------------------------------                               -----------------
(Address of principal executive offices)                      (Zip Code)

         Issuer's telephone number, including area code: (303) 699-8784

                                    No change
                   ------------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes _____    No   X.

                      APPLICABLE ONLY TO CORPORATE ISSUERS
         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 125,680,000 shares of
Common Stock, par value $ .0001 per share, outstanding as of August 15, 1998.

                                      - 1 -

<PAGE>



                                   FORM 10-QSB

                       FINANCIAL STATEMENTS AND SCHEDULES
                                  MORLEX, INC.

                       For the Quarter ended June 30, 1998

         The following financial statements and schedules of the registrant and
         its consolidated subsidiaries are submitted herewith:


                          PART I- FINANCIAL INFORMATION


                                                                   Page of
                                                                   Form 10-QSB
                                                                   -----------
Item 1.  Financial Statements:

         Condensed Balance Sheets -- June 30, 1998 (unaudited) 
                  and 1997                                               3
         Condensed Statement of Income for the three months ended 
                  June 30, 1998 and 1997(unaudited)                      4
         Condensed Statement of Cash Flows for the three months ended 
                  June 30, 1998 and 1997 (unaudited)                     5
         Notes to Financial Statements                                   6

Item 2.  Management's Discussion and Analysis or Plan of Operation       7
-------------------------------------------------------------------------------

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                      - 2 -


<PAGE>

                                  MORLEX, INC.

                         (FORMERLY AMERICA ONLINE, INC.)
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         (Unaudited)
                                                                           June 30,                   December 31,
                                                                             1998                           1997
                                                                      -------------------             -----------------
                                                    ASSETS

<S>                                                                <C>                               <C>
TOTAL ASSETS                                                        $             -                 $            -     
                                                                      ===================             =================



                                     LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

           Accrued Expenses-Shareholder                             $             13,871            $            -
                                                                      -------------------             -----------------
                        TOTAL CURRENT LIABILITIES                                 13,871                         -
                                                                      -------------------             -----------------

SHAREHOLDERS' EQUITY

           Common Stock, $.0001 par value-authorized,
            1,000,000,000; shares issued and outstanding
            125,680,000 and 89,710,000, respectively                              12,568                        12,568
           Additional paid-in capital                                            291,728                       291,728
           Deficit                                                              (318,167)                     (304,296)
                                                                      -------------------             -----------------

                        TOTAL SHAREHOLDERS'  EQUITY                              (13,871)                        -
                                                                      -------------------             -----------------

TOTAL LIABILITIES AND
           SHAREHOLDERS'  EQUITY                                    $              -                $            -    
                                                                      ===================             =================
</TABLE>
             See Notes to Unaudited Condensed Financial Statements
                                        
                                      - 3 -
<PAGE>

                                  MORLEX, INC.

                         (FORMERLY AMERICA ONLINE, INC.)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Three Months Ended                   Six Months Ended
                                                                         June 30,                             June 30,

                                                                  1998               1997              1998              1997
                                                              --------------     -------------     --------------    --------------
<S>                                                         <C>                       <C>               <C>                <C>    
CASH FLOWS USED IN OPERATING ACTIVITIES:
          Net Loss                                           $       (6,933)    $      (1,150)    $      (13,671)   $       (2,584)
                                                              --------------     -------------     --------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
          Shareholder Advances                                        6,933             1,150             13,671             2,584
                                                              --------------     -------------     --------------    --------------

NET INCREASE (DECREASE) IN CASH                                           -                 -                  -                 -

CASH, BEGINNING OF THE PERIOD                                             -                 -                  -                 -
                                                              --------------     -------------     --------------    --------------

CASH, END OF THE PERIOD                                     $             -     $           -     $            -    $            -
                                                              ==============     =============     ==============    ==============

</TABLE>

             See Notes to Unaudited Condensed Financial Statements

                                      - 4 -
<PAGE>

                                  MORLEX, INC.
                         (FORMERLY AMERICA ONLINE, INC.)
                         CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                  Three Months Ended                     Six Months Ended
                                                                     June 30,                                June 30,

                                                             1998                1997                1998                1997
                                                        ----------------    ----------------    ----------------    ----------------

<S>                                                   <C>                 <C>                 <C>                 <C>              
REVENUE                                               $               -   $               -   $               -   $               -
                                                        ----------------    ----------------    ----------------    ----------------


EXPENSES
            Consulting                                            6,426                 600              12,852               1,500
            General and Administrative                              507                 550                 819               1,084
                                                        ----------------    ----------------    ----------------    ----------------

                       Total Expenses                             6,933               1,150              13,671               2,584
                                                        ----------------    ----------------    ----------------    ----------------

NET LOSS                                              $          (6,933)  $          (1,150)            (13,671)             (2,584)
                                                        ================    ================    ================    ================

NET LOSS PER COMMON SHARE                             $       NIL         $       NIL         $       NIL         $       NIL
                                                        ================    ================    ================    ================

WEIGHTED AVERAGE NUMBER OF
      COMMON SHARES OUTSTANDING                             125,680,000          89,710,000         125,680,000          89,710,000
                                                        ================    ================    ================    ================

</TABLE>

             See Notes to Unaudited Condensed Financial Statements


                                      - 5 -
<PAGE>



                                  MORLEX, INC.
                         (FORMERLY AMERICA ONLINE, INC.)


               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis Of Presentation

These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and pursuant 
to the rules and regulations of the Securities and Exchange Commission.
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 (consisting of normal accruals)
considered necessary for a fair presentation have been included. The unaudited
condensed financial statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's Annual Report on form
10-KSB for the year ended December 31, 1997.



                                      - 6 -

<PAGE>



                                     ITEM 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OR
                                PLAN OF OPERATION

         The Company incurred a net loss of $ 6,933 for the three months ended
June 30, 1998, and $1,150 for the three months ended June 30, 1997. Combined
with the fact that the Company has no working capital and an accumulated deficit
of $ 318,167, it is management's assertion that these circumstances may hinder
the Company's ability to continue as a going concern.

         The Company completed two private placements of its Common Stock, par
value $.0001 per share, in December 1997 and July 1998. In December 1997,
Charles T. Gould, a director and then the Company's President, purchased
35,970,000 shares of Common Stock in exchange for the cancellation of $49,191 of
indebtedness of the Company to Mr. Gould. In July 1998, Steven J. Goodman, a
director of the Company and Lawrence E. Kaplan, the President, Secretary and
Treasurer and a director of the Company, each purchased 94,260,000 shares of
Common Stock in exchange for $3,000 each in cash and $6,246 each in previous
services rendered, or an aggregate of 188,520,000 shares of Common Stock with 
an aggregate purchase price of $6,000 in cash and $12,852 in previous services
rendered. The Company currently has virtually no cash or other assets.

         In August 1998, Kaylene Veron and Lannelle Lancaster resigned as 
directors of the Company. Mr. Gould, the remaining director, thereupon elected
Messrs. Goodman and Kaplan as directors. These directors thereupon elected Mr.
Kaplan as President and Treasurer, and Mr.Goodman as Secretary of the Company.

         Plan of Operation. The Company has not realized any revenues from
operations in the past two fiscal years, and its plan of operation for the next
twelve months shall be to continue its efforts to locate suitable acquisition
candidates. The Company can provide no assurance that it can continue to satisfy
its cash requirements for at least the next twelve months.

         Liquidity and Capital Resources. As of June 30, 1998, the Company had
assets of $ 0 and liabilities of $ 13,871. This compares to assets of $0 and
liabilities of $ 0 for the year ended December 31, 1997.

         Results of Operations. The Company has not conducted any active
operations in the past two fiscal years, except for its efforts to locate
suitable acquisition transactions. No revenue has been generated by the Company
during such two-year period. It is unlikely the Company will have any revenues
unless it is able to effect an acquisition of or merger with an operating
company, of which there can be no assurance.

                                      - 7 -

<PAGE>



                           PART II - OTHER INFORMATION


Item 1.           Legal Proceedings.  To the best knowledge of the officers and 
                  directors, neither the Company nor any of its officers and 
                  directors are party to any legal proceeding or litigation.

Item 2.           Changes in Securities.  None.


Item 3.           Defaults Upon Senior Securities.  None.

Item 4.           Submission of Matters to a Vote of Security Holders. On
                  April 24, 1998, the Board of Directors, by unanimous written
                  consent in lieu of a special meeting, resolved to amend the
                  Company's Articles of Incorporation to change the name of the
                  Company from America Online, Inc. back to Morlex, Inc. in
                  order to remove any confusion between the Company and the
                  Internet company of the same name.

                  On May 15, 1998, the shareholders of the Company, by majority
                  vote, approved the amendment and name change at a meeting
                  called for that purpose. The amendment was filed with the
                  Secretary of State of Colorado on June 2, 1998, upon which 
                  the name of the Company became Morlex, Inc.

Item 5.           Other Information.  None.

Item 6.           Exhibits and Reports on Form 8-K.

                  (a) Exhibit No.            Description
                       27.1                  Financial Data Schedule

                  (b) Reports on Form 8-K.   None.


                                      - 8 -

<PAGE>



                                   SIGNATURES


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

Date: August 14, 1998                   MORLEX, INC.



                                    By: /s/ Lawrence Kaplan
                                        ---------------------------------------
                                        Lawrence Kaplan, President and Director

                                                      
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