UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

X ________  Quarterly Report Pursuant to Section 13 or 15 (d) of the
            Securities Exchange Act of 1934

            For the quarterly period ended: September 30, 2002
                                      or

__________  Transition Report Pursuant to Section 13 or 15 (d) of the Securities
            Exchange Act of 1934

                         Commission File Number: 0-24684

                            ZENEX INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)

              Colorado                              73-1587867
     (State of incorporation)                 (I.R.S. Employer ID no.)

 201 S. Robert S. Kerr, Suite 500                     73102
       Oklahoma City, Oklahoma                     (Zip Code)
(Address of Principal Executive Offices)

          Issuer's telephone number, including area code: 405-749-9999

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 at least the
past 90 days: Yes [X] No [ ]

Shares of Common Stock, $.001 par value, outstanding as of November 14, 2002:
38,342,290.

Transitional Small Business Disclosure Format:  Yes  [  ]  No  [X]


                                       1
<PAGE>


                            ZENEX INTERNATIONAL, INC.

                                      INDEX

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

        Independent Accountant's Review Report..............................4

        Financial Statements:

           Consolidated Balance Sheets....................................5-6

           Consolidated Statements of Operations............................7

           Consolidated Statements of Cash Flows.... .....................8-9

           Notes to the Financial Statements............................10-23

Item 2.    Management's Discussion and Analysis or Plan of Operation....24-27

PART II.   OTHER INFORMATION

Item 2.    Changes in Securities ..........................................28

Item 5.    Other Information...............................................28

Item 6.    Exhibits and Reports on Form 8-K ...............................28


                                       2
<PAGE>



                            ZENEX INTERNATIONAL, INC.

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements - September 30, 2002 and 2001

This quarterly report on Form 10-QSB should be read in conjunction with
Zenex International, Inc.'s Annual Report on Form 10-KSB for the year ended
December 31, 2001.


                                       3
<PAGE>

                            Independent Review Report

Board of Directors and Stockholders
Zenex International, Inc.

We have reviewed the accompanying consolidated balance sheets of Zenex
International, Inc. Inc. (formerly Lone Wolf Energy, Inc.) as of September 30,
2002, and the related consolidated statements of income for the three and nine
months ended September 30, 2002 and 2001, and the consolidated statements of
cash flows for the nine months ended September 30, 2002 and 2001 in accordance
with Statements on Standards for accounting and Review Services issued by the
American Institute of Certified Public Accountants. These financial statements
are the responsibility of the Company's management.

A review of interim financial statements consists principally of inquiries
of company personnel and analytical procedures applied to financial data. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our review we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.

The December 31, 2001 financial statements for Zenex Telecom, Inc. were
audited by us and we expressed an unqualified opinion in our reports dated March
15, 2002, but we have not performed any auditing procedures since that date.

The accompanying consolidated financial statements have been prepared
assuming that the company will continue as a going concern. As discussed in Note
11 to the financial statements, the Company has had a significant decline in
revenue from a major customer and is in default on certain provisions of a
purchase agreement. These conditions raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.


Sutton Robinson Freeman & Co., P.C.
Certified Public Accountants

Tulsa, Oklahoma
November 12, 2002


                                       4
<PAGE>

<TABLE>
<CAPTION>

                           ZENEX INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                                September 30,     December 31,
                                                                    2002              2001
                                                                 (Unaudited)
                                                              ----------------- -----------------

                              Assets


Current Assets
<S>                                                          <C>               <C>
   Cash                                                      $           2,841 $             339
   Accounts receivable (net of allowance for                           547,079           331,139
     doubtful accounts of $40,000 at September 30, 2002)
   Current portion of  notes receivable                                      -            21,717
   Deposits                                                             10,884            13,478
   Inventory                                                             6,880            25,750
   Prepaid expenses                                                     11,182                 -
   Assets held for sale                                                      -            64,368
                                                              ----------------- -----------------
                                                                       578,866           456,791
                                                              ----------------- -----------------



Property and Equipment                                               1,966,925         1,766,540
   Less:  accumulated depreciation                                    (998,225)         (839,187)
                                                              ----------------- -----------------
                                                                       968,700           927,353
                                                              ----------------- -----------------



Other
   Goodwill (net)                                                      713,703           713,703
   Notes receivable (net of current portion)                                 -           120,000
   Deferred taxes                                                      296,000           296,000
                                                              ----------------- -----------------
                                                                     1,009,703         1,129,703
                                                              ----------------- -----------------


                                                             $       2,557,269 $       2,513,847
                                                              ================= =================

     See accompanying notes to financial statements and accountant's report

</TABLE>


                                       5
<PAGE>


<TABLE>
<CAPTION>

                           ZENEX INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                                September 30,     December 31,
                                                                    2002              2001
                                                                 (Unaudited)
                                                              ----------------- -----------------

    Liabilities and Stockholders' Equity


Current Liabilities
<S>                                                                  <C>                 <C>
   Current portion of long-term
    debt                                                     $         938,503 $         429,688
   Accounts payable                                                  1,150,591           420,896
   Zenex stock acquisition payable                                     317,647           317,647
   Accrued
    liabilities                                                        322,736            83,138
   Prepayments and customer deposits                                    52,650            11,353
                                                              ----------------- -----------------
                                                                     2,782,127         1,262,722
                                                              ----------------- -----------------


Other Liabilities
   Long-term debt (net of current portion)                             608,669           452,131
   Other liabilities                                                   217,376           217,376
                                                              ----------------- -----------------
                                                                       826,045           669,507
                                                              ----------------- -----------------

Stockholders' Equity
   Preferred stock ($0.001 par value, 20,000,000
     shares authorized, no shares issued and                                 -                 -
     outstanding)
   Common stock ($0.001  par value, 100,000,000
     shares authorized 38,342,290 and 27,508,290
     shares issued and outstanding at September 30, 2002                38,342            27,508
     and December 31, 2001)
   Paid-in capital                                                   1,661,121         1,351,953
   Unrealized gain (loss) on available for sale securities                   -          (270,882)
   Retained earnings (deficit)                                      (2,750,366)         (526,961)
                                                              ----------------- -----------------
                                                                    (1,050,903)          581,618
                                                              ----------------- -----------------


                                                             $       2,557,269 $       2,513,847
                                                              ================= =================

     See accompanying notes to financial statements and accountant's report

</TABLE>


                                       6
<PAGE>


<TABLE>
<CAPTION>

                           ZENEX INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                              Three Months Ended          Nine Months Ended
                                                September 30,               September 30,
                                             2002          2001         2002            2001
                                         (Unaudited)   (Unaudited)   (Unaudited)     (Unaudited)
                                         ------------ ------------- -------------  --------------


<S>                                     <C>          <C>           <C>            <C>
Revenues                                 $ 1,154,520   $   895,974  $  2,554,901   $   3,070,781

Operating Expenses
   Cost of sales                           1,030,378       597,318     2,120,204       1,915,470
   Selling, general and administrative       414,241       344,013     1,267,389       1,061,614
   Depreciation and amortization              60,063        75,361       173,131         225,481
                                         ------------ ------------- -------------  --------------
                                           1,504,682     1,016,692     3,560,724       3,202,565
                                         ------------ ------------- -------------  --------------

Operating Income (Loss)                     (350,162)     (120,718)   (1,005,823)       (131,784)

Other Income (Expense)
   Interest income                                 -             -         2,006              33
   Interest expense                          (28,826)      (16,974)      (87,259)        (57,647)
   Merger related expense                          -             -      (360,000)              -
   Bad debt expense                         (338,170)            -      (503,887)              -
   Gain on sale of assets                          -             -         2,440               -
   Realized loss on
    securities                                     -       (14,364)     (270,882)        (14,364)
   Other income                                    -       136,147             -         136,147
                                         ------------ ------------- -------------  --------------
                                            (366,996)      104,809    (1,217,582)         64,169
                                         ------------ ------------- -------------  --------------

Net Income (Loss) from Operations
   Before Income
    Taxes                                   (717,158)      (15,909)   (2,223,405)        (67,615)

   Income tax (expense)
    benefit                                        -        (5,000)            -          16,000
                                         ------------ ------------- -------------  --------------

Net Income (Loss) Before
   Discontinued Operations                  (717,158)      (20,909)   (2,223,405)        (51,615)
                                         ------------ ------------- -------------  --------------

Discontinued Operations

   Profit (loss) from discontinued
    business
      operations net of income taxes               -             -             -         (47,902)

   Gain on sale of discontinued
    operations
      net of income taxes                          -             -             -         214,219
                                         ------------ ------------- -------------  --------------

Net Income (Loss)                           (717,158)      (20,909)   (2,223,405)        114,702

Other Comprehensive Income:
   Unrealized holding gains(losses)                -         1,605      (270,882)         13,480
   Reclassification
    adjustment                                     -        14,364       270,882          14,364
                                         ------------ ------------- -------------  --------------

Comprehensive Income (Loss)              $  (717,158) $     (4,940) $ (2,223,405)  $     142,546
                                         ============ ============= =============  ==============

     Primary Earnings (Loss) per Share   $     (0.02) $          -  $      (0.06)  $           -
                                         ============ ============= =============  ==============
     Fully Diluted Earnings (Loss) per
      Share                              $     (0.02) $          -  $      (0.06)  $           -
                                         ============ ============= =============  ==============



     See accompanying notes to financial statements and accountant's report

</TABLE>


                                       7
<PAGE>


<TABLE>
<CAPTION>
                           ZENEX INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                       Nine Months Ended
                                                                September 30,     September 30,
                                                                    2002              2001
                                                                 (Unaudited)       (Unaudited)
                                                              ----------------- -----------------


Cash Flows from Operating Activities

<S>                                                          <C>               <C>
   Net income(loss)                                          $      (2,223,405)$         142,546

   Reconciliation of net income to net cash
     provided by operating activities:

     Depreciation and amortization                                     173,131           225,481
     Investments transferred for compensation                           64,368                 -
     Bad debt write-off                                                189,899                 -
     Gain on sale of property and equipment                             (2,440)                -
     Realized loss on disposal of securities                           270,882                 -
     Issuance of common stock for services                             220,000             4,125
     Common stock received for sale of property and equip.                   -          (410,000)
     Book value of assets disposed                                           -           140,916
     (Increase) Decrease from changes in:
        Accounts receivable                                           (255,940)          143,861
        Deferred
         taxes                                                               -            94,000
        Deposits                                                         2,594           (18,228)
        Inventory                                                          120            (6,025)
        Prepayments                                                    (11,182)              234
     Increase (Decrease) from changes in:
        Accounts payable                                               729,695          (124,904)
        Accrued liabilities                                            239,598            (1,794)
        Other
         liabilities                                                         -           (26,862)
        Prepayments and customer deposits                               41,297              (899)
                                                              ----------------- -----------------

   Net adjustments to net income                                     1,662,022            19,905
                                                              ----------------- -----------------

   Net cash used by operating activities                              (561,383)          162,451
                                                              ----------------- -----------------

     See accompanying notes to financial statements and accountant's report

</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>


                           ZENEX INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                      Nine Months Ended
                                                                September 30,     September 30,
                                                                    2002              2001
                                                                 (Unaudited)       (Unaudited)
                                                             ----------------- -----------------

Cash Flows from Investing Activities
<S>                                                                   <C>                <C>

   Increase in carrying value of investments                                 -          (375,750)
   Purchase of property and equipment                                 (185,603)          (59,168)
                                                              ----------------- -----------------

   Net cash used by investing activities                              (185,603)         (434,918)
                                                              ----------------- -----------------

Cash Flows from Financing Activities
   Change in notes receivable                                            1,000           431,657
   Proceeds from long-term debt                                        788,480                 -
   Payment of long-term debt                                          (139,992)          (69,002)
   Proceeds from issuance of common stock                              100,000                 -
                                                              ----------------- -----------------

   Net cash provided by financing activities                           749,488           362,655
                                                              ----------------- -----------------

Net Increase in Cash                                                     2,502            90,188

Cash at Beginning of Period                                                339                 -
                                                              ----------------- -----------------

Cash at End of Period                                        $           2,841 $          90,188
                                                              ================= =================


Supplemental Schedule of Non-Cash
   Investing and Financing
    Activities

   Fixed asset additions                                     $          28,557 $               -
                                                              ----------------- -----------------
   Liabilities assumed or incurred                                      28,557                 -
                                                              ================= =================

   Liabilities transferred with fixed asset disposal         $          20,871 $               -
                                                              ----------------- -----------------

   Common stock issued for services                          $         220,000 $               -
                                                              ================= =================

     See accompanying notes to financial statements and accountant's report

</TABLE>


                                       9
<PAGE>

                           ZENEX INTERNATIONAL, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

Zenex International, Inc. (formerly Lone Wolf Energy, Inc.) was
incorporated on March 4, 1991, in the state of Colorado. On November 15, 2001,
the shareholders approved the change of the corporate name from Lone Wolf
Energy, Inc. to Zenex Telecom, Inc. which was changed on August 3, 2002 to Zenex
International, Inc. ("ZII" or the "Company").

On June 21, 2000, the Company completed the acquisition of Prestige
Investments, Inc. and its wholly owned subsidiary Zenex Long Distance, Inc. (dba
Zenex Communications, Inc. or "Zenex"). A newly formed wholly owned subsidiary
of the Company, Prestige Acquisition Corp. ("Prestige Acquisition"), was merged
with and into Prestige Investments, Inc. ("Prestige Investments"), the parent
company of Zenex. Prestige Investments was the surviving corporation in the
merger. The merger was pursuant to an Agreement and Plan of Reorganization dated
May 4, 2000, by and among the Company, Prestige Acquisition, Prestige
Investments and the five shareholders of Prestige Investments (the "Zenex Merger
Agreement"). Pursuant to the Zenex Merger Agreement, the Company issued
15,550,000 shares of the Company's common stock to the shareholders of Prestige
Investments in return for their surrender to the Company of all of their shares
of common stock of Prestige Investments. Following the merger, Prestige
Investments became a wholly owned subsidiary of the Company with Zenex operating
as a wholly owned subsidiary of Prestige Investments. The business combination
was accounted for as a pooling of interest. The 1999 financial statements were
restated to include the assets, liabilities and operations of Prestige and its
wholly owned subsidiary Zenex.

Zenex is engaged primarily in the wholesale of telecommunication services.
The primary products are wholesale calling cards and "one plus" long distance
service. Zenex primarily markets its product to distributors and switchless
resellers who re-market the products to retailers.

On May 11, 2000, the Company acquired ChurchLink.com, Inc. ("ChurchLink").
ChurchLink was operated as a subsidiary of the Company during 2000 until its
disposition in April 2001.

ChurchLink developed a software product that provided an online
communications hub for churches and their membership. The purchase price of
ChurchLink was 100,000 shares of the Company's common stock, with an additional
400,000 shares of the Company's common stock to be issued as certain numbers of
churches subscribed to the service; however, there were no additional shares
issued under the purchase agreement. The fair market value of the 100,000 shares
issued was $28,000. The acquisition was accounted for as a purchase.


In April 2001, the Company entered into an Exchange of Stock Agreement with
a shareholder that owned 7,400,000 common shares of the Company, whereby the
Company exchanged all of the stock of ChurchLink for the 7,400,000 shares owned
by a shareholder. The 7,400,000 shares of Company common stock were valued at
the quoted market price of $0.05 per share ($370,000) on the date of the
transaction. The shares were subsequently retired and reduced the outstanding
shares of the Company by approximately 20%.


                                       10
<PAGE>


In March 2000, the Company purchased the assets of EP Distributing Company
("EPD") for $100,000 in cash and 1,000,000 shares of the Company's common stock
valued at $40,000. EPD was operated as a division of the Company during 2000.
The division sold nutritional products, with its primary line being Earth
Pharmacy brand products and brokered medical supplies.

The Company ceased the operation of EPD at the end of December 2000 and in
May 2001 made an agreement with the previous owners to transfer the division
back to them. The Company received the original one million shares of common
stock previously issued in the purchase transaction and a note for $125,000 to
be paid over a term of three years.

In February 1999, the Company signed a Master Equipment Sales Agreement,
(the "MESA") with Eagle Capital, Inc. ("Eagle", listed on the OTCBB as ECIC) to
sell specialized equipment. In February 2000, the Company terminated the MESA.
Under the terms of the termination agreement, the Company recorded a note
receivable for $1,625,000 of which $775,000 was collected as of December 31,
2000, and the balance was settled in 2001 (see Note 2). The Company discontinued
the business segment of equipment leasing in 2001.

The Company's September 30, 2002, and December 31, 2001, consolidated
balance sheets include the wholly owned subsidiary, Prestige, and Prestige's
wholly owned subsidiary, Zenex. The Company's consolidated statements of
operations for the nine months ended September 30, 2002 and 2001 includes the
pooled entity of Prestige and its wholly owned subsidiary Zenex for the periods
presented. The purchased and subsequently disposed of entities of EPD and
Churchlink are included from their respective dates of purchase and subsequent
disposition as discontinued operations. All significant inter-company accounts
have been eliminated in the consolidated financial statements. The consolidated
financial statements include all adjustments, which in the opinion of management
are necessary in order to make the statements not misleading.

Cash and Cash Equivalents

The Company considers all highly liquid debt or equity instruments
purchased with an original maturity at the date of purchase of 90 days or less
to be cash equivalents.

Inventory

Inventory of prepaid long-distance calling cards is stated at the lower of
cost or fair market value.


                                       11
<PAGE>


Fair Value of Financial Instruments

The Company's financial instruments include cash, receivables, short-term
payables, and notes payable. The carrying amounts of cash, receivables, and
short-term payables approximate fair value due to their short-term nature. The
carrying amounts of notes payable approximate fair value based on borrowing
terms currently available to the Company.

Goodwill and Intangible Assets

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, and SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No.
142 supercedes APB Opinion No. 17, Intangible Assets and primarily addresses
accounting for goodwill and intangible assets subsequent to acquisition. Under
SFAS No. 142, goodwill and separately identified intangible assets with
indefinite lives will no longer be amortized but reviewed annually (or more
frequently if impairment indicators arise) for impairment. Separately identified
intangible assets not deemed to have indefinite lives would continue to be
amortized over their useful lives. SFAS No. 142 applies to all goodwill and
intangible assets acquired after June 30, 2001. For goodwill and intangible
assets acquired prior to July 1, 2001, the Company is required to adopt SFAS No.
142 effective January 1, 2002. There was no material impact on its financial
statements from adoption. SFAS No. 143 requires that entities record as a
liability obligations associated with the retirement of a tangible long-lived
asset when such obligations are incurred and capitalize the cost by increasing
the carrying amount of the related long-lived asset. SFAS No. 143 will be
effective for fiscal years beginning after June 15, 2002; however, earlier
application is encouraged. The Company adopted SFAS No. 143 on January 1, 2002,
and evaluated the impact on its financial statements; goodwill was not
considered impaired and accordingly no adjustment was made. The Company has
$713,703 of unamortized goodwill at September 30, 2002.

Advertising Cost

Advertising costs are expensed as incurred as selling, general and
administrative expenses in the accompanying statement of operations.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. This statement prescribes the use of the liability
method whereby deferred tax assets and liabilities are determined based on the
differences between financial reporting and tax bases of assets and liabilities
and measured at tax rates that will be in effect when the differences are
expected to reverse. Valuation allowances are established, when necessary, to
reduce deferred tax assets when it is more likely than not that the deferred tax
asset will not be realized.


                                       12
<PAGE>


Revenue Recognition

The Company earns revenues by providing access to and usage of long
distance networks. Revenue is recognized in the month the service is provided.
The Company records deferred revenue for prepaid calling cards sold and
recognizes revenue as the customer utilizes the calling time from the cards.

Net Loss Per Share

The Company computes net income (loss) per share in accordance with SFAS
No. 128, Earnings per Share and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic net income (loss) per
share is calculated by dividing net income (loss) available to common
stockholders for the period by the weighted average number of common shares
outstanding during the period.

Concentrations

In connection with providing long distance service to customers, Zenex has
contractual agreements with certain carriers which provide access to and usage
of their long distance network. The contracts include an agreed-upon billing
rate and a term for these services. For the period ended September 30, 2002,
four carriers carried approximately 89% of the Company's long distance traffic
with the highest carrying 32%. One carrier carried approximately 82% for the
period ended September 30, 2001. Although other carriers are available to
provide access and usage of their long distance network, there are a limited
number of such sources. Additionally, the time required to efficiently transfer
system connections makes the Company vulnerable to a risk of a near-term
significant impact in the event of a natural disaster or any other termination
of the carrier's service; however, the Company has the ability to utilize back
up systems in the event of the carrier's termination of services.

Although, Zenex had a significant number of customers for the period ended
September 30, 2002, one customer accounted for approximately 10% of the Zenex
revenue. For the period ended September 30, 2001, one customer accounted for 61%
of Zenex revenue.

The Company's receivables are from a small number of companies in the same
industry, which are subject to business cycle variations. This concentration
subjects the Company to a credit risk if the general industry or the companies
fail to perform.

Regulation

Zenex is subject to regulation by the Federal Communications Commission and
by various state public service and public utility commissions. The Company's
management and regulatory legal counsel believe the Company is in compliance
with regulations in all states.


                                       13
<PAGE>

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Segment Information

Effective January 1, 1998, the Company adopted the provisions of SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information. The
Company identifies its operating segments based upon business activities,
management responsibilities and geographical location. Certain items in the
September 30, 2001 financial statements have been reclassified to reflect the
discontinued operations of the Company. After the reclassified presentation, the
net loss from continuing operations reflects the operations of the wholesale
telecommunications services, the single business segment in which the Company
operates.

Hedging Transactions

The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
133, Accounting for Derivative Instruments and Hedging Activities during 1999.
Currently, the Company does not engage in hedging activities for transactions
involving derivatives.

Mergers and Acquisitions

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, Business Combinations, which supersedes Accounting Principles Board
("APB") Opinion No. 16, Business Combinations, and SFAS No. 38, Accounting for
Pre-acquisition Contingencies of Purchased Enterprises. The provisions of the
Statement apply to all business combinations initiated after June 30, 2001. SFAS
No. 141 requires that all business combinations be accounted for by the accounts
as of the date of acquisition with an excess of purchase price over the fair
value of the net assets acquired to be capitalized as goodwill. The Statement
also requires that the assets of an acquired institution be recognized as assets
apart from goodwill if they meet specific criteria presented in the Statement.
The Statement ends the use of the pooling-of-interests method of accounting for
business combinations, which required the restatement of all prior information
for the accounts of the acquired institution. The Company will account for all
mergers and acquisitions initiated after June 30, 2001, using the purchase
method.


                                       14
<PAGE>


Reclassifications

Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.

NOTE 2 - NOTES RECEIVABLE

Notes receivable are as follows:

                                           September 30,      December 31,
                                               2002               2001
                                               ----               ----
Due from an unrelated individual from the
 sale of EP Distributing Company, payable
 in monthly installments of $500 in July
 through September 2001, $1,000 in October
 through December 2001 and $1,500 from
 January 2002 through May 2004 with a
 balance of $104,500 due on June 1, 2004.
 The total payments to be received are
 $153,500 without interest, and the note
 amount is shown as the present value with
 an interest rate imputed at
 approximately 8%                          $        -           $  120,000

Due from a customer in monthly
 installments of $1,297 including
 interest at 8% through January 2003                -               21,717
                                           ----------           ----------
                                                    -              141,717
Less current portion                                -               21,717
                                           ----------           ----------
Notes receivable - net of current portion  $        -           $  120,000
                                           ==========           ==========

NOTE 3 - PROPERTY AND EQUIPMENT

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, and APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS
No. 144 establishes an accounting model based on SFAS No. 121 for long-lived
assets to be disposed of by sale, previously accounted for under APB Opinion No.
30. This Statement is effective for fiscal years beginning after December 15,
2001. The Company adopted SFAS No. 144 on January 1, 2002, and there was no
material impact on its financial statements.


                                       15
<PAGE>


Property and equipment are recorded at cost. Expenditures for repairs and
maintenance are charged to operations when incurred. Major improvements and
renewals that extend the useful life of the related asset are capitalized and
depreciated over the remaining useful life. Depreciation and amortization are
computed for financial and income tax reporting purposes using straight-line and
accelerated methods over estimated useful lives ranging from three years to ten
years. Depreciation charged to operations was $173,131 and $225,481 for the nine
months ended September 30, 2002 and 2001 respectively. The following table
summarizes the classifications of property and equipment, total accumulated
depreciation and the related estimated useful lives:

Property and Equipment                        Cost                Year

Equipment                                $  1,712,539             5-10
Office software and equipment                 206,161              5-7
Autos                                          28,558                5
Leasehold improvements                         19,667                5
                                         ------------
                                            1,966,925
Less: accumulated depreciation                998,225
                                         ------------
Net property and equipment               $    968,700


NOTE 4 - INTANGIBLE ASSETS

Goodwill represents the excess of the cost of assets acquired over the fair
market value at the date of the business combination. Goodwill in the amount of
$900,687 was being amortized on the straight-line method over fifteen years.
Amortization was discontinued effective January 1, 2002 was the adoption of SFAS
No. 142. Amortization expense of $30,697 was charged to operations for the nine
months ended September 30, 2001.

Goodwill includes the following:

                                         September 30,        December 31,
                                              2002                2001
Prestige's acquisition of Zenex Long
 Distance, Inc.                          $    583,040       $    583,040
Earn out rights                               317,647            317,647
                                         ------------       ------------
                                              900,687            900,687

Less: accumulated amortization                186,984            186,984
                                         ------------       ------------
Net Goodwill                             $    713,703       $    713,703
                                         ============       ============



                                       16
<PAGE>


NOTE 5 - LONG-TERM DEBT

The Company has the following long-term debt as of:

                                      September 30, 2002  December 31, 2001

9.5% note secured by all Zenex equipment
 and common stock, due in monthly
 installments of $5,227, including
 interest through January 2005           $    132,210       $    168,696

9.75% note secured by all Zenex
 equipment and common stock, due in
 monthly installments of $2,124,
 including interest through March 2005         56,001             70,548

9.75% note secured by transportation
 equipment due in monthly installments
 of $848, including interest to
 June 2005                                     24,173             23,915

$450,000 line of credit with interest
 payable monthly at 1.5% over Wall Street
 prime, secured by all assets of Zenex
 and the personal guarantee of certain
 Directors                                    450,000            252,289

9.5% note secured by all Zenex equipment
 and Zenex common stock, due in monthly
 installments of $6,301, including
 interest through February 2006               221,691            255,265

10% unsecured note due in monthly
 installments of $4,456, including
 interest through April 2004                   80,421           111,106

Note payable to stockholder bearing
 interest at 5% due on
 September 13, 2004                           120,000                  -

Note payable, secured by all Zenex
 equipment, receivables and stockholder
 guaranty, bearing interest at 3.5% over
 New York prime, (currently 8.25%); due
 in monthly installments of $5,237,
 including interest to June 2006              220,266                  -



                                       17
<PAGE>


Note payable to stockholder bearing
 interest at 3.5% over New York prime
 (currently 8.25%) due in quarterly
 principal payments of $60,000 beginning
 September 25, 2002, and monthly
 interest payments through June 25, 2003      242,410                  -
                                         ------------       ------------
                                            1,547,172            881,819
Less: current portion of long-term debt       938,503            429,688
                                         $    608,669       $    452,131

Maturities of long-term debt as of
 September 30, 2002, are as follows:

           Year              Amount

           2004         $   357,278
           2005             169,542
           2006              81,849
                        $   608,669

NOTE 6 - INCOME TAXES

At December 31, 2001, the Company had net operating losses of approximately
$2,300,000 available to reduce future federal and state taxable income. Unless
utilized, the carry forward amounts will begin to expire in 2012. For federal
and state tax purposes, the Company's net operating loss carry forward amounts
are subject to an annual limitation due to a greater than 50% change in stock
ownership, as defined by federal and state tax law.

Under the provisions of FAS-109, Accounting for Income Taxes, deferred tax
liabilities and assets are measured using the applicable tax rate based on the
taxable and deductible temporary differences and operating loss carry forward
amounts. Taxable temporary differences result principally from the excess of
depreciation for tax purposes over the amount deducted for financial reporting
purposes. Deductible temporary differences and the operating loss carry forward,
giving rise to deferred tax assets, are reduced by a valuation allowance if it
is more likely than not that some or all of the deferred tax assets will not be
realized.


The components of the net deferred tax asset are as follows:

                                         September 30,       December 31,
                                             2002               2001

Deferred tax liability on depreciation   $   (122,661)      $   (129,000)
Deferred tax asset for loss carry forward   1,735,092            885,000
                                         ------------       ------------
Deferred tax asset                          1,612,431            756,000

Less: valuation allowance                   1,316,431            460,000
                                         ------------       ------------
Net deferred tax asset                   $    296,000       $    296,000
                                         ============       ============


                                       18
<PAGE>


The Company has established a valuation allowance for a portion of its net
deferred tax asset due to the ownership changes limitation on the use of the
loss carry forward.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Investment Banking Services

Zenex Telecom, Inc. entered into a Business Consulting Agreement (the
"Agreement") with Benchmark Capital Consulting, Inc. ("Benchmark") effective
June 17, 2002. Under the terms of the three-year Agreement, Benchmark will
provide transaction advisory services to Zenex. The services will include
assistance with proposed transactions, due diligence to provide comprehensive
valuations of Zenex and of proposed acquisitions, comprehensive long-term
financial planning, and preparation of marketing and public relation material to
increase awareness of Zenex.

Benchmark will receive One Hundred Thousand Dollars ($100,000), Four
Million (4,000,000) shares of fully registered Zenex common stock and an option
to purchase Five Hundred Thousand (500,000) shares of Zenex common stock at a
price of $0.04 per share. Upon the agreement of the terms, the fair market value
of the 4,000,000 shares was $0.04 per share or $160,000.

Upon completion of the Benchmark agreement, one million five hundred
thousand (1,500,000) shares of Zenex common stock that are "restricted
securities" were issued to three individuals for consultation. Restricted
securities under the Securities Act of 1933, as amended, can only be sold in the
market under Rule 144, which imposes certain limitations including a holding
period, volume limitations and notice filings. Upon the agreement of the terms,
the fair market value of the 1,500,000 shares was $0.04 per share of $60,000.

The Company also incurred $40,000 in professional fees associated with the
various agreements.

The $360,000 ($100,000 cash and $260,000 value of stock) is included in
costs for the nine months ended September 30, 2002 as merger related cost.

Customer Billing Service

On June 1, 1999, Zenex entered into a billing service agreement with a
third party outsource service provider. The agreement extends for a period of
forty-two (42) months. Under the terms of the agreement, the service fee is
$2,750 per month for recording up to 750,000 detail call records per month. The
additional monthly fee for call records in excess of 750,000 is on a declining
scale of .00395(cent) to .00310(cent) per record.

In September 2001, an additional Service Agreement was entered into with a
third party. The agreement provides for a minimum monthly fee of $3,750 and is
effective for twelve months.


                                       19
<PAGE>

Operating Leases

The Company leases its facilities under operating leases, which expire at
various intervals through September 30, 2005. Under the terms of the leases, the
Company is responsible for its share of common area maintenance and operating
expenses. Rent expense under operating leases for the nine months ended
September 30, 2002 and 2001 totaled $53,978 and $50,429 respectively.

As of September 30, 2002, the future minimum lease commitments under the
leases were as follows:

                         Year         Amount
                         2002      $  18,640
                         2003         75,511
                         2004         78,358
                         2005         55,104
                                   ---------
                                   $ 210,837
                                   =========

Future Payment Obligations Under Stock Purchase Agreement

Prestige Investments, Inc., a wholly owned subsidiary of the Company
acquired Zenex in accordance with a Stock Purchase Agreement ("the Agreement")
dated February 19, 1999. The business combination was accounted for as a
purchase. Under the Agreement, the initial purchase price was $6,353 for 100% of
the 635,295 outstanding common shares. The Agreement includes a provision
whereby the sellers may earn additional amounts if the cumulative collected
gross sales revenue reach certain levels, (the "Earn Out Rights"), as follows:

(a)  When collected gross sales revenue reaches Ten Million ($10,000,000), the
     sellers will be paid an additional Fifty Cents ($0.50) per share totaling
     $317,647.

(b)  When collected gross sales revenue reaches Twenty Million ($20,000,000),
     the sellers will be paid and additional One Dollar ($1.00) per share
     totaling $635,295.

(c)  When collected gross sales revenue reaches Thirty-Six Million
     ($36,000,000), the sellers will be paid an additional One Dollar ($1.00)
     per share totaling $635,590.

(d)  In no event will the Purchase Price exceed the amount of Two Dollars and
     Fifty-One Cents ($2.51) per share totaling $1,594,590.



                                       20
<PAGE>

Collected gross sales revenues through September 30, 2001, totaled
approximately $10,200,000. In accordance with the Agreement, the $317,647 in
Earn Out Rights is due on December 30, 2001, or within ninety days of attaining
the collected gross sales revenue. The Company is in default on the payment
provisions of the Agreement and currently does not have the funds or the
financing ability to cure the default. In view of these matters, realization of
a major portion of the assets in the accompanying balance sheet is dependent
upon continued operations of the Company, which in turn is dependent upon the
Company's ability to meet its funding requirements and the success of its future
operations.

<TABLE>
<CAPTION>


NOTE 8 - EARNINGS PER SHARE
                                                     For the                                  For the
                                                Three Months Ended                        Nine Months Ended
                                         September 30,      September 30,          September 30,        September 30,
                                             2002               2001                    2002                 2001
Primary earnings per share:
 (in thousands)

<S>                                            <C>                <C>                   <C>                 <C>
  Common shares outstanding                    38,342             27,508                38,342              27,508

  Weighted average shares outstanding          38,342             27,508                32,511              32,344


  Earnings (loss) per share              $       (.02)      $          -          $       (.06)       $          -


Fully diluted earnings per share:

  Common shares outstanding                    40,042             27,508                  40,042              35,886

  Weighted average shares outstanding          40,042             27,508                  34,237              31,596


  Earnings (loss) per share              $       (.02)      $          -          $         (.06)      $           -
</TABLE>


NOTE 9 - STOCK OPTIONS

In accordance with the terms of an April 1999 loan agreement with Federal
Bank Centre, a five-year option was granted to the bank to purchase 500,000
shares of the Company's common stock for $0.15 per share.

In accordance with the terms of a January 2001 loan agreement, with a
stockholder, a five-year option was granted for the purchase of 1,200,000 shares
of the Company's common stock for $0.10 per share.

In connection with the retention of Benchmark Capital Consulting, Inc. as
the Company's investment banking firm, a three-year option was granted to
purchase 500,000 shares of the Company's common stock for $0.04 per share.



                                       21
<PAGE>


NOTE 10 - RELATED PARTY TRANSACTION

On July 3, 2002 the Company purchased $160,000 of equipment and software
upgrades from a company controlled by an officer and stockholder. The payable
requires minimum monthly payments of $2,500 and is due within one year. In
addition if the payable is not satisfied by December 31, 2002 the company will
issue 200,000 options for eight cents ($0.08). The balance due at September 30,
2002 was $___________ and included in accounts payable.

NOTE 11 - GOING CONCERN UNCERTAINTIES

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern; however, the Company has sustained operating losses
for the years ending December 31, 1999, 2000 and 2001. The stockholders' equity
has decreased from $581,618 (23% of assets) at December 31, 2001 to $(1,050,903)
(41% of assets) at September 30, 2002. The Company has a working capital deficit
of $805,931 at December 31, 2001, compared to a working capital deficit of
$2,203,261 at September 30, 2002.

The Company is in default on the $317,647 Earn Out Rights payment due on
December 30, 2001, under the terms of the Agreement discussed in Note 7. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.

NOTE  12 - CHANGE IN MANAGEMENT

On March 17, 2002, the Company announced a change in management. Fireball
Enterprises LLC, which held twenty-seven percent (27%) of the Company stock,
bought an additional 7.65 million shares from Marc Newman, the President and
Chief Executive Officer and Doug Newman, the Chief Financial Officer. Marc and
Doug Newman resigned as Officers and Directors and a new Chief Executive was
named.

The purchase involved a cash price of $100,000, a termination of the Newman
employment agreements, the substitution of certain Fireball principals for the
Newman's as guarantors of corporate borrowings, and the exchange of mutual
releases.


                                       22
<PAGE>

NOTE  13 - SUBSEQUENT EVENTS

Acquisition of Aduddell Roofing & Sheet Metal, Inc. - In accordance with
the Zenex Telecom, Inc. and Aduddell Roofing & Sheet Metal, Inc. AGREEMENT AND
PLAN OF SPLIT-OFF AND MERGER (the "agreement") Zenex International, Inc.
("Zenex") acquired Aduddell Roofing & Sheet Metal, Inc., ("Aduddell") an
Oklahoma corporation, through an Agreement and Plan of Restructuring approved by
the Board of Directors of Aduddell. The transaction occurred subsequent to
September 30, 2002 and qualified as reorganization under the meaning of Section
368(a) of the Internal Revenue Service Code. Prior to closing the transaction,
Aduddell formed a separate wholly owned subsidiary, Aduddell Holdings, and
transferred and split-off certain non-operating assets and liabilities that were
not retained in Aduddell after the Merger. Tim Aduddell, the owner of 100% of
Aduddell common stock transferred a portion of his common stock of Aduddell to
Aduddell in exchange for 100% of the common shares of Newco to effect the
split-off of the non-operating assets of Aduddell. Tim Aduddell also transferred
his remaining common stock of Aduddell to a newly formed subsidiary of Zenex, AR
Acquisition Corp. ("Sub") in exchange for ten million (10,000,000) shares of
common stock of Zenex and options to purchase thirty million (30,000,000) shares
of Zenex common stock for four cents ($0.04) per share. Subsequent to the
exchange, Aduddell merged into the Sub and Aduddell became the surviving
corporation. Following the merger, Aduddell became a wholly owned subsidiary of
Zenex and Aduddell Holdings a 100% owned company of Tim Aduddell.




The purpose of the Merger was to effect the acquisition by Zenex
International, Inc. of Aduddell Roofing & Sheet Metal, Inc. after splitting off
the non-operating assets of Aduddell into a separately owned company to be owned
by Tim Aduddell.

The preceding statements with respect to the Merger Agreement are a brief
summary thereof. While the summary is accurate, it does not purport to be
complete and reference is made to the Zenex Telecom, Inc. and Aduddell Roofing &
Sheet Metal, Inc. Agreement and Plan of Split-Off and Merger for a complete
statement of the Merger. A copy of the agreement is filed as an Exhibit to the
Current Report on Form 8-K and is incorporated herein by this reference.


                                       23
<PAGE>

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

This quarterly report on Form 10-QSB includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act), which can be identified by the use of
forward-looking terminology such as: "may", "might", "could", "would",
"believe", "expect", "intend", "plan", "seek", "anticipate", "estimate",
"project" or "continue" or the negative thereof or other variations thereon or
comparable terminology. All statements other than statements of historical fact
included in this quarterly report on Form 10-QSB, including, without limitation,
the statements under this "Item 2. Management's Discussion and Analysis or Plan
of Operation" and located elsewhere herein regarding our financial position and
liquidity are forward-looking statements. These forward-looking statements also
include, but are not limited to: o our ability to expand Zenex's business and
make it profitable; o retention of our existing customer base and our ability to
attract new customers; o our ability to compromise an obligation owed to the
former owners of Zenex Communications; o effects of rapid changes within the
industry and the impact of new services and products that we might introduce; o
Actions of our competitors; o Statements regarding our anticipated revenues,
expense levels, liquidity and capital resources and projections of when we will
achieve break-even or positive operating cash flow. Although we believe the
expectations reflected in such forward-looking statements are reasonable, we can
give no assurance such expectations will prove to have been correct. Important
factors with respect to any such forward-looking statements, including certain
risks and uncertainties that could cause actual results to differ materially
from our expectations (Cautionary Statements), are disclosed in this quarterly
report on Form 10-QSB and under the heading "Risk Factors" in our annual report
on Form 10-KSB, which are incorporated by reference into this quarterly report.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include, but are not limited to:
1) competition in the industry and markets in which we operate, especially from
larger competitors offering more sophisticated products; 2) loss of existing
customers or decreases in their demand, which might arise from factors beyond
our control; 3) our failure to increase revenues and find additional capital; 4)
our inability to compromise or defer the obligation owing to Zenex
Communications' former owners; 5) changes or advances in technology; 6) changes
in government regulation; 7) general economic and business conditions. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. All subsequent written
and oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the Cautionary Statements.
See "Risk Factors" in our annual report on Form 10-KSB for further information
regarding risks and uncertainties related to our businesses. The following
discussion is intended to assist in understanding of the Company's financial
position as of September 30, 2002, and its results of operations for the
three-month and nine month periods ended September 30, 2002 and 2001. The
financial statements and notes included in this report contain additional
information and should be referred to in conjunction with this discussion. It is
presumed that the readers have read or have access to Zenex International's
(formerly "Zenex Telecom, Inc.'s") annual report on Form 10-KSB for the year
ended December 31, 2001.


                                       24
<PAGE>

The Company. Zenex International, Inc. ("We", or the "Company") is engaged
primarily in the wholesale of telephone long distance minutes. Throughout the
third quarter, we moved towards completion of the acquisition of Aduddell
Roofing & Sheet Metal, Inc. ("Roofing"), a commercial roofer which had
approximately $13.1 million of sales in 2001. This acquisition became effective
on October 1, 2002 and therefore is not incorporated into the third quarter
results. For telecommunications, our minutes and related services are generally
sold to distributors and switchless resellers and competitive local exchange
carriers. Competitive local exchange carriers are telephone service providers
that compete in deregulated markets against the regional Bell operating
companies for local and long distance service. Many of the minutes are sold to
retailers of calling cards. We own our own switching facilities and a
proprietary interactive voice response (IVR) platform. We use the IVR platform
for the calling cards and for a variety of commercial telephony services
including the private payphone industry. We conduct our business through a
subsidiary, Zenex Long Distance, Inc., which does business as Zenex
Communications, Inc. ("Zenex Communications"). In March 2002, we underwent a
change of control and new management was installed. New management will focus on
the development of Zenex Communications' business, which we believe will lead to
profitability. Our strategy involves the diversification of our customer base,
expanding our sale of long distance minutes in non-calling card markets,
creating a sales division or relationship to focus on the development of retail
business customers, developing additional IVR services, and strengthening our
capital base. During the third quarter, our telecommunications business
experienced a major setback attributable to noncollectible trade receivables in
the amount of $338,170. In early August, we entered into a business relationship
with an East Coast distributor of pre-paid international calling cards. The
customer initially paid in advance and on a weekly basis. However, the customer
significantly ramped up their volume in a single week. The individuals behind
this distributor subsequently disappeared and we have to date been unsuccessful
in collecting any of these owed monies. Zenex closed this account on Labor Day
weekend. With the anticipated collection from this receivable near zero, we
incurred a bad debt expense for the full amount of $338,170 during the third
quarter. We have engaged an investigative team to locate the individuals and
their assets, but thus far these efforts have not been successful. Recently, one
of our major suppliers was cut off by its carrier on November 14th, which in
turn cut off Zenex's services as well. This affected a substantial amount of our
customer base, which in turn will decrease our revenue stream. Unless we are
able to restore our connection with this supplier, our revenues will be
materially and adversely affected in our fourth quarter and possibly longer.


                                       25
<PAGE>

Results of Operations --------------------- The revenues for the three
months ended September30, 2002 were $1,154,520 compared to $895,974 for the
three months ended September 30, 2001. This is a $258,546 increase or 29%
revenue growth between the periods. This increase primarily derives from our
success in penetrating the competitive local exchange (CLE) market. Since
January 2002, our CLE sales have generally increase each month and we expect
this growth to continue, although at a reduced rate. Our customer base continues
to increase and diversify as we sign up new local exchange carriers to handle
their long distance. The revenues for the nine months ended September 30, 2002
decreased $515,880 to $2,554,901, or 17%, from the same period in 2001. The
decrease was attributable to a substantial decline in the long distance usage of
our largest customer, whose usage accounted for 68% of our revenues in the first
quarter of 2001. This customer's usage declined throughout 2001 and, during the
first three quarters of 2002, represented less than 10% of our overall revenue.
The decline from this customer was attributable to internal developments and was
unrelated to our services. The current revenue level has resulted in an
operating loss of $350,162 and $1,005,823 for the three and nine months ended
September 30, 2002. Added to the operating loss was our write-off of
questionable receivables for $338,170 and $503,887 for the three and nine months
ended September 30, 2002. After these adjustments, our comprehensive loss for
the three months ended September 30, 2002 totaled $(717,158) compared to a loss
of ($4,940) for the same period in 2001. For the nine months ended September 30,
2002 the comprehensive loss was $(2,223,405) compared to income of $142,546 for
the same period in 2001. Cost of sales as a percentage of revenue increased
significantly in 2002 versus 2001. The increase has been primarily due to our
lower revenue level from the loss of a major customer in the latter part of
2001. Cost of sales also increased as we expanded our circuits and capacity to
prepare for expected growth in the CLE sales. If we are able to continue to
increase our revenue, then the fixed portion of costs of goods sold should
remain relatively constant, and allow for our gross profit margins to expand. We
believe that our monthly operating breakeven revenue is approximately $500,000.
Our limited financial and staff resources may impede our ability to
significantly improve Zenex Communications' sales towards the breakeven
threshold. Recently, the bad debt collection from the East Coast prepaid calling
card distributor has resulted in liquidity problems for Zenex Communications.
These liquidity problems have taken an increasing amount of management's time
and diverted our attention from sales initiatives.


                                       26
<PAGE>


Selling, general and administrative expenses of $414,241 were up against
$344,013 in the comparable 2001 quarter. The increase was due in part to the
addition of sales and other personnel to increase marketing and enhance products
and services; including increased program development and design fees associated
with the rollout of new e-based support and billing services. Such expense also
increased as the result of higher compensation and other payments to former
management.

Liquidity and Capital Resources ------------------------------- The
reductions in usage have clearly affected operating results and strained our
cash resources. At September 30, 2002, we had a working capital deficit of
$2,203,261 compared to a deficit in working capital at December 31, 2001 of
$805,931. Our stockholders' equity decreased from $581,618 (23% of assets) at
December 31 30, 2001 to $(1,050,903) (-41% of assets) at September 30, 2002. At
present, we have limited financial resources and are operating at a cash
deficit. For these reasons, our independent auditors have indicated doubt about
our ability to continue as a going concern. As an interim measure, during the
second quarter, we obtained a $242,000 line of credit and a $228,359 term loan
from a commercial bank with the personal guaranty of our Chairman of the Board.
In the fourth quarter, we expect liquidity conditions to remain adverse with a
heavy payables burden against our operating cash flow from receivables. In order
to plug the gap, we may need to seek subsidies/loans from Roofing, or borrow
externally, if such funds or loans are available. If our revenues increase
further in the fourth quarter, our working capital requirements may also
increase, principally due to timing differences between our payments to
personnel and suppliers and the receipt of customer payments. These timing
differences may require that we obtain cash from sources other than operations,
such as from borrowings or stock sales. With limited financial resources,
obtaining this cash may be difficult. So far as Zenex Communications is
concerned, we believe that our capacity to borrow is limited at this stage.

Strategy for Increasing Revenues and Earnings ---------------- As revenues
declined in 2001, we developed a strategy for increasing revenues and attaining
profitability. Our strategy focuses upon Zenex Communications, and we have
discontinued all other operations and liquidated those assets. We may explore
the acquisition of profitable companies, assets or business entities that could
strengthen our balance sheet. Our strategy involves several objectives,
including increasing revenues, decreasing costs, improving efficiencies and
enhancing functionality and services, and restructuring our debt. To increase
revenues, during the first half of 2002, we added sales and marketing staff,
diversified our customer base (especially in non-calling card long distance
markets), added new products and services, and enhanced existing products and
services. These initiatives lost some momentum in the third quarter due to our
focus on closure of the merger with Roofing and our liquidity problems. To
decrease costs, we revamped the executive management structure following the
March 2002 change of control. To bolster cash flow, we may have to significant
reductions in staff and overheads at our telecommunications business. To ensure
that we have adequate capital to meet our near term obligations, we established
additional financing during the third quarter and are currently working on other
financing arrangements and restructuring of existing debt. Zenex International
will in the short-run look to Roofing to drive earnings, as this roofing
business has historically been sound.


                                       27
<PAGE>


                            PART II-OTHER INFORMATION

Item 2.  SALE OF SECURITIES

None

Item 5.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits
            None

(b)      During the  quarter  ended  September  30,  2002,  we filed one
         Form 8-K,  which was dated  August 6,  2002.  This Form 8-K
         disclosed a name change, pending merger acquisition, and named the new
         Chairman of the Board of Directors.


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

November 20, 2002                   Zenex International, Inc.
                                    By: _______/S/ Ron Carte____________
                                           Ron Carte
                                           Chairman and Chief Executive Officer



                                       28
<PAGE>