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: June 30, 2002 or

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

    For the transition period from ________ to ________

                         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)

                                  405-749-9999
                            -------------------------
                           (Issuer's telephone number)

                               Zenex Telecom, Inc.
                              -------------------
              (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 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 August 19,  2002:
29,508,290.

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


                                        1
<PAGE>
                               ZENEX TELECOM, 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...............................10-22
Item 2.  Management's Discussion and Analysis or Plan of Operation.........23-26

PART II. OTHER INFORMATION

Item 2.  Changes in Securities ...............................................27

Item 5.  Other Information....................................................27

Item 6.  Exhibits and Reports on Form 8-K ....................................27

SIGNATURES

                                        2
<PAGE>
                               ZENEX TELECOM, INC.

                         PART I - FINANCIAL INFORMATION

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

This quarterly  report on Form 10-QSB should be read in  conjunction  with Zenex
Telecom,  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 Telecom, Inc.

We have reviewed the accompanying  consolidated balance sheets of Zenex Telecom,
Inc.  (formerly  Lone Wolf Energy,  Inc.) as of June 30,  2002,  and the related
consolidated  statements  of income for the three and six months  ended June 30,
2002 and 2001, and the consolidated  statements of cash flows for the six months
ended June 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 a qualified  opinion in our reports dated March 15, 2002,
but we have not performed any auditing procedures since that date.

The March 15, 2002 report stated that the  accompanying  consolidated  financial
statements have been prepared assuming that the company will continue as a going
concern.  As discussed in Note 10 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
August 2, 2002

                                        4
<PAGE>
<TABLE>
<CAPTION>
                              ZENEX TELECOM, INC.
                           CONSOLIDATED BALANCE SHEETS

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

                              Assets
<S>                                                    <C>          <C>
Current Assets
   Cash                                                $   89,569   $       339
   Accounts receivable (net of allowance for              635,063       331,139
     doubtful accounts of $25,000 at June 30, 2002)
   Current portion of  notes receivable                       -          21,717
   Deposits                                                10,884        13,478
   Inventory                                                6,880        25,750

   Prepaid expenses                                        13,666           -
   Assets held for sale                                       -          64,368
                                                       ----------   ------------
                                                          756,062       456,791
                                                       ----------   ------------

Property and Equipment                                  1,787,573     1,766,540
   Less:  accumulated depreciation                       (938,161)     (839,187)
                                                       ----------   ------------
                                                          849,412       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
                                                       ----------   ------------

                                                       $2,615,177   $ 2,513,847
                                                       ==========   ============

    See accompanying notes to financial statements and accountant's report.
</TABLE>

                                        5
<PAGE>
<TABLE>
<CAPTION>
                              ZENEX TELECOM, INC.
                           CONSOLIDATED BALANCE SHEETS

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

    Liabilities and Stockholders' Equity
<S>                                                    <C>          <C>
Current Liabilities
   Current portion of long-term debt                   $  926,310   $   429,688
   Accounts payable                                       678,696       420,896
   Zenex stock acquisition payable                        317,647       317,647
   Accrued liabilities                                    223,875        83,138
   Prepayments and customer deposits                       33,400        11,353
                                                       ----------   ------------
                                                        2,179,928     1,262,722
                                                       ----------   ------------
Other Liabilities
   Long-term debt net of current portion                  551,617       452,131
   Other liabilities                                      217,376       217,376
                                                       ----------   ------------
                                                          768,993       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 June 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)                         (2,033,207)     (526,961)
                                                       ----------   ------------
                                                         (333,744)      581,618
                                                       ----------   ------------

                                                       $2,615,177   $ 2,513,847
                                                       ==========   ============

    See accompanying notes to financial statements and accountant's report.

</TABLE>

                                        6
<PAGE>
<TABLE>
<CAPTION>
                              ZENEX TELECOM, INC.
                      CONOLIDATED STATEMENTS OF OPERATIONS

                                                  Three Months Ended            Six Months Ended
                                                June 30       June 30        June 30        June 30
                                                  2002          2001           2002           2001
                                              (Unaudited)   (Unaudited)    (Unaudited)    (Unaudited)
                                              -----------   -----------    -----------    -----------
<S>                                           <C>           <C>            <C>            <C>
Revenues                                      $   844,156   $ 1,171,002    $ 1,400,380    $ 2,174,807

Operating Expenses
   Cost of sales                                  635,641       707,236      1,089,825      1,318,152
   Selling, general and administrative            404,294       415,103        853,148        717,601
   Depreciation and amortization                   39,895        74,135        113,067        150,120
                                              -----------   -----------    -----------     ----------
                                                1,079,830     1,196,474      2,056,040      2,185,873
                                              -----------   -----------    -----------     ----------

Operating Income (Loss)                          (235,674)      (25,472)      (655,660)       (11,066)

Other Income (Expense)

   Interest income                                    -             -            2,006             33
   Interest expense                               (35,808)      (21,596)       (58,433)       (40,673)

   Merger related expense                        (360,000)          -         (360,000)           -

   Bad debt expense                               (46,716)          -         (165,717)           -

   Gain on sale of assets                           2,440           -             2,440           -

   Realized loss on securities                        -             -          (270,882)          -
                                              -----------    ----------     -----------     ---------
                                                 (440,084)      (21,596)       (850,586)      (40,640)
                                              -----------    ----------     -----------     ---------

Net Income (Loss) from Operations
   Before Income Taxes                           (675,758)      (47,068)     (1,506,246)      (51,706)


   Income tax (expense) benefit                       -          20,000              -         21,000
                                              -----------    ----------     -----------     ---------

Net Income (Loss) Before
   Before Discontinued Operations                (675,758)      (27,068)     (1,506,246)      (30,706)
                                              -----------    -----------    -----------     ---------

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             -         214,219
                                              -----------    ----------     -----------     ---------

Net Income (Loss)                               (675,758)       187,151      (1,506,246)      135,611

Other Comprehensive Income:

   Unrealized holding gains(losses)                  -           11,875        (270,882)       11,875

   Reclassification adjustment                       -              -           270,882           -
                                              -----------    ----------     -----------     ---------

Comprehensive Income (Loss)                   $ (675,758)    $  199,026     $(1,506,246)    $ 147,486
                                              ===========    ==========     ===========     =========

   Primary Earnings (Loss) per Share          $    (0.02)    $      -             (0.05)          -
                                              ==========     ==========     ===========     =========
     Fully Diluted Earnings (Loss) per Share  $    (0.02)    $      -             (0.05)          -
                                              ==========     ==========     ===========     =========

    See accompanying notes to financial statements and accountant's report.

</TABLE>

                                        7
<PAGE>
<TABLE>
<CAPTION>
                              ZENEX TELECOM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           Six Months Ended
                                                        June 30,       June 30,
                                                          2002           2001
                                                      (Unaudited)    (Unaudited)
                                                      ------------    ----------
<S>                                                   <C>             <C>
Cash Flows from Operating Activities
   Net income(loss)                                   $(1,506,246)    $ 147,486

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

     Depreciation and amortization                        113,067       150,120
     Investments transferred for compensation              64,368           -
     Bad debt write-off                                   165,717           -
     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)
     Increase in carrying value of investments                -         (11,875)
     Book value of assets disposed                            -         140,916
     (Increase) Decrease from changes in:
        Accounts receivable                              (328,924)      (20,134
        Deferred taxes                                        -          89,000
        Deposits                                            2,594        (7,500)
        Inventory                                             120           -
        Prepayments                                       (13,666)          -
     Increase (Decrease) from changes in:
        Accounts payable                                  257,800       (14,614)
        Accrued liabilities                               140,737       (26,275)
        Other liabilities                                     -         (17,642)
        Prepayments and customer deposits                  22,047        22,169
                                                      -----------     ----------
   Net adjustments to net income                          912,302      (101,710)
                                                      -----------     ----------
   Net cash used by operating activities                 (593,944)       45,776
                                                      -----------     ----------
</TABLE>

                                        8
<PAGE>
<TABLE>
<CAPTION>
                              ZENEX TELECOM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           Six Months Ended
                                                        June 30,       June 30,
                                                          2002           2001
                                                      (Unaudited)    (Unaudited)
                                                      ------------    ----------
<S>                                                   <C>             <C>
Cash Flows from Investing Activities
   Purchase of property and equipment                      (6,250)      (34,006)
                                                      ------------    ----------
   Net cash used by investing activities                   (6,250)      (34,006)
                                                      ------------    ----------
Cash Flows from Financing Activities
   Change in notes receivable                         $     1,000     $(120,000)
   Proceeds from long-term debt                           668,480           -
   Payment of long-term debt                              (80,056)      138,803
   Proceeds from issuance of common stock                 100,000           -
                                                      ------------    ----------
   Net cash provided by financing activities              689,424        18,803
                                                      ------------    ----------
Net Increase in Cash                                       89,230        30,573

Cash at Beginning of Period                                   339           -
                                                      ------------    ----------
Cash at  End of Period                                $    89,569     $  30,573
                                                      ============    ==========

Supplemental Schedule of Non-Cash
   Investing and Financing Activities

   Fixed asset additions                              $    28,557     $     -
                                                      ------------    ----------
   Liabilities assumed or incurred                         28,557        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 TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Organization and Nature of Business

Zenex Telecom,  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. ("ZTI" 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

                                       10
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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%.

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 June 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
six months ended June 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>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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 June 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>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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 June 30,  2002,  four
carriers carried  approximately  90% of the Company's long distance traffic with
the highest carrying 29%. One carrier carried  approximately  70% for the period
ended June 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 June
30, 2002, one customer accounted for approximately 10% of the Zenex revenue. For
the period ended June 30, 2001, one customer accounted for 68% 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>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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 June 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>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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:
<TABLE>
<CAPTION>
                                                        June 30,    December 31,
                                                         2002          2001
                                                         ----          ----
     <S>                                               <C>          <C>
     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
                                                       =======      ============
</TABLE>

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>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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 $113,067 and $120,810 for the six
months ended June 30, 2002 and 2001 respectively. The following table summarizes
the  classifications of property and equipment,  total accumulated  depreciation
and the related estimated useful lives:
<TABLE>
<CAPTION>
           Property and Equipment                Cost             Year
           ----------------------                ----             ----
        <S>                                  <C>                  <C>
        Equipment                            $ 1,534,663          5-10
        Office software and equipment            204,684          5-7
        Autos                                     28,558            5
        Leasehold improvements                    19,667            5
                                             -----------
                                               1,787,572
        Less: accumulated depreciation           938,161
                                             -----------
        Net property and equipment           $   849,411
                                             ===========
</TABLE>

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 $19,435 was charged to operations for the six
months ended June 30, 2001.
<TABLE>
<CAPTION>
Goodwill includes the following:
                                                     June 30,    December 31,
                                                      2002          2001
                                                      ----          ----
        <S>                                       <C>           <C>
        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
                                                  ==========    ==========
</TABLE>

                                       16
<PAGE>
<TABLE>
<CAPTION>
NOTE 5 - LONG-TERM DEBT
-----------------------

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

                                               June 30, 2002   December 31, 2001
                                               -------------   -----------------
    <S>                                           <C>                 <C>
    9.5% note secured by all Zenex equipment
    and common stock, due in monthly
    installments of $5,227, including interest
    through January 2005                          $  145,094          $  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                                61,426              70,548

    9.75% note secured by transportation
    equipment due in monthly installments of
    $848, including interest to June 2005             26,089              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                            235,128             255,265

    10% unsecured note due in monthly
    installments of $4,456, including interest
    through April 2004                                89,421             111,106

    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                            228,359                -

    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                -
                                                  ----------          ----------
                                                   1,477,927             881,819
    Less: current portion of long-term debt          926,310             429,688
                                                  ----------          ----------
                                                  $  551,617          $  452,131
                                                  ----------          ----------
</TABLE>

                                       17
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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

                Year                          Amount

                2004                       $  246,575
                2005                          189,773
                2006                          115,269
                                           ----------
                                           $  551,617
                                           ==========

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.
<TABLE>
<CAPTION>
The components of the net deferred tax asset are as follows:

                                                      June 30,      December 31,
                                                       2002             2001
                                                       ----             ----

   <S>                                            <C>            <C>
   Deferred tax liability on depreciation         $  (129,000)   $   (129,000)
   Deferred tax asset for loss carry forward        1,487,498         885,000
                                                  -----------    ------------
   Deferred tax asset                               1,358,498         756,000

   Less: valuation allowance                        1,062,498         460,000
                                                  -----------    ------------
   Net deferred tax asset                         $   296,000    $    296,000
                                                  ===========    ============
</TABLE>
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.

                                       18
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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 the
current period cost 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.

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 six months ended June 30,
2002 and 2001 totaled $35,857 and $34,164 respectively.

                                       19
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

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

                        Year                               Amount
                        ----                               ------

                        2002                            $  36,806
                        2003                               75,511
                        2004                               78,358
                        2005                               55,104
                                                        ---------
                                                        $ 245,779
                                                        =========

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.

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.

                                       20
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002

NOTE 8 - EARNINGS PER SHARE
---------------------------

                                               For the             For the
                                         Three Months Ended    Six Months Ended
                                         June 30, June 30,    June 30,  June 30,
                                           2002     2001        2002      2001
                                           ----     ----        ----      ----
   Primary earnings per share:
     (in thousands)

     Common shares outstanding            38,342    27,508    38,342    27,508
                                          ------    ------    ------    ------
     Weighted average shares              30,904    28,185    29,547    33,907
        outstanding                       ------    ------    ------    ------

      Earnings (loss) per share           $(.02)    $  -      $(.05)    $  -
                                          ======    ======    ======    ======

   Fully diluted earnings per share:

      Common shares outstanding           40,542    27,508    40,542    27,508
                                          ------    ------    ------    ------
      Weighted average shares
        outstanding                       32,681    28,185    31,287    33,907
                                          ------    ------    ------    ------
      Earnings (loss) per share           $(.02)    $  -      $(.05)       -
                                          ======    ======    ======    ======
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.

NOTE 10 - 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 $(333,744)
(13% of assets) at June 30, 2002. The Company has a working  capital  deficit of
$805,931  at  December  31,  2001,  compared  to a working  capital  deficit  of
$1,423,866 at June 30, 2002.

                                       21
<PAGE>
                               ZENEX TELECOM, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 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  11 - 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.

NOTE  12 - SUBSEQUENT EVENTS
----------------------------

On August 3, 2002 Zenex Telecom,  Inc. changed its name to Zenex  International,
Inc. to reflect the company's new growth strategies.  The company's stock symbol
remains the same.

                                       22
<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  Communication;

     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:

     o competition in the industry and markets in which we operate, especially
       from larger competitors offering more sophisticated products;

     o loss of existing customers or decreases in their demand, which might
       arise from factors beyond our control;

     o our failure to increase revenues and find additional capital;

     o our inability to compromise or defer the obligation owing  to  Zenex
       Communication's  former  owners;

     o changes  or  advances  in technology;

     o Changes in government regulation;

     o General economic and business conditions.

                                       23
<PAGE>

     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 June 30, 2002, and its results of operations
for the  three-month  and six month  periods  ended June 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  Telecom,  Inc.'s
annual report on Form 10-KSB for the year ended December 31, 2001.

The Company
-----------

     General.  Zenex Telecom, Inc. ("We", or the "Company") is engaged primarily
in the  wholesale of telephone  long distance  minutes.  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 Communication's
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.  Pursuit of our strategy may
include the  acquisition  of other  telecommunication  businesses  as a means of
increasing our telephony services and products, expanding markets and increasing
efficiencies.  We will explore the possible  acquisition of profitable  business
's, which could improve our balance sheet.

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

     The  revenues  for the three  months  ended  June 30,  2002  were  $844,156
compared to  $556,230  for the three  months  ended  March 31,  2002.  This is a
$287,926  increase or 51% revenue  growth  between the  periods.  This  increase
primarily  comes  from  the  competitive  local  exchange  (CLE)  market.  Since
beginning in January 2002,  our CLE sales have increase each month and we expect
this growth to continue.  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 three and six months  ended June 30, 2002  decreased
$326,846 and $1,003,805 respectively from the same periods 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  two  quarter's  of 2002,  represented  approximately  10% of our  overall
revenue.   The  decline  from  this  customer  was   attributable   to  internal
developments and was unrelated to our services.

                                       24
<PAGE>

     The current revenue level has resulted in an operating loss of $235,674 and
$655,660  for the  three  and six  months  ended  June  30,  2002.  Added to the
operating loss was our write-off of a questionable  receivables  for $46,716 and
$165,717  for the three and six  months  ended June 30,  2002.  During the three
months ended June 30, 2002 we also incurred merger related costs associated with
our retaining and investment  banking firm of $360,000.  After these adjustments
our  comprehensive  loss  for the  three  months  ended  June 30,  2002  totaled
$(675,758)  compared to income of $199,026 for the same period in 2001.  For the
six months ended June 30, 2002 the comprehensive loss was $(1,506,246)  compared
to income of $147,486 for the same period in 2001.

     Cost of sales as a percentage of revenue increased significantly during the
first and second  quarters of 2002 compared to 2001.  The increase was primarily
due to our lower revenue level.  Cost of sales also increased as we expanded our
circuits  and  capacity  to prepare  for  expected  growth in the CLE sales.  As
revenue  continues  to  increase,  the fixed  portion of costs of goods,  should
continue to remain  relatively  constant,  will become less as a  percentage  of
revenue and should have a positive impact on gross margin.

     As volume  has  increased  in the second  quarter,  our  network  switching
platform,  with its aged processors,  hard drives and software revision,  hasn't
been able to keep up with the Call Detail  Records has failed.  Management  does
not and  cannot  know the  full  extent  of the lost  call  records.  A  capital
improvement to the switch was approved and announced at the annual shareholder's
meeting.  The hardware and software  upgrade should be completed in the month of
August  2002 and resolve the  problem.  The loss of these  records has meant our
inability  to bill for those calls.  The impact of lost Call Detail  Records has
reduced billing  revenue but not the cost  associated  with the lost calls.  The
research  and  development  team is  currently  designing a system to track call
detail  records,  real time and  significantly  reduce  the  potential  for lost
records. Also, the new software upgrade will increase our call handling capacity
to 100 meg/second.

     Selling,  general and administrative  expenses of $853,147 increased during
the first two quarters of 2002 from $717,601 for the second quarter of 2001. The
increase was due in part to the addition of sales and other personal 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.  In addition,  legal and
professional fees were incurred in association with the change in management.

     Merger related  expenses for the quarter totaled $360,000 and were incurred
in connection  with Zenex  entering into a Business  Consulting  Agreement  with
Benchmark Capital Consulting, Inc.

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

     The  reductions  in usage  have  clearly  affected  operating  results  and
strained our cash resources.  At June 30, 2002, we had a working capital deficit
of $1,423,866  compared to a deficit in working  capital at December 31, 2001 of
$805,931.  Our stockholders'  equity has decreased from $581,618 (23% of assets)
at December 31 30, 2001 to  $$(333,744)  (-13.1% of assets) at June 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.

                                       25
<PAGE>

     As an interim  measure,  we have  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.  We believe  that this credit line will  suffice to cover
our cash needs  through  the third  quarter and our  currently  working on other
financing  arrangements  to cover our cash  needs  until we are  operating  with
positive cash flow.

     If our revenues increase as anticipated,  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.

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  telecommunications  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,  we have  added  sales  and  marketing  staff,  are
diversifying  our customer base,  especially in  non-calling  card long distance
markets,  have added new  products  and  services,  and have  enhanced  existing
products  and  services.  We intend to continue our focus on an expansion of our
switched long distance  service to commercial  business  customers.  To decrease
costs, we revamped the executive  management  structure following the March 2002
change of  control.  We have also  negotiated  lower  rates  from long  distance
carriers  (providers) and have established  better pricing for our international
toll traffic. To improve efficiencies and despite falling revenues, we continued
to invest in research and  development  during 2001 and during the first quarter
of 2002.  This work has  improved  our  efficiencies  and  enhanced  back-office
functionality  and  services.  Most  notable  is  our  recent  completion  of  a
web-based,  customer support and database  integration  system.  The proprietary
system software fully  automates  customer  services and establishes  interfaces
between  our  database  and those of our  provider  carriers  and  customers  to
facilitate ordering,  billing and database management. We have also improved our
billing  systems,  improved the least cost  routing  platform to help ensure the
lowest cost for long distance  traffic,  and built a proprietary 800 routing and
fraud control system to prevent  unauthorized  usage. We are also  introducing a
user friendly, conference-calling product through our IVR platform.

     Because of  decreased  usage and the  scalability  of our new  systems  and
services,  we have  substantial  capacity and can  increase  our  existing  call
traffic by a factor of four to five times without significant  additional costs.
We believe  these  steps  will  increase  our  marketing  opportunities,  foster
customer loyalty and enhance our competitive position. These steps have begun to
generate increased traffic, especially during the second two quarters of 2002.

     To ensure that we have adequate capital to meet our near term  obligations,
we have  established  additional  financing and are  currently  working on other
financing arrangements and restructuring of existing debt.

                                       26
<PAGE>
                           PART II - OTHER INFORMATION
                          ---------------------------

Item 2.  Sale of Securities
---------------------------

     3,332,000  shares of common  stock were  issued to Tim  Aduddell  and Jimmy
Williams on June 16, 2002 for $100,000.

Item 5.  Other Information
--------------------------

     In March 2002,  in a change of control,  current  management  replaced Lone
Wolf's  management.  Fireball  Enterprises,  LLC, bought 7,645,435 shares of our
common  stock  from a group of  selling  shareholders,  which  included  Marc W.
Newman, the former President and Chief Executive Officer, and Douglas A. Newman,
the former Chief Financial Officer and Secretary. The transaction terminated all
the Newmans' ownership in Zenex and they resigned as officers and directors. The
purchase  increased  Fireball's  share  ownership to  15,045,434  shares,  which
represents 51.0% of the outstanding shares.

     Fireball  paid  the  selling  shareholder  group  $100,000  in cash for the
shares. For the termination of the Newmans' employment  agreements and a release
of the  obligations  under the  agreements,  we  transferred  to the Newmans our
shares in Eagle Building  Technologies,  Inc. We had obtained shares in Eagle in
an August  2001  settlement  of  litigation  and  believe the shares had nominal
value.

     The new Board of Directors consists of Tim Aduddell  (Chairman),  Ron Carte
and Debra G. Morehead. Mr. Aduddell is a principal of Fireball. Mr. Carte is the
new Chief  Executive  Officer and  President of Zenex.  Ms.  Morehead is the new
Chief Financial Officer. Brian D. Gustas, the President of Zenex Communications,
continues in that capacity.

     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.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------
(a)      Exhibits

         Exhibit 99.1 Certification of Chief Executive Officer Ron Carte
         pursuant to 18 U.S.C. 1350

         Exhibit 99.1 Certification of Chief Financial Officer Ron Carte
         pursuant to 18 U.S.C. 1350

(b)      Reports on Form 8-K

                  None

                                       27
<PAGE>

                                   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.


August 19, 2002                                       Zenex International, Inc.


                                                  By: /s/ /Ron Carte
                                                     --------------------------
                                                      Ron Carte
                                                      President and
                                                      Chief Executive Officer