SECURITIES EXCHANGE COMMISSION 
                    Washington, D.C.  20549
                    
                        FORM 10-KSB

         ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) 
            OF THE SECURITIES EXCHANGE ACT OF 1934
            For the Fiscal Year Ended May 31, 1997 

                Commission file number 0-21210

                         NELX, INC.

     (Exact name of registrant as specified in its charter) 

Kansas                                              84-0922335
(State  or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                   Identification No.)

Route 1, Box 4J, Bridgeport, West Virginia          26330
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code: (304) 622-9599
Securities Registered Pursuant to Section 12(b) ofthe Act:

                        NONE

Securities Registered Pursuant to Section 12(g) of the Act

            COMMON STOCK $.0001 PAR VALUE

Indicate  by check mark whether the registrant (1)
has filed  all reports  required  to be filed by
Section  13  or  15(d)  of  the Securities  Exchange
Act of 1934 during the preceding  12  months (or  for
such shorter period that the registrant was required
to file  such  reports),  and (2) has been  subject
to  the  filing requirements for at least the past 90
days.

                    Yes  X       No

Indicate  by  check  mark if disclosure of delinquent
filers  in Response to Item 405 of Regulation S-B is
not contained  in  this form,  and  no  disclosure
will be  contained  to  the  best  of Registrant's
knowledge  in  definitive  proxy  or   information
statements incorporated by reference in Part III of
this Form 10KSB or any amendment to this Form 10-KSB.

                    Yes        No   X


<PAGE>

Registrants gross revenues for its most recent fiscal
year  were $0, and operations expenses totaled
$(826,089) for a net loss  of $4,093,083 after write-
off for discontinued operations.

State the aggregate market value of the voting stock
held by nonaffiliates  of the Registrant: $1,376,622
as of May 31,  1997  (a $.06/share average bid at May
31, 1997).

Indicate  the  number  of  shares  outstanding  of
each  of  the Registrant's classes of common stock:
25,477,042 common shares as of May 31, 1997.

<PAGE>

                  TABLE OF CONTENTS

                       PART I
                                                                  Page

Item    1.          Business......................................1

Item    2.          Properties....................................3

Item    3.          LegalProceedings..............................4

Item    4.          Submission of Matters to a Vote of
                    Security Holders..............................4

                       PART II
                          
Item    5.          Market for Registrant's Common Stock and
                    Security Holder Matters...................... 4

Item    6.          Management's Discussion and Analysis of
                    Financial Condition and Results of
                    Operations................................... 5

Item    7.          Financial Statements and Supplementary Data...7

Item    8.          Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosure........7

                      PART III
                          
Item    9.          Directors and Executive Officers of the
                    Registrant................................... 7

Item   10.          Executive Compensation........................9

Item   11.          Security Ownership of Certain Beneficial
                    Owners and Management........................ 11

Item   12.          Certain Relationships and Related
                    Transactions..................................12

                      PART IV
                          
Item   13.          Exhibits, Financial Statement Schedule
                    and Reports on Form 8-K...................... 12


<PAGE>

                       PART I
                          
                          
ITEM 1.   BUSINESS

General

           The Registrant was incorporated in the State of Kansas 
in  March 1983 as Nelson Exploration, Inc.  In October 1991, the
Registrant  acquired  Westwind  Production  Company, a  Nevada 
corporation,  which  owned  certain  non-producing  oil  and  
gas properties  and  related assets.  The  Registrant's  business 
is in  real estate,  in  one geographic area, the Denver area, but 
it has been unsuccessful in achieving  any  oil  or gas production.  
The company  holds  real estate  for investment, development and  
resale.  For  financial information see "Financial Statements and 
Supplementary Data." Parent (Registrant)

NELX, Inc.

Wholly owned Subsidiaries

     1.   CS, Inc. (a Utah corporation)
          Operations:    None

     2.   MS Oil Company, Inc. (a Colorado corporation)
          Operations:    None

     3.   Westwind Production Company (a Colorado corporation)
          Operations:    Inactive

Oil and Gas Producing Activities.

       None.    All attempts at production activities were terminated.

Patents, Trademarks, Licenses, Etc.

           The  Registrant does not hold any patents, trademarks, 
licenses,  etc., with respect to, nor are patents significant  in 
regard to, the Registrant's activities.

<PAGE>

Governmental Regulation

           General  - The Registrant's activities are
subject  to extensive  regulation  by  numerous federal,  
state  and   local governmental authorities,   including   
county   planning   and commission  agencies. Regulation 
of the Registrant's development activities, if they ever 
develop, will have a significant  effect on the Registrant 
and its operating results.

Real Estate Business

      The  Company  originally acquired real  estate as capital 
assets  to form a base from which to grow.  Due to the continuing 
lack of capital partners for oil and gas exploration, the company 
has  turned its attention to efforts to liquidate its real estate
capital assets.

      Market factors:  Real estate markets are greatly influenced by  
economic  cycles, availability of development,  construction loans,
competitive properties, oversupply and other matters over which the  
registrant  has no control. Registrant  intends  to maintain  these 
market factors in perspective and develop on a basis that  would  
allow  the company  and  properties  to  be liquidated in a cyclical 
market, to reduce debt.

      Capital:  The Company has no commitments for capital at this 
time for its real estate development projects.

     The  Company  determined, that due  to defaulted  mortgage 
obligations on its real estate, it would write down its assets to 
the  balance outstanding on its mortgage obligations, since there
appeared  to be sufficient equity in the real estate to satisfy the  
obligations. The Company wrote off a note  receivable  and returned  
real estate held to senior mortgage holders on  two  of its  real  
estate parcels, since both mortgages were in  default. An apartment  
triplex owned  by the  Company  was  lost  in foreclosure,  but it   
resulted  in  the extinguishment  of approximately $111,000 in debt.
Write-offs of real estate and  a note receivable totaled $3,266,994.

Competition and Markets

          There are many companies and individuals engaged in the real  
estate  business. Some are very large and well  established with  
substantial capabilities and long  earnings  records.  The registrant 
is at a competitive disadvantage with other firms and individuals in 
marketing real properties since they have  greater financial resources  
and  larger  technical  staffs   than the Registrant.  In  addition, 
in recent  years  a number  of  small companies have been formed which
have objectives similar to those of  the  Registrant and which present 
substantial competition  to the Registrant.

           A  number of factors, beyond the Registrant's  control and  
the  effect of which cannot be accurately predicted,  affect the
development  of real estate. These  factors include  area growth,  
interest rates, transportation routes, the marketing  of competitive   
properties and  other   matters   affecting   the availability of a 
ready market, such as fluctuating  supply  and demand.

<PAGE>

Industry Segments

Real Estate Rental Income & Expense
(Residential)
Income              $ 8,418
Expenses            $ 9,688
Net Income (Loss)   $ (1,270)

(Industrial-CS, Inc.)

Income              $ 28,023
Expenses            $ 65,866

Net Income(Loss)    $(37,843)

Oil & Gas Income and Expense  (Operations discontinued)

Income              $ 0
Cost of Sales       $ 0
Expenses            $ 0
Net Income          $ 0

Employees

            The  Registrant  currently  coordinates real  
estate activities using contract labor and consultants. 
The  Registrant retains   consultants  with  respect  to  
current and  proposed properties and well by well operations. 
The Registrant from  time to time  retains independent  
engineering   and  geological consultants  and  the services 
of real estate in connection  with its operations.  The company
President, Wes Whiting, is on a full time basis as President of 
NELX, Inc.   Subsequent to fiscal year end, Mr. Whiting resigned. 

ITEM  2.    PROPERTIES

Oil and Gas Properties

     None

REAL PROPERTY

     1)    The Company owns 240 acres of undeveloped land adjacent 
to  the  towns  of Erie and Broomfield, Colorado  on  Highway  #7 
approximately 3 miles east of the town of Lafayette, Colorado and 4   
miles west of I-25.  The  property is  currently zoned agricultural 
and being used for grazing.  The  Company  holds the property for 
investment and seek a joint venture participant to develop the property.

<PAGE>

      2)    The  company owns 320 acres of real estate
(more  or less)  located  north-east of the Front Range 
Airport  in  Adams County,  Colorado. The  property is  
included  in  the  Denver International Airport master 
plan area.  It is zoned:  160  acres light industrial  
and 160 acres residential.   Financing is  a Promissory 
Note in amount of $500,000 bearing interest at 8%  per 
annum  payable  in  a lump sum on or before September 30,  
1998, secured  by  a First Trust Deed. (This property was  
conveyed  to holder of the Trust Deed in December 1997.)

ITEM  3.    LEGAL PROCEEDINGS

           There  are  presently  no  material pending legal
proceedings which would result in any uninsured liability,  
other than routine litigation incidental to the business, to 
which  the Registrant  is  a party  except  as  follows:   The  
Company  is Defendant in a suit filed by Allan Pezoldt naming the
Company as a co-defendant in El Paso County, Colorado.  Plaintiff's 
counsel filed  a Lis Pendens on the Erie property, and served a 
complaint on  the Company in February 1997.  The Company believes 
any suit by  Allan  Pezoldt  has no merit whatsoever, and  is  
vigorously defending the suit.

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

     None in Fiscal Year ended May 31, 1997.


                       PART II
                          
ITEM  5.    MARKET FOR THE REGISTRANT'S COMMON STOCK AND  
RELATED          SECURITY HOLDER MATTERS

           (a)   The Registrant's common stock is traded  in  
the over-the-counter market under the symbol NLXI (OTC Bulletin 
Board Symbol).  The table below sets forth the high and low bid  
prices of  the Registrant's common stock for the periods indicated.
Such prices  are  inter-dealer prices, without mark-up,  mark-down  
or commissions and do not necessarily represent actual sales.

                         High Bid       Low Bid
FY 1996:
     1st quarter         .24            .09
     2nd quarter         .125           .055
     3rd quarter         .14            .045
     4th quarter         .11            .03125

<PAGE>


                         High Bid        Low Bid

FY 1995:
     1st quarter         1.125           .63 
     2nd quarter          .938           .375
     3rd quarter          .688           .219
     4th quarter          .469           .141

      The  above quotations reflect inter-dealer
prices,  without retail  mark-up, mark-down, or
commission and may not necessarily represent actual
transactions.

      The Company has not declared or paid any cash
dividends  on its common stock and does not
anticipate paying dividends for the foreseeable
future.

          (b)   As  of  May 31, 1997, there were 749
holders  of record of the Registrant's common stock.

          (c)  The Registrant has neither declared
nor paid  any cash  dividends  on its common stock,
and it is  not  anticipated that  any  such  dividend
will  be  declared  or  paid  in the foreseeable future.

ITEM 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

          The Registrant was unable to satisfy all of
its general working  capital requirements with cash
flow generated  from  oil and  gas  and  real estate
operations during the  current  fiscal year. This
deficit in working capital was financed by loans,
and capital contributions through private placement
of stock.

           In  view of the current economic
conditions within the industries  in which the
Registrant participates, the  Registrant anticipates
that cash flow from operations for fiscal  1995  will
be  insufficient  to satisfy all of its general
working  capital requirements  necessitating
additional  capital  infusions  from affiliates,
from sale of assets, borrowing, equity participation
or Farmout Agreements.

           The Registrant will continue a deficit
working capital position in the future if sustaining
revenues and growth  capital are not generated by the
Registrant.

      Changes in Financial Conditions - Loss of Assets

      In  Fiscal Year 1996 ending May 31, 1997, the
Company  lost an apartment property in foreclosure, a
triplex, which resulted  in  debt reduction of
approximately $111,000, and returned two undeveloped
land  parcels to a lender in exchange for a release
of  liability on  notes  with accrued interest
totaling in excess of  $630,000. Further,  the
Company  lost  in  foreclosure  its  Provo,   Utah
industrial  building,  which resulted  in  debt
cancellation  of approximately  $350,000.   The total  

<PAGE>

write-off  of  equity  was approximately $1,330,000 with 
a net write-off after deduction  of debt cancellation, of 
approximately $225,000.

      Results of Operations

      NELX, Inc. incurred operating expenses for
fiscal year 1996 in  the amount of $786,976 as
compared with operating expenses of $1,815,858  for
fiscal year 1995.  The Company determined,  that due
to  defaulted mortgage obligations on its  real
estate,  it would  write  down its assets to the
balance outstanding  on  its mortgage  obligations,
since there  appeared  to  be  sufficient equity  in
the  real  estate to satisfy  the  obligations.  The
Company wrote off a note receivable and returned real
estate held to the  senior  mortgage holder on two of
its real  estate  parcels, since both mortgages were
in default.  An apartment triplex owned by  the
Company was lost in foreclosure, but it resulted in
the extinguishment of approximately $111,000 in debt.
Write-offs  of real  estate  and  a  note  receivable
totaled  $3,266,994.  The registrant expects that its 
operating expenses will substantially decrease  in  fiscal  
year  1997 over 1996.   The  net  loss  on operations  for 
year ended May 31, 1997, was ($826,089)  compared to
($1,848,606) for year end May 31, 1996.  The Company's  
total net  loss after write-offs on assets for year ended May 
31, 1997, was  $4,093,083 as compared to $2,903,569 for the 
year ended  May 31, 1996.   The per share loss for year ended 
May 31, 1997  was ($.20) compared to ($.20) for the year
ended May 31, 1996.

      Registrant had no oil and gas operating revenues in  fiscal 
year  1996  and  by contrast had oil  and  gas  operating revenues 
of $72,336 in fiscal year 1995.
   
      Registrants  monthly revenue for operations is insufficient 
to cover its normal operating costs and debt service.

     Liquidity and Capital Resources

      Registrants  liquidity  is  limited  by  its ownership  of 
undeveloped  real  estate, which is not  be  readily  marketable. 
The company has no cash  flow  from  any other source.
      
      Registrant  will  be  forced to seek venture partners  for 
capital,  or  in  the  alternative, borrow money  upon  its  real 
estate,  which  may not be possible or practical  under  current 
market conditions.

      Registrant had no significant cash reserves or deposits  at 
year  end,  and  was totally illiquid and without  any  operating 
funds.

       Registrant  will  be  forced  to  and  will seek  private 
placements  of  its  stock and loans to  make  up  the  lack  of 
operating revenues.

<PAGE>

ITEM  7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

           The  response to this Item is included as
a  separate Exhibit to this report.  Please see pages
F-1 through F-12.

ITEM  8.    CHANGES  IN  AND DISAGREEMENTS  WITH ACCOUNTANTS  ON
                   ACCOUNTING AND FINANCIAL DISCLOSURE

     a)   No changes in accountants have been made.

     b)   In  connection with audits of two most
recent fiscal years and any interim  period preceding
resignation, no disagreements exist with any former 
accountant on any matter  of accounting   principles   
or practices, financial  statement disclosure,  or 
auditing scope of procedure, which disagreements if  
not  resolved  to the satisfaction of the  former  
accountant would have caused him to make reference in 
connection  with  his report to the subject matter of 
the disagreement(s).

     c)   The  principal accountant's report on
the  financial statements for the past two years 
contained no adverse opinion or a  disclaimer  of  
opinion nor was qualified as  to  uncertainty,
audit  scope,  or  accounting principles except  for
the  "going concern" qualification.

                          PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

           (a)   The names of the directors and information about them,  
as  furnished by the directors themselves, are  set  forth below:

     Name           Age   Relationship       Term of   Director
                          With Company       Office    Since

Wesley F. Whiting   65    President &        Annual    Jan. 1993
                          Director

Reed Clayson        67    Secretary-         Annual    Nov. 1993
                          Treasurer


Officers and Directors

      The  term of office for each director is one
(1)  year,  or until  his/her  successor  is elected
at  the  Company's  annual meeting  and qualified.
The term of office for each  officer  of the Company
is at the pleasure of the board of directors.

<PAGE>


       The  board  of  directors has no nominating,
auditing,  or compensation  committee.  Therefore,
the selection of  person  or election to the board of
directors was neither independently made nor
negotiated at arm's length.

       Business Experience

       The  Company's president and a director, Wesley
F. Whiting, age  65,  president of Westwind
Production Inc., (since  February 1993)  a subsidiary
of NELX, Inc., has been directly involved  in the
oil and gas field exploration, drilling and
management since 1978.  Mr.  Whiting has sixteen
years experience in oil  and  gas leases  as  well as
mapping, management and exploration.  He  has been
president,  director and secretary  of  Berge
Exploration, Inc.,  (1978-88) and vice president and
director of Intermountain Methane  Corporation (1988-
91), and Westwind Production, Inc.  (a subsidiary of
NELX, Inc. now inactive from 1993).

       The Company's Secretary-Treasurer is Reed Clayson, 
age  67, and  President  and  director of CS,, Inc., a 
wholly  owned subsidiary, received his B.S. Degree in 
physics  and journalism from Utah State University and 
has completed three years graduate work in english, math, 
and operations research. Positions held in the past are: 
CS, Inc.: President from 1992 to date, responsible for 
technology transfer from universities  in  areas of 
cogeneration,  remediation product design  and training/
information systems. Position previously  held: Synfuels  
Engineering and Development,  Inc.:   Vice  President, 
responsible   for  computer  modeling, documentation,   
resource analysis,   environmental and  socioeconomic  
studies  involving innovative waste  processing and 
synfuels development  including DOE  evaluation  contracts 
as well as private industry.   Science Applications, Inc.:  
Manager, Resource Analysis, responsible  for development,
documentation, and use of automated decision-aiding
tools   (government  and  industry).   Resource Science,   
Inc.: Executive  Vice  President,  responsible  for 
socioeconomic  and environmental  modeling,  land
planning  studies,   siting   for transportation and
energy facilities.

      Family Relationships

      There are no family relationships among any of
the company's officers and directors.

      Involvement in Certain Legal Proceedings

      During  the  past five years there have been no
filing  of petitions  under  the  federal  bankruptcy
laws,  or  any  state insolvency  laws,  by  or
against any partnership  in  which  any director or
executive officer of Registrant was a general partner
or  executive officer at the time or within two years
before  the time of such a filing.

      No  director or executive officer of Registrant
has, during the  past five years, been convicted in a
criminal proceeding  or is  the named subject of a
pending criminal proceeding (excluding traffic
violations and other minor offenses).

      During the past five years no director or
executive officer of  Registrant  has  been the
subject of any order,  judgment  or decree,  not
subsequently reversed, suspended or vacated  by  any

<PAGE>

court   of  competent  jurisdiction  permanently  or
temporarily enjoining him from or otherwise limited
in his involvement in any type of business,
securities or banking activities.

      During the past five years no director or
executive officer of Registrant has been found by a
court of competent jurisdiction in  a civil action,
nor by the Securities and Exchange Commission nor the
Commodity Futures Trading Commission to have violated
any federal or state securities or commodities law,
which judgment or finding has not been subsequently
reversed, suspended or vacated.

      The  Executive  Officers  of  the  Registrant
are  elected annually  for  term terminating at such
time as their  respective successors are elected and
qualified.

 Compliance with Section 16(a) of the Exchange Act.
                          
      Section  16(a) of the Securities Exchange Act
of 1934  (the "Exchange Act") requires the Company's
directors and officers and any persons who own more
than ten percent of the Company's equity securities,
to file reports of ownership and changes in ownership
with   the  Securities  and  Exchange  Commission
(the  "SEC"). Directors, officers and greater than
ten-percent shareholders are required by SEC
regulation to furnish the Company with copies  of all
Section 16(a) report files.

      The  Company has requested that its officers
and  directors and greater-than-ten-percent
shareholders comply with the Section 16(a) by filing
Form 5.

      The  following persons had not filed Form 5 as of  May  31, 1997:

     Wesley F. Whiting
     Reed Clayson

ITEM 10.  EXECUTIVE COMPENSATION

     Summary

           a)  Set forth in the following table is
information as to the cash compensation paid or set
aside directly or indirectly during  the fiscal year
ended May 31, 1997, to or for the benefit of any
executive  officer  whose  cash  compensation exceeded 
$60,000.00, and all executive officers as a group:

Name of Individual            Capacities in       Salary
or Number of Group            Which Served        and fees
Wesley F. Whiting             President           $20,000
Reed Clayson                  Secretary           $0
                              Directors           $0
All Executive Officers
as a Group (2 persons)             -              $20,000

<PAGE>
          

         b)   Compensation paid by the Company for all services 
provided during the fiscal year ended May 31, 1997, (1) to each 
of  the  Company's directors  whose cash  compensation  exceeded 
$60,000 and (2) to all directors as a group is set forth below:

                         ANNUAL COMPENSATION ($$)

Name and Position             Year           Fees           Bonus

Wesley F. Whiting             1996           $0             $0

Grant Gaeth (Resigned)        1996           $0             $0

Reed Clayson                  1996           $0             $0

Directors                     1996           $0             $0




                         LONG TERM COMPENSATION
                                   Options
                       Restricted  & SARs
                       Stock       LTIP     LTIP       Other
Other                  Awards      Payouts  Payouts    Compensation

Wesley F. Whiting      None        None      None      1,000,000
                                                       shares

Max P. Sommer          None        None      None      None

Grant Gaeth            None        None      None      500,000
(Resigned)                                             shares

Reed Clayson           None        None      None      1,000,000
                                                       shares

All  directors and officers as a group received 2,500,000  
shares as additional Compensation

     Option/SAR Granted During the Last Fiscal Year

     Registrant  does  not  have  a  stock  option   or   stock
appreciation  rights  plan.  Therefore  this section is not applicable.

     Long Term Incentive Plans/Awards in Last Fiscal Year
                          
     Registrant has no long-term incentive plans and consequently has  
made  no  such awards, except as set forth under  Long  Term 
Compensation above.

<PAGE>

     Compensation of Directors

     (1)  Standard Arrangements.  None
     (2)  Other  Arrangements.  There are no other arrangements 
for the compensation of directors of the Registrant.

      Employment  Contracts  and Termination  of Employment  
and Change-in-Control Arrangements. None.

      Report on Repricing of Options/SARs

      No options or stock appreciation rights are
outstanding  or were  repriced  during the fiscal
year ended  May  31,  1997,  or subsequently.

      1995 Employee Stock Compensation Plan - No open plans.
                          
ITEM 11.  SECURITY  OWNERSHIP  OF CERTAIN BENEFICIAL OWNERS  AND 
          MANAGEMENT
          
           (a)   The  following table sets forth, as
of  May  31, 1997,  the beneficial ownership (as
defined by the rules  of  the Securities and Exchange
Commission)  of  common  stock  of  the Registrant  
by  each person owning more than  5%  of Registrants 
Common  Stock  and each officer and director and by 
all  officers and  directors  as a group, together 
with the percentage  of  the outstanding shares of 
such class which such ownership represents. Unless 
otherwise indicated, such persons have  sole  voting
and investment power with respect to such shares.
                                              Amount and Nature  Percent
                                              of Beneficial      of
Name of Beneficial Owner                      Ownership          Class

Reed Clayson                                   1,333,334         5.2%
Secretary & Director
10200 W. 44th Ave. #400
Wheat Ridge, CO  80033

Wesley F. Whiting                              1,200,000         4.7%
President & Director
10200 W. 44th Ave. #400       (including 50,000 shares
Wheat Ridge, CO  80033        owned by Jeraldine 
                              Whiting, wife) 

Total owned by Officers and Directors           2,533,334        9.9% 


<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Certain Transactions

     In February 1997, the Directors voted to issue
common shares to themselves in  consideration  of services
rendered as officers and directors as follows:   1,000,000 
shares  to Wesley F. Whiting; 1,000,000 shares to Reed Clayson;
and 500,000 shares to Grant Gaeth.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
          REPORTS  ON FORM 8-K
          
           (a)  Financial Statements and Schedules.
The following financial statements and schedules for
NELX, Inc., as of May  31, 1997, and 1996 are filed
as part of this report.

                                                     Page
     (1)  Financial statements of NELX, Inc:

          Reports of Independent Accountants
          Report of Michael B. Johnson & Co.
          years ended May 31, 1997 an May 31, 1996   F-2
          Balance Sheets                             F-3
          Statements of Operations                   F-4
          Statements of Cash Flow                    F-5 - F-6
          Statements of Shareholders' Equity         F-7 
          Notes to Financial Statements              F-8 - F-12

     (2)  Financial Statement Schedules:

          (a)  None
          (b)  Reports on Form 8-K:
               February 14, 1997        Incorporatedby reference as
                                        filed with Securities and
                                        Exchange Commission
          (c)  Exhibits
Item No.
(under 601)

4.1*           Articles of Incorporation and By-Laws:
               Incorporated by Reference as filed with  
               Form  10 with the Securities and Exchange 
               Commission
13.1*          Quarterly Report of NELX, Inc. 10-QSB
               for  Period ended August 31, 1996.
13.2*          Quarterly Report of NELX, Inc. 10-QSB
               for  Period ended November 30, 1996.
13.3*          Quarterly Report of NELX, Inc. 10-QSB 
               for Period ended February 28, 1997.
22.1*          Subsidiaries of Registrant

* Previously filed

<PAGE>

                     SIGNATURES
                          
      Pursuant to the requirements of Section 13 or
15(d) of  the Securities  Exchange Act of 1934, the
Registrant has duly  caused this  report  to  be
signed on its behalf  by  the  undersigned, thereunto
duly authorized.

DATE                               NELX, INC.

March 10, 1998                     by:/s/ Charles L.Stout
                                          Charles L. Stout, President

      Pursuant to the requirements of Section 13 or
15(d) of  the Securities  Exchange  Act of 1934, this
report  has  been  signed below by the following
persons on behalf of the Registrant and in the
capacities and on the dates indicated.


/s/Charles L. Stout           President      March 10, 1998
Charles L. Stout              and Director


/s/Harry Bullock              Secretary      March 10, 1998
Harry Bullock                 and Director


/s/Kenneth L. Curry           Director       March 10, 1998
Kenneth L. Curry


<PAGE>





                          NELX, INC.
                 INDEPENDENT AUDITORS' REPORT 
              CONSOLIDATED FINANCIAL STATEMENTS

           For the Year Ended May 31, 1997 and 1996




<PAGE>


                          Michael B. Johnson & Co., P.C.                        

                           (A Professional Corporation)

                          Certified Public Accountants

                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237

Michael B. Johnson C.P.A.
Member: A.I.C.P.A.
Colorado Society of C.P.A.'s




                 INDEPENDENT AUDITORS'REPORT


To the Board of Directors of
NELX, Inc.



We have audited the accompanying balance sheet of
NELX, Inc., as of May 31, 1997 and 1996, and the
related statements of operations, cash flows and
changes in stockholders' equity for the period
then ended.  These financial statements are the
responsibility of the Company's management.  Our
responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with
generally accepted auditing standards.  Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a test 
basis, evidence supporting the amounts and disclosures 
in the financial statements.  An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well
as evaluating the overall financial statements
presentation.  We believe that our audit provides
a reasonable basis for our opinion.

As shown in the financial statements, the company
incurred a net loss of $4,093,083 for 1997 and had
incurred a substantial net loss in the prior year.
At May 31, 1997, current liabilities exceed
current assets by $1,684,358.  These factors
indicate that the company has substantial doubt
about its ability to continue as a going concern.
The financial statements do not include any
adjustments relating to the recoverability and
classification of recorded assets, or the amounts
and classification of liabilities that might be
necessary in the event the company cannot continue
in existence.

In our opinion, the financial statements, referred
to above, present fairly, in all material respects, 
the financial position of NELX, Inc., as of May 31, 
1997 and 1996 and the results of its operations, cash 
flows and changes in stockholders' equity for the years 
then ended in conformity with  generally accepted 
accounting principles.


Michael B. Johnson & Co., P.C.

Denver, Colorado
January 5, 1998


<PAGE>


                                                   1997           1996
ASSETS:

Current Assets:
    Cash and cash equivalents                $          -  $      8,701
    Accrued Interest Receivable                         -           500

        Total Current Assets                            -         9,201

Fixed Assets:
    Land                                          950,000     3,716,801
    Plant & Plant Equipment                       100,000     1,000,000
    Equipment                                      12,479         8,654
    Buildings                                      82,000       678,063
                                                1,144,479     5,403,518
    Less Accumulated Depreciation                (106,154)     (132,725)     
        Net Fixed Assets                        1,038,325     5,270,793
                                        
Other Assets:
    Deposits                                        3,950         3,950
    Investments                                    10,000        10,000
        Total Other Assets                         13,950        13,950

TOTAL ASSETS                                $   1,052,275  $  5,293,944
                                       
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Bank Overdraft                           $      8,533  $          -         
    Accounts Payable                              489,424       139,649
    Accrued Expenses                              374,149       307,972
    Current Portion ofLong-Term Debt              812,252       368,214
       Total Current Liabilities                1,684,358       815,835

Long-Term Liabilities:
    Notes Payable                                   30,617     1,315,761
       Total Long-Term Liabilities                  30,617     1,315,761

TOTAL LIABILITIES                                1,714,975     2,131,596

STOCKHOLDERS' EQUITY:
    Common Stock, $.0001 par value 500,000,000
     shares authorized,25,477,042 and 18,947,300
     issued and outstanding at May 31,1997
     and 1996, respectively                           2,548         1,895
    Additional paid-in capital                    7,441,162     7,183,780
    Retained Deficit                             (8,106,410)   (4,023,327)
TOTAL STOCKHOLDERS' EQUITY                         (662,700)    3,162,348
                             
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                            $ 1,052,275    $ 5,293,944

<PAGE>

                                                     1997            1996
REVENUES:
    Oil & gas sales                             $          -    $    72,336

Cost of Sales                                              -        (44,839)

Gross Profit                                               -         27,497

EXPENSES:
    Consulting                                       366,061        810,850
    Salaries                                               -         59,199
    Office Expense                                     8,276         23,248
    Travel                                             2,635         20,685
    Lease Expense                                     52,580        352,898
    Repairs & Maintenance                                195          1,497
    Professional Fees                                137,310        174,950
    Telephone & Utilities                             87,233         42,062
    Depreciation & Depletion                          19,103         75,207
    Miscellaneous                                     25,559         84,825
    Interest Expense                                 150,110        170,437

Total Expenses                                       849,062      1,815,858


OTHER REVENUES & (EXPENSES):
    Net Rental Expense                               (39,113)       (70,430)
    Interest Income                                        -         10,185

Total Other Revenue & (Expenses)                     (39,113)       (60,245)

NET LOSS BEFORE DISCONTINUED OPERATIONS            $(888,175)   $(1,848,606)

DISCONTINUED OPERATIONS:
    Loss on Write Off of Non-Producing Assets     (3,204,908)      (759,959)    
    Sale of Assets                                         -       (295,004)

NET LOSS                                         $(4,093,083)   $(2,903,569)

Loss per Common Shares:
Loss Before Discounted Operations                      (0.04)         (0.12)
Loss on Discontinued Operations                        (0.16)         (0.08)

Net Loss Per Share                              $      (0.20)   $     (0.20)

Weighted Average Number of
Shares Outstanding                                20,084,742     14,692,441


<PAGE>



                          NELX, INC.
        CONSOLIDATED STATEMENTS OF CASH FLOWS, (Cont.)
           For the Year Ended May 31, 1997 and 1996



SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Noncash Activities During Year End May 31, 1996

  The company issued 4,058,619 common shares in exchanges for services.

  The company issued 1,000,000 common shares in exchange for a
      10% investment in home improvement financing, Inc.

  The company issued 750,000 common shares in exchange for rights 
      to manufacture and market a patented safety device.

  The company issued 570,000 common shares in exchange for the 
      acquisition interest in seven oil wells.

  The company issued 350,000 common shares in exchange for a 
      mini mall located in Kansas.

  The company issued 150,000 common shares in exchange for a 
      100% ownership of Crystal Mountain Water, Inc.

  The company issued 111,000 common shares in relief of$14,906 
      interest owed to Joshua Foss.

Non Cash Activities During Year End May 31, 1997

  The company issued 232,143 shares for architectural services.

  The company issued 1,817,993 shares for consulting services.

  The company issued 120,000 shares for advertising services.

  The company issued 2,000,000 shares to the Board of
      Directors for services rendered.


<PAGE>

                                                      1997        1996
Cash Flows from Operating Activities:
    Net Profit (Loss)                            $(4,083,083)$(2,903,569) 
    Amortization and Depreciation                     19,103      55,211
    Issuance of Common Stock for Services            248,771     917,926
    (Increase) Decrease in Prepaids                        -      22,524
    (Decrease) Increase in Accounts Payable          349,775     109,470
    (Decrease) Increase in Bank Draft                  8,533           -
    (Decrease) Increase in Accounts Payable --
        Related Parties                                    -     (85,304)
    (Decrease) Increase in Accrued Expenses           66,177      (6,000)
    (Increase) Decrease in Investments                     -     (10,000)
    (Increase) Decrease in Accounts Receivable             -      31,829
    (Increase) Decrease in Accrued Interest 
     Receivable                                          500      55,600
    (Increase) Decrease in Note Receivable                 -     735,000

Net Cash Flows Used for Operating Activities      (3,390,224) (1,077,313)   

Cash Flows From Investing Activities:
    Purchase of Fixed Assets                          (5,476)     29,768
    Retirements/Repossessionof Fixed Assets        3,369,202     589,463

Net Cash Flow Used for Investing Activities        3,363,726     619,231

Cash Flows From Financing Activities:
    Borrowing Under Notes Payable                           -    248,037
    Principal Payments on Notes Payable                     -   (174,596) 
    Issuance of Common Stock:                           9,264    382,238

Net Cash Flows Provided by Financing Activities        9,264     455,679

Increase (Decrease) in cash                          (17,234)     (2,403)
                                    
Cash and Cash Equivalents -- Beginning
    of Year                                            8,701      11,104

Cash and Cash Equivalents -- End of Year          $   (8,533)    $ 8,701

Supplemental Disclosure of Cash Flow
    Information Cash Paid During the Year for:
    Interest                                      $          -   $29,054.00
    Income Taxes                                  $          -   $        -



<PAGE>
<TABLE>
<CAPTION>


                                  Common Stock   Additional
                                                 Paid-In     Accumulated
                          # of Shares    Amount  Capital     Deficit
<S>                         <C>          <C>    <C>         <C>                      
Balance at May 31, 1995     10,437,581   $1,044 $5,195,578  $(1,119 758)      

Issuance of Common
 Stock for Cash              1,520,100      152    382,086             -

Issuance of Common
 Stock for Services               
 Rendered                    4,058,619      406    917,520             - 

Issuance of Common
 Stock for Assets
 Acquired or Reduction
 in Liabilities              2,931,000      293    688,596             -

May 31, 1996 Net Loss                -        -          -   (2,903,569)
                                                 
Balance at May 31,              
 1996                       18,947,300    1,895  7,183,780   (4,023,327)

Issuance of Common
 Stock for Cash                185,280       19      9,245             -                    

Issuance of Common
 Stock for Services            
 Rendered                    6,344,462      634    248,137             -

May 31, 1997 Net Loss                -        -          -   (4,083,083)

Balance at May 31, 
 1997                       25,477,042   $2,548 $7,441,162  $(8,106,410)

</TABLE>

<PAGE>


                           NELX, INC.
                 NOTES TO FINANCIAL STATEMENTS
                    May 31, 1997 and 1996
                        
                        
                        
                        
     NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     The following is a summary of NELX, Inc.'s (Company)
     significant accounting policies:

     Organization

     The Company was incorporated March 25, 1983
     under the laws of Kansas for the purpose of
     acquiring, dealing in and, if warranted,
     developing oil and gas properties. The
     Company may also engage in other businesses or
     activities unrelated to natural resources
     which management believes hold potential for
     profit.  On October 25, 1983, the Company
     amended its Articles of Incorporation
     increasing its authorized shares of 0.0001
     par value common stock from 200,000,000 to
     500,000,000 shares.

     On October 30, 1993, a special meeting of
     Shareholders was held.  Stockholders approved
     a name change of the Company from Nelson
     Exploration, Inc., to NELX, Inc.

     On November 30, 1993 the Board approved a
     "reverse split" of the issued and outstanding
     shares of common stock based upon issuance of
     one (1) new common share in exchange for each
     30 shares of (old) common stock issued and
     outstanding effective as of December 31,
     1993.

     Cash and Cash Equivalents:

     For purposes of the statement of cash flows,
     cash and cash equivalents include cash in
     banks and money market accounts.  The cash
     position at May 31, 1997 was a deficit of
     $8,533.

     Fixed Assets and Depreciation/Depletion:

     The useful lives of property, plant, equipment,
     andoperating leases, for purposes of computing
     depreciation/depletion are:
     
     Buildings         31.5 - 39.5 years
     Machinery &               6.0 years
     equipment
     Plant                    27.5 years


     In 1997 and 1996, respectfully,
     depreciation and depletion expense of
     $19,103 and $75,207 was charged to
     operations.


<PAGE>
     
                          NELX, INC.
                 NOTES TO FINANCIAL STATEMENTS
                     May 31, 1997 and 1996
                         
                         
                         
                         
     NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES, CON'T:


     Income taxes:

     The Financial Accounting Standards Board
     (FASB) has issued Statement of Financial
     Accounting Standards Number 109 ("SFAS 109"),
     "Accounting for Income Taxes", which requires
     a change from the deferred method to the asset
     and liability method of accounting for income
     taxes. Under the asset and liability method,
     deferred income taxes are recognized for the
     tax consequences of "temporary differences" by
     applying enacted statutory tax rates applicable 
     to future years to differences between the 
     financial statement carrying amounts and the tax 
     basis of existing assets and liabilities.
     
     At May 31, 1997, the Company had net operating
     loss carryforwards of approximately $8,091,780
     for federal income tax purposes.  These 
     carryforwards, if not utilized to offset taxable 
     income will expire at the end of the indicated years:

                      2001      $     20,180
                      2002                 -
                      2003            19,735
                      2004            22,537
                      2005             2,401
                      2006             6,447
                      2007             2,487
                      2008            67,274
                      2009                 -
                      2010           964,067
                      2011         2,903,569
                      2011         4,083,083

                                   $8,091,780

     There was no provision or benefit for income taxes in
     fiscal 1997.

     Reclassifications:

     Certain amounts in the 1996 financial
     statements have been reclassified to conform
     to the 1997 presentation.
     
     Use of Estimates in the Preparation of Financial Statements:

     The preparation of financial statements in
     conformity with generally accepted accounting
     principles requires management to make
     estimates and assumptions that affect the
     reported amount of assets and liabilities and
     disclosures 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.
     
     
<PAGE>

       
     
                            NELX, INC.
                 NOTES TO FINANCIAL STATEMENTS
                     May 31, 1997 and 1996
NOTE 2 - LONG-TERM DEBT:

Following is a summary of long-term debt
at May 31


                                                 1997         1996


     8%     Note payable to Latter
            Day Saints Church Real
            Estate, $4,014 payable
            per month, due 01/2008, 
            secured by office building 
            in Provo, Utah                  $        -   $  380,963          

     7.6%   Note payable to CNETCO, 
            Inc., payable at $359 per 
            month, due 10/05, secured 
            by 4th mortgage on property         31,875       31,875     

   13.75%   Note payable to Chrysler 
            First Financial Services,Inc., 
            payable at $745 per month due 
            06/97, secured by first deed 
            of trust on apartment
            building in Denver, Colorado             -       22,591
       
       8%   Notes payable to Standard 
            Financial Services, Inc., due
            01/94, and 9/30/95 secured by 
            land in Weld County, CO, and 
            apartment units in Denver, 
            Colorado                                 -       50,000

       8%   Note payable to Linda
            K. Gash Trust Fund,
            due 07/97, secured by
            first deed of trust on      
            land in Boulder County, 
            Colorado                                 -      200,000  

       8%   Note payable to Richard
            E. Gash Electric Company,
            Inc., due 07/97, secured 
            by first deed of trust on 
            land in Adams County, 
            Colorado                                 -      200,000

       8%   Note payable to Meheen
            Engineering Corp.
            Profit Sharing Plan
            Trust, due 09/98,secured 
            by first deed of trust 
            on land in Brighton, Colorado      500,000      500,000      

      14%   Note payable to DBL
            Mortgage Corp., payable 
            at $2,800 per month secured 
            by first deed of trust on land
            in Weld County, Colorado.  
            Note is in default, interest 
            escalates to 38% on unpaid 
            balance.                           240,000      240,000  
       
Various %   Unsecured notes payable to 
            others, due on various dates  
            through 1998 at interest rates
            from 8% - 10%                       70,944       24,137

    Less:   Current maturities included in 
            current liabilities               (812,252)    (368,214)
                                            $   30,617   $1,315,761

<PAGE>


                          NELX, INC.
                 NOTES TO FINANCIAL STATEMENTS
                    May 31, 1997 and 1996
Following are maturities of long-term debt for each of the next
five years:

        1999                      $  2,577
        2000                         2,780
        2001                         2,999
        2002                         3,185
        2003                         8,980
                                    20,521
        Remaining Balance           10,096

        Total Long-Term Debt       $30,617


NOTE 3 - GOING CONCERN:

     The Company incurred a net loss of $4,083,083 for 1997 and
     has incurred a substantial net loss in the prior year.  At
     May 31, 1997, current liabilities exceed current assets by
     $1,684,358.  These factors indicate that the Company has
     substantial doubt about its ability to continue in
     existence.  The financial statements do not include any
     adjustments relating to the recoverability and
     classification of recorded assets, or the amounts and
     classification of liabilities that might be necessary in
     the event the company cannot continue in existence.
     
NOTE 4 - ASSET DISSOLUTION:

    In November of 1992 the company issued 7,400,000 shares
     of the company's common stock for a 3 unit apartment
     building, subject to a promissory note of $57,000 to
     Chrysler First Financial Services Corporation.  During the
     1997 fiscal year the company was in default on this note
     and the property was foreclosed.
     
     In November 1993 the company exchanged 37,600,000 shares
     of common stock and acquired an industrial building and
     office facility in Provo, Utah subject to a promissory
     note and trust deed for $420,000.   During the 1997 fiscal
     year the company was in default on this note and the trust
     deed was foreclosed on the property and the note
     satisfied.
     
     In November 1993 the company issued 20,000,000 shares of
     common stock for two separate five acreage parcels of land
     subject to a $400,000 note and trust deed.  During the
     1997 fiscal year the company was in default on this note
     and the properties were relinquished and the debt was
     extinguished via a deed in lieu of foreclosure.
     
NOTE 5 - SUBSEQUENT EVENTS AND ASSET REVALUATION:

     In November of 1992 the company issued 60,000,000 shares
     of stock for 240 acres of land upon which the company
     borrowed $240,000 via a note and deed of trust.  The
     company is in default on this mortgage and it has been
     foreclosed.  The company believes it has reached an
     agreement to settle a lawsuit surrounding this property.
     At year end the company has written the property down to
     $450,000, the amount of the outstanding mortgage accrued
     interest and penalties.
                               
<PAGE>
                               
                          NELX, INC.
                 NOTES TO FINANCIAL STATEMENTS
                     May 31, 1997 and 1996
                               
NOTE 5 - SUBSEQUENT EVENTS AND ASSET REVALUATION, CON'T:

     In October of 1993, the company issued 6,200,00 shares of
     common stock in exchange for 320 acres of land subject to
     a promissory note and deed of trust in the amount of
     $500,000.  The company was in default on this mortgage at
     year end and subsequently gave the deed in lieu of
     foreclosure to the note holder.  The company has written
     the property down to $500,000, the amount of the
     outstanding mortgage at year end.
     
     
     In September of 1995 the company exchanged 350,000 shares
     of common stock for a mini mall located in Kansas subject
     to a note for $31,875.  The company is in default on this
     note and the company has revalued this property down to
     the amount of the outstanding mortgage of $31,000.
     
     In 1996 & 1997 the company wrote off certain costs
     associated with contracts to purchase land, because the
     company could not perform upon the purchase contracts
     within the time requirements of the contracts.  The
     purchase contracts were for land in Central, Colorado and
     Elbert County, Colorado.
     
     On October 9, 1997, the Board of Directors accepted an
     offer from Charles Stout to acquire 20 million shares of
     common stock of NELX, Inc., in consideration for his
     agreement to contribute $20,000 in immediate cash and to
     contribute such additional funding up to $250,000 to
     settle accounts payable and commitments.  Subsequently, on
     October 17, 1997, the initial cash contribution of $20,000
     was made.  When issued, the 20 million shares will represent 
     46% of the outstanding stock of NELX, Inc. Mr. Charles Stout 
     was appointed President on October 9, 1997.