NELX to seek private placements to save operations

By Sheri Kasprzak

New York, Oct. 20 -NELX, Inc. is looking toward private placements to help it stay afloat due to a working capital deficiency and cash flow shortages.

The company had a working capital deficit of $4,480,625 as of Aug. 31.

"Recognizing the cash flow shortages that the company is facing, management will seek to raise additional funds through private placements of stock at prices that will not be dilutive to current shareholders," said a form 10-QSB the company filed with the Securities and Exchange Commission.

"The company is actively attempting to raise financing for the acquisition of an insurance company. [...] If such a financing and acquisition are successfully accomplished, holders of the company's indebtedness who have been granted the right to convert such indebtedness into common shares will be encouraged to exercise their conversion rights.

"If the company is unable to arrange financing for the acquisition, it may not survive. Irrespective of whether the company's cash assets prove to be inadequate to meet the company's operational needs, the company might seek to compensate providers of services by issuances of stock in lieu of cash."

On Oct. 6, NELX raised $3 million through a private placement of series A and B preferred shares to help pay for its acquisition of West Virginia First and Casualty Co. from The Celina Mutual Insurance Co.

NELX said in its form 10-QSB that it has incurred significant losses from operations since inception and those losses are expected to continue.

For fiscal year 2005, the company sustained a loss from operations of $796,000 and a loss from operations of $144,700 for the quarter ended Aug. 31.

Based in Charleston, W.Va., NELX is an investment manager and advisor.

The company's stock remained unchanged at $0.018 Thursday.

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