Veri-Tek offers $9 million stock; Fonix climbs; Continental Energy falls; Market slow, traders' hopeful

By LLuvia Mares

New York, Aug. 31 - Veri-Tek International, Corp. announced it plans to offer a $9 million private placement of shares.

The company secured agreements from several institutional investors including Skylands Capital, Skylands Special Investment, Harbour Holdings Ltd., Lake Street Fund, Alder Capital Partners I, LP, Alder Offshore Partners, Ltd., Sunrise Equity Partners, LP, Pierce Diversified Strategy Master Fund, LLC, Enable Opportunity Partners LP and The Pinnacle Fund, LP to purchase 1.5 million shares at $6.00 each.

"I think the company is just a very solid company," said an analyst. "It has a very nice EBITDA margin and the management has been executing like they should and we feel strongly that they will do whatever it is they promised."

Roth Capital Partners, LLC served as placement agent.

The company plans to use proceeds to repay part of its debt.

"The company has already been paying interest on their debt," said the analyst. "With the reduction in debt, the company can improve their EBITDA margin."

Bridgeview, Ill.-based Veri-Tek specializes in making specialty equipment for automotive and heavy equipment industries.

"For the six months ending June 30, the company did $53 million in revenue and $4.1 million in EBITDA," said the analyst. "The company has given public guidance $55 to $100 million in revenue for 2007 and $8 million to $8.5 million in EBITDA, so we think the company will perform. We believe that the management will meet or exceed their guidance."

The analyst, whose firm has invested in Veri-Tek in the past, said the company's management has been very conservative. "We are very confident that they will beat their numbers and they still have a long lead-time before the building of their product so the backblock is committed."

Sense sells $2.08 million units

Sense Holdings, Inc. concluded a private placement of units for $2.085 million.

The company sold 34.725 million units at $.06 per share to a group of investors. Warrants to purchase 34.725 million shares of stock were included in the deal.

The warrants are exercisable at $0.12 per share for five years with one half each of each purchaser's warrants being called if the closing price of the stock is equal to or above $0.18 for any 10 trading days out of any 30 consecutive trading days. The warrants are subject to a 4.99% cap on the beneficial ownership.

Proceeds from the transaction will be used for working capital purposes.

Sunrise, Fla.-based Sense Holdings specializes in biometric solutions and micro-sensor identification systems.

Fonix stock climbs

A day after Fonix Corp. announced a $2.4 million offering of series N 9% convertible preferreds, the company's stock climbed 12.50%.

The company closed Thursday at $0.08 cents and increased Friday by $0.1 cent ending the day at $0.9 cents.

"Fonix Corp. is in a crowded space," said a trader. "It's amazing they can raise any capital with that stock price."

The company will sell 2,400 shares of preferred stock at $1,000 per share to various investors including lead investor Trillium Partners, LP.

The stock is convertible into shares of the company's class A common stock at a conversion price of 80% of the two lowest closing bid prices over the 20 trading days prior to the conversion date.

Salt Lake City, Utah-based Fonix specializes in speech recognition and text-to-speech technologies.

Continental Energy stock falls

After Continental Energy Corp. completed a $3.25 million private equity placement Thursday, the company saw its stock drop 2.86% Friday.

The shares closed Thursday at $0.70 cents but dropped $0.2 cents during Friday's session to end at $0.68.

The company issued 5 million common shares at $0.65 each. The placement also included 10 million in warrants with an exercise price of $0.90 per share for three years.

"Selling equity is the best thing these companies can do if at all possible," said a market source. "It shows management is willing to dilute their own holdings in the name of growth and it also shows investors are willing to take a non debt/secured stake in the company so they too are enthusiastic about prospects."

When exercised, the warrants will provide an additional $9 million in proceeds. The total in common shares and warrants will represent 19.4% of Continental's outstanding share capital.

Dallas-based Continental Energy is an international oil and gas exploration company, focused on making oil or gas discoveries in Indonesia.

Market slowdown, traders' hopeful

In other news, after a relatively slow month in the PIPE market, analysts are hopeful business will pick up for the month of September.

"It's a typical end of summer slow down," said one analyst Friday. "I would expect the deal flow to pick up after Labor Day."

The analyst said news of more mining deals from Canada can be expected this fall.

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