Volume remains light as stocks fall, oil makes meager gains; American Oil wraps $13.5 million offering

By Sheri Kasprzak

New York, July 25 - PIPE volume fell off from the steady surge experienced last week, thanks to lower stocks, sell-siders said Monday. However, the drop may be temporary.

"The boom couldn't last forever," joked one sell-sider of the drop in volume. "Stocks were off, oil's up just a bit. [It was] not really a big day."

With stocks pushed down by slightly higher oil, one sell-sider said some issuers were probably just waiting out what he called "a temporary setback."

"I expect about the same level [of volume] this week as we had last week," he said. "There's just a temporary setback because of lower stocks."

That market source said he fully believes PIPE volume is going to be strong throughout the summer.

The Dow dipped 54.70 to close at 10,596.48; the Nasdaq composite index slid 13 to close at 2,166.74 and the S&P 500 ended the day 4.65 lower to end at 1,229.03.

Oil, on the other hand, made some slight gains Monday on talk that inventories may be down again. Oil prices rose $0.35 to close at $59.

While there were some oil and natural gas exploration companies in the market Monday, one market source familiar with the sector said the majority of those offerings have acquisitions attached to them.

"Oil stocks aren't doing that great right now, so unless there's some type of merger or something of that sort, we probably won't see too many of them," he said. "There were some out today, but again, they were being done as part of a [merger or acquisition]."

Although American Oil & Gas, Inc. did not have an acquisition or merger involved with its $13.5 million private placement, the company did have natural gas production goals attached.

The Denver-based exploration company sold 250,000 units at $54 each.

The units are comprised of one share of series AA convertible preferred stock and warrants for 3.6 common shares for each preferred.

The units include one share of series AA convertible preferred stock and warrants for 3.6 common shares for each preferred.

The preferreds pay annual dividends at 8% and each preferred is initially convertible into 12 common shares at $4.50 each.

The terms of the offering will change if the company establishes natural gas sales from its Sims well at the Fetter project in the next two months. The company will initially issue warrants for 3.6 common shares for each preferred, exercisable at $4.50 each for 18 months. However, if those sales are made, the company will issue warrants for 2.7 shares for each preferred, exercisable at $6 each for 18 months. Also, the preferreds will become convertible into common shares at $6 each.

After announcing the closing Monday morning, American Oil's stock gained $0.21 to end at $5.41.

The company intends to use the proceeds for drilling and development activities.

"We are pleased to announce the closing of this financing, a large portion of which was done with existing shareholders," said the company's president, Andrew Calerich, in a statement.

"The proceeds from this funding, combined with our existing cash position and cash flow, position us to maintain aggressive drilling and development activities in our project inventory. In addition to ongoing drilling programs at our Fetter and Big Sky projects, we anticipate commencing drilling operations in other project areas during 2005. Our increased financial flexibility also allows us to continue adding acreage in core project areas and strengthens our ability to add new opportunities to our portfolio that offer the potential for significant reserve and production growth."

American Oil, according to its latest earnings statement, had 35,776,202 outstanding common shares as of May 19.

The company had cash assets totaling $4,391,115 as of March 31, compared to $5,251,889 for the same period in 2004. The company reported a net income of $61,662 for the quarter ended March 31, compared to net loss of $161,999 for the same period in 2004.

ImageWare raises $3.1 million

ImageWare Systems, Inc. announced that it is preparing to close a $3,105,001 private placement of units.

The offering includes 1,203,489 units at $2.58 each, sold mostly to existing shareholders.

The units consist of one share and one warrant for 0.38 of a common share. The whole warrants allow for the purchase of an additional share at $3.45 each.

"These funds will provide ImageWare additional balance sheet strength to aggressively pursue our target markets," said Jim Miller, the company's chairman and chief executive officer, in a statement. "We are especially pleased to be able to secure this funding largely from existing shareholders of ImageWare that know our company well and appreciate the company's positioning in the markets we serve."

The proceeds from the deal will be used for working capital.

Based in San Diego, ImageWare produces identity-detection technologies.

ImageWare's stock dropped $0.11 to end at $2.89 Monday.

Cyries prices C$50 million deal

Canadian offerings were led Monday by a C$50,005,425 offering priced by Cyries Energy Inc.

The company plans to sell 803,300 units at C$62.25 each.

Those units are comprised of two common shares and three subscription receipts.

The receipts allow for one common share after Cyries completes its acquisition of a private oil and gas company and its subsidiary.

The deal is being placed through a syndicate of underwriters led by FirstEnergy Capital Corp.

Cyries is in talks to buy a private oil company and its subsidiary for C$57 million. That acquisition is scheduled to close in mid-August.

The acquisition must close before Aug. 31, otherwise all of the proceeds from the receipts will be returned to the investors. The proceeds obtained from the subscription receipts will be used to partially fund the acquisition.

Proceeds from the common shares will be used to fund the company's increased capital expenditure program and for general corporate purposes.

Based in Calgary, Alta., Cyries is an oil and natural gas exploration company.

At market close Monday, Cyries' stock slipped C$0.04 to end at C$12.79.

Adventrx's stock continues climb

Adventrx Pharmaceuticals, Inc. saw its stock rise for the second straight session following the news that it has secured $20 million from a stock offering.

The company's stock closed up $0.22 at $3.02 Monday after gaining more than 24%, or $0.55, to close at $2.80 on Friday when the deal was first announced.

The company sold shares at $1.85 each to a group of institutional investors led by Icahn Partners LP and Icahn Partners Master Fund LP.

San Diego-based Adventrx develops treatments for cancer and viruses.

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