Zoom gives detail of private placement; Dynasty to sell stock; North Bay obtains credit line

By Stephanie N. Rotondo

Portland, Ore., Oct. 21 - Zoom Technologies Inc. brought one of Wednesday's more complicated private placements to market.

The company said it was looking to raise just over $10 million by privately placing stock. Zoom already closed on nearly half that amount, while the remaining funds sit in escrow, pending shareholder approval. But it was the issuance of five series of warrants that made the deal harder to grasp.

Meanwhile, Dynasty Metals & Mining Inc. said it would pocket C$6 million from a private placement of shares. According to a company spokesperson, Dynasty was approached by a group of underwriters, which then led to the deal.

North Bay Resources Inc. received a $5 million credit line, the company announced. The company will sell shares in up to $100,000 tranches. The funds will be used to fund the company's business plan.

Elsewhere, iCo Therapeutics Inc. is seeking C$4 million. The company will conduct a private placement of equity to raise the funds.

In settled deals, India Globalization Capital Inc. said it took in $2 million from a private placement of promissory notes.

Zoom plans private equity sale

Zoom Technologies is seeking $10.01 million from a private placement of equity, according to a regulatory filing.

The company closed on $4.97 million on Oct. 16. The remaining funds are sitting in escrow pending shareholder approval.

The terms of the deal are "very complicated," according to Anthony Chan, chief financial officer of Zoom. The settled portion included the sale of approximately 1.24 million shares at $4.00 per share. Investors in the first tranche also received 620,969 series A warrants, which offer 50% warrant coverage and are exercisable at $6.00 per share for five years.

Zoom also issued 629,670 series C warrants - which bear the same terms as the series A warrants - which are attached to the funds sitting in escrow.

The funds in escrow were raised through the issuance of approximately 1.26 million series B warrants. The warrants are immediately exercisable at one penny for one share of common stock, pending shareholder approval.

Additionally, investors received 625,313 series D warrants and 625,313 series E warrants. Both of those warrants are exercisable at a penny, but only if the company fails to meet its fiscal 2009 and fiscal 2010 earnings targets, Chan explained.

"They are called 'make-good warrants,'" he said. As a Chinese company coming to the United States, he said that the company needed to offer such a security to provide investors with some sort of guarantee.

Chan said the company has made forecasts for 2009 and 2010 and if those levels differ too much from actual earnings, "our investors will hold us to that."

Basically, "it is a penalty against the company if we miss our earnings forecast," he said. "As a first time company coming to the financial markets, we still have to prove ourselves, so to speak."

However, if Zoom does meet its targets, the series D and E warrants are voided.

Chan said the deal was structured in this way in an effort to work around the Nasdaq 20% rule, which states that if a company issues 20% or more of its outstanding stock, shareholder approval must be obtained.

"Originally, we were trying to work in a way that we could have closing in one go," Chan said, thus the creation of the series B warrant. "It was a very fancy work around" the rule.

But Nasdaq officials later informed the company that there was no way around the rule and the company needed to go ahead and get shareholders to sign off on the deal.

Still, Chan is confident that approval will be secured, calling the planned special shareholder meeting a "formality."

"We know we will get approval because our largest two shareholders that hold about 60% [of outstanding equity] have already pledged to vote for it," he said.

Zoom is currently working on filing its proxy statement and a date for the meting has not been scheduled.

Proceeds from the financing will be used for manufacturing expansion in China, Chan said.

He explained that the penetration rate of the cell phone market in China is less than 50%, meaning less than half the population has access to cell phones. That compares with places like the United States and Hong Kong, where penetration is around 90%.

"They have a huge population and we believe there is a lot of room to grow," he said.

Zoom's stock (Nasdaq: ZOOM) fell 6 cents, or 0.92%, to $6.44.

Zoom Technologies is a Boston-based cell phone manufacturer focused on the Chinese market.

Dynasty to sell discounted shares

Dynasty Metals & Mining will sell 1.5 million common shares in its effort to raise C$6 million, the company announced.

The shares will be sold at C$4.00 per share on a bought-deal basis.

"It's basically a 6% discount to the five-day" volume-weighted average price, according to Murray Oliver, director of corporate relations, said in a statement. Oliver noted that the stock price was "around C$3.80 when we were first approached" by the placement underwriters.

"It's very little dilution, in the big scheme of things," Oliver added as reasoning for going ahead with the deal. He said that, at the time, the company's liquidity was "a little below C$7 million."

"We never like to be below $10 million," he said.

"In these markets, it just makes sense if you can get a good price and very little dilution," he remarked.

Dynasty plans to use proceeds for development of its Ecuadorian properties, mainly its Zaruma Gold Project.

"It gives us an opportunity to expand at Zaruma and to look at other options of bringing other ore into Zaruma," Oliver said.

Dynatsy's shares (Toronto: DMM) dropped 20 cents, or 4.48%, to C$4.26. Market Capitalization is C$152 million.

Dynasty Metals & Mining is a Vancouver, B.B.-based mining company.

North Bay secures credit line

North Bay Resources secured a $5 million line of credit with Tangiers Investors LP, according to a press release.

The company will sell common shares to Tangiers at 90% of the lowest volume-weighted average price of the equity during the pricing period.

The stock will be sold in tranches up to $100,000 per 10 consecutive trading days following the draw request.

"We are very pleased to have secured this equity credit line with Tangiers," said Perry Leopold, chief executive officer, in the release. "We believe this to be a great vote of confidence in our prospects by a well-established investment firm, and we look forward to working closely with them as we continue to grow the company and successfully execute our business plan."

North Bay's equity (Pink Sheets: NBRI) gained $0.006, or 31.43%, to $0.023.

North Bay Resources is a Skippack, Pa.-based junior mining company.

iCo aims for $4 million

iCo Therapeutics will raise C$4 million via a private placement of equity.

The company will issue approximately 8.33 million common shares at C$0.48 per share.

Proceeds will be used for working capital and general corporate purposes.

Calls seeking comment were not returned Wednesday.

iCo's stock (TSX venture: ICO) declined by 3 cents, or 5.17%, to C$0.55. Market capitalization is C$15.9 million.

iCo Therapeutics is a Vancouver, B.C.-based development-stage pharmaceutical company.

India Globalization takes in $2 million

India Globalization Capital, a Bethesda, Md.-based investor in renewable energy concerns, said it sold $2 million of unsecured promissory notes in a private placement.

The deal settled Oct. 16, according to a regulatory filing.

The notes due Oct. 16, 2010 were sold to Bricoleur Partners LP. The investor also received 530,000 common shares.

The notes do not generate interest.

The company did not respond to an e-mail for comment by press time.

India Globalization's shares (Amex: IGC) slipped 13 cents, or 6.40%, to $1.90. Market capitalization is $20 million.

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