a21 wraps $15.5 million convertible note sale; Dobi Medical sells $6 million discounted debentures

By Sheri Kasprzak

New York, May 1 - Heading up PIPE action for the week - and for the month - was a $15.5 million convertible note sale from a21, Inc.

Tech stocks climbed early in the session after a slump last week and by the end of the day, a21's stock jumped 12.5%, or 8 cents, to settle at $0.72 (OTCBB: ATWO).

The 5% notes were purchased by a group of institutions led by StarVest Partners, LP; QueeQueg Partners, LP; and Morgan Stanley.

The notes are due March 2011 and are convertible into common stock at $0.65 each.

a21 plans to use the proceeds to repay debt, expand its business and provide working capital.

"We are pleased that this investor group recognizes the progress the company has made by electing to complete this financing at a premium to the current market price of our common stock," said a21 chief executive officer Albert Pleus in a news release. "While about 50% of the notes were purchased by our existing investors, we have also added some very important new investors to the company. The financing allows us to improve our capital structure, retire certain outstanding warrants, strengthen our balance sheet and support the next phase of the company's growth."

The placement comes just days after a21 released its fourth-quarter and year-end financial results.

For the quarter ended Dec. 31, a21 reported a net loss of $1.5 million, compared with a net loss of $494,000 for the same quarter of 2004.

The company reported a net loss of $4.8 million for the year ended Dec. 31, compared with a net loss of $2.5 million for the same period ended Dec. 31, 2004.

Jacksonville, Fla.-based a21 is an online digital content marketplace used by creative professionals. The company provides images through three web sites.

Dobi Medical's $6 million PIPE

Elsewhere in the tech sector, Dobi Medical International, Inc. issued $6 million in debentures for proceeds of $5.25 million.

The zero-coupon debentures, priced at 87, are due on Aug. 28, 2007 and are convertible into 75 million common shares at $0.08 each.

The conversion price represents a 42.8% discount to the company's $0.14 closing stock price on April 28.

The investors received warrants for 75 million shares, exercisable at $0.15 each and warrants for 37.5 million shares, exercisable at $0.50 each.

Dobi chief financial officer Michael Jorgensen did not immediately return requests for comment on the offering Monday.

The proceeds will be used for a clinical trial research study, sales and marketing efforts, working capital and general corporate purposes.

The stock dove by 42.86%, or 6 cents, to close at $0.08 Monday (OTCBB: DBMI). This is the first time the stock has moved since April 26 when it gained just a penny.

"This is a struggling company, clearly. It's not a company I'd personally look at," said one technology buysider, who saw the deal but did not participate in it.

The buysider noted that the stock already dipped substantially on Monday, and even though it probably won't go much lower, "it might stay this low for a while."

For the fourth quarter of 2005, the highest closing price of Dobi's stock was $0.49 and the lowest was $0.19. In the corresponding quarter of 2004, the highest was $1.06 and the lowest was $0.50.

Dobi reported a net loss of $10.43 million for the quarter ended Dec. 31, compared with a net loss of $7.01 million for the same quarter of 2004. Since its inception in September 1999, Dobi has incurred a net loss of $34.18 million.

Dobi Medical, based in Mahwah, N.J., is a medical imaging company focused on diagnosing malignant breast cancer.

Paxton raises $3.06 million

In the energy sector, Paxton Energy, Inc. wrapped a $3,065,125 offering as oil prices rebounded.

Oil prices gained $1.82 on Monday to close at $73.70 per barrel after closing below $72 per barrel on Friday.

In the Paxton deal, the company issued 2,452,100 units at $1.25 apiece to a group of institutional and private investors.

The units include one share and one half-share warrant. Each full warrant allows for the purchase of another share at $3.00 each for five years.

Empire Financial Group, Inc. was the placement agent.

After the deal was announced late Monday morning, Paxton's stock slipped 15 cents, or 4.84%, to close at $2.95 (Pink Sheets: PXTE).

The proceeds from the deal will be used to drill four wells and gather three-dimensional seismic data on oil and gas exploration acreage in Texas.

Carson City, Nev.-based Paxton is an oil and natural gas exploration company.

Nstein prices C$9.99 million deal

In Canada, Nstein Technologies Inc. led activity, pricing a C$9,996,000 private placement.

J.L. Albright Venture Partners and Solidarity Fund QFL agreed to buy 117.6 million shares at C$0.085 each, a 5% discount to the company's C$0.09 closing stock price on April 28.

Solidarity, which is an insider of the company, will subscribe for half of the offering and J.L. Albright the other half.

Nstein expects the offering to close within the next 45 days.

Desjardins Securities Inc. is the lead placement agent for the offering.

Nstein's stock advanced by 16.67%, or a penny and a half, to close at C$0.105 Monday (TSX Venture: EIN).

Part of the proceeds from the placement will be used to develop a new platform that will offer Nstein's technology via an internet subscription model. In particular, the platform will allow financial analysts the ability to receive early warnings they can use to monitor certain companies and make analyses.

"This financing, which is the outcome of several months of work, will provide Nstein with an enviable position against the major players in the multilingual information access solutions' market," said Mario Girard, the company's CEO, in a statement. "We are delighted that the Solidarity Fund QFL is once again demonstrating its confidence in us, and very proud to gain an investor of J.L. Albright's quality who will undoubtedly bring significant value to the development of this company. Their involvement confirms that Nstein has the technology, resources and expertise it needs to reach its goals."

"Over the last five years, search engine technologies such as Google have made great progress enabling internet users to conduct searches on virtually infinite sources of information," said Pierre Donaldson, general partner with J.L. Albright, in a statement. "Although these tools are getting more powerful, users are still faced with the tedious task of manually sorting among thousands of results in order to find the information they are looking for.

"As these search engines evolve, it is expected that quality of results will be privileged over quantity by applying highly specialized text mining technologies. Thanks to its capabilities in analyzing structured and unstructured data, Nstein is extremely well-positioned to become the leader in this emerging text-mining market."

Montreal-based Nstein develops software used to analyze unstructured data in a variety of languages.

Qiao Xing stock climbs

After announcing a $40 million convertible bonds offering Friday, China's Qiao Xing Universal Telephone, Inc. saw its stock advance by 4.88%, or 45 cents, to close at $9.67 Monday (Nasdaq: XING).

On Friday, when the deal was announced, the stock gained 10.68%, or 89 cents, to end at $9.22.

The bonds are convertible at 115% of the volume weighted average price of the company's stock for the five trading days after the term sheet is signed.

Based in Guangdong, China, Qiao Xing develops and distributes telecommunications products.

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