VirtualScopics raises $7 million from convertible preferreds; higher oil sparks energy offerings

By Sheri Kasprzak

New York, Dec. 5 - VirtualScopics, Inc. led a meager day for private placements as oil prices continued to move higher on news of wintry weather.

In the VirtualScopics deal, the Rochester, N.Y.-based company raised $7 million from the sale of preferred stock convertible into a total of 2.8 million common shares.

The investors in the offering received warrants for 1.4 million shares, but the full details of neither the preferreds nor the warrants could be determined by press time. Calls the company's headquarters were not returned Monday.

The preferreds are convertible into a total of 2.8 million common shares

The company currently has 24,689,071 outstanding common shares, including the shares underlying the preferreds.

Looking to the company's earnings, for the quarter ended May 31, VirtualScopics reported a net loss of $2,864, compared with a net income of $59,568 for the same quarter of 2004.

"If revenues are insufficient to meet costs other than those which can be deferred, we will have to obtain financing," said the company's latest earnings report. "If financing is not available, we will have to reduce operations."

VirtualScopics provides biomarkers used by the health care industry to determine the effectiveness of drugs and devices.

The company's stock remained unchanged at $6.80 Monday.

In the broader PIPE market Monday, oil prices continued to rise for the third straight session, sparking a small deluge of energy offerings, mostly in Canada.

Oil rose $0.59 on Monday, ending the day at $59.91 per barrel.

With the major stock indexes ending the day down and with oil prices up, one market source said volume was less than stellar. Issuers, he said, are waiting out the surge in oil prices and looking for better market conditions.

"It's that time of year when [issuers] are out pricing stuff before the year ends," he said. "It's not like things are going to come to a grinding halt just because oil's up."

Volume in Canada, however, took off as more natural resources offerings priced on higher oil.

"You can expect it as long as oil keeps going up," said one sellsider in Vancouver.

The Dow Jones Industrial Average lost 42.50 to end at 10,835.01; the Nasdaq composite index closed down 15.73 at 2,257.64; and the Standard & Poor's 500 composite index ended down 2.99 to settle at 1,262.09.

Kodiak Oil's C$8.4 million deal

Kodiak Oil & Gas Corp. led the slate of energy offerings Monday, pricing a C$8.4 million offering.

The Denver-based oil exploration company intends to sell up to 6 million shares at C$1.40 each.

Proceeds from the non-brokered deal will be used for exploratory drilling, development and general corporate purposes.

The company's stock slipped C$0.09, or 6%, to end at C$1.41.

North of the border, Calgary, Alta.'s Trimox Energy Inc. negotiated a C$5.2 million offering. The deal includes 1 million class A shares at C$2.30 each and 1 million class A flow-through shares at C$2.90 each.

The deal is scheduled to close Dec. 21.

Proceeds will be used for exploration and development on the company's Worsley property in the Peace River Arch area of Alberta.

On Monday, the company's stock remained unchanged at C$2.50.

Another Calgary-based oil company, Longview Resources Corp., priced a C$2,002,000 offering of 3.08 million flow-through shares.

The shares were priced at C$0.65 each.

Proceeds will be used for drilling and well completion. The rest will be used for general corporate purposes.

Longview's stock slipped C$0.02 to end the day at C$0.53.

Storm Cat Energy Corp., yet another Calgary-based oil explorer, negotiated a $2.5 million offering upon the closing of its previously announced $5 million stock offering.

In the latest deal, the company intends to sell 992,063 shares at $2.52 each.

The deal includes warrants for 0.3 of a share for every share purchased. The whole warrants are exercisable at $2.97 each through Oct. 25, 2007.

Proceeds will be used for exploration and drilling programs on the Powder River Basin properties.

In the $5 million private placement, the company issued 2,325,581 shares at $2.15 each.

In October, the company settled a $10,948,505 offering of 5,092,328 shares at $2.15 each.

On Monday, the company's stock closed down 26 cents, or 8.75%, to end at $2.71.

PGM plans C$3.9 million offering

Elsewhere in the natural resources sector, PGM Ventures Corp. announced its plans to head to the private placement market with a C$3,995,000 stock deal.

As part of its 10-year off-take agreement with Trafigura Beheer BV, Trafigura agreed to buy 4.7 million shares at C$0.85 each. Trafigura also agreed to provide an additional funding facility of C$23.4 million through new equity, capital cost overrun guarantees and subordinated debt. Trafigura will provide a minimum of C$5.9 million in new equity and up to C$11.7 million in capital cost overrun guarantees.

Under the terms of the off-take agreement, Trafigura will buy all of the copper, zinc and lead concentrates in PGM's Aguas Tenidas mine in southern Spain for a 10-year period. At the end of the fifth year, PGM has the option to continue with the agreement, switch to an agency agreement or buy out the balance of the off-take contract.

Proceeds from the private placement will be used to retire all of the remaining debt from promissory notes originally issued by PGM to acquire 100% interest in the Aguas Tenidas mines.

Toronto-based PGM is a mineral exploration company.

eLEC stock drops 13.3%

eLEC Communications Corp.'s stock fell on Monday after completing a $2 million note offering on Friday.

The company's stock fell 6 cents, or 13.33%, to settle at $0.39.

On Friday, the company's stock gained 4.65%, or 2 cents, to end at $0.45.

The company issued a note to Laurus Master Fund, Ltd. The note is convertible into common shares at $0.61.

White Plains, N.Y.-based eLEC is a telecommunications company focused on local, long distance, dedicated access and voice-over-internet protocol products.

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