Cash Systems gears up to settle $20 million convertibles; Axial raises $2.7 million in stock sale

By Sheri Kasprzak

New York, Oct. 9 - Minimal stock movement and the Columbus Day holiday held back PIPE volume on Monday, but light activity was led by a $20 million convertibles offering from Cash Systems, Inc.

The company is preparing to settle an offering of 6.5% senior secured convertible notes. The notes are convertible at $8.00 each. The maturity of the notes could not be determined by press time Monday.

Investors to the deal will receive warrants for 312,500 shares, exercisable at $8.00 each.

Andrew Cashin, the company's chief financial officer, did not immediately return requests for comment on the deal by press time Monday.

Deutsche Bank Securities Inc. is the placement agent for the offering, which is scheduled to wrap Tuesday.

On Monday, the stock gave up 4 cents, or 0.61%, to end at $6.55 after making some early gains. By 11 a.m. ET, the stock had climbed by 1.67%, or 11 cents, after the deal was announced in the morning.

Volume trailed off with 5,362 shares traded compared to the average 47,831 shares.

Proceeds will be used to repay bank debt. The remainder will be used for working capital.

"This positions the company to complete its product development plans and allows for greater financial flexibility as we continue to grow our business," said Michael Rumbolz, the company's chief executive officer, in a news release.

Cash conducted a PIPE - a stock-for-cash transaction - in February for proceeds of $4,470,160. The company sold 710,000 shares at $6.296 each to the Viejas Band of the Kumeyaay Indians. The offering was conducted as part of Cash's acquisition of automated teller machines from Indian Gaming Services.

Looking to the company's latest earnings statement, Cash reported a net loss of $804,142 for the quarter ended June 30, compared to a net loss of $1,668,385 for the corresponding 2005 quarter.

Based in Burnsville, Minn., Cash Systems provides automated teller machines.

In the broader market, volume crawled because of the holiday and because of only meager gains in the stock market.

One market source who responded via his BlackBerry Monday said it was a combination of the two things, most likely, keeping volume down.

"People are actually working today?" he quipped. "[It's] most likely the [holiday]. Stocks aren't doing too much either."

The Dow Jones Industrial Average edged up 7.60 to close the session at 11,857.81; the Nasdaq composite index settled up 11.78 to close at 2,311.77; and the Standard & Poor's 500 composite index gained 1.08 to end at 1,350.66.

Axial raises $2.7 million

After announcing the completion of a $2.7 million stock deal Monday, Axial Vector Engine Corp. fell by 5.66%.

The stock lost 15 cents to end at $2.50 (OTCBB: AXVC).

In the placement, the company sold 1.35 million shares at $2.00 each. The price per share is a 24.5% discount to the company's $2.65 closing stock price on Friday.

"We are extremely pleased by the support of our shareholders who provided this favorable financing to the company," said Raymond Brouzes, the company's CEO, in a statement. "Our development and patenting program continues full speed ahead. We will be premiering our new low-cost power-generating technologies at the World Power Generation Show Nov. 28 through 30 in Orlando, Fla."

Located in Portland, Ore., Axial develops internal combustion engine technologies designed to make engines more fuel efficient.

Memory stock jumps 20%

In the biotech sector, Memory Pharmaceuticals Corp.'s stock took off, gaining 20% Monday after the company announced a $31.3 million stock deal last week.

The stock gained 24 cents to close at $1.44 Monday (Nasdaq: MEMY), advancing another penny in after-hours trading activity.

The company's stock gained a penny on Friday to end at $1.20. On Thursday, when the deal was announced, the company's stock gained 5 cents to end at $1.19.

Volume remained somewhat elevated on Monday with 898,300 shares traded compared to the average 126,012 shares.

On Friday, volume of Memory shares traded skyrocketed with 1,617,152 shares traded compared with the average 105,012 shares.

As previously reported, Memory plans to sell shares at $1.11 each to a group of investors led by Great Point Partners and MPM Capital. The price per share is a 2.6% discount to the company's $1.14 closing stock price Wednesday.

The placement is set to close in at least two tranches with the first - for $26.7 million - set to settle on Oct. 16. The closing of the second tranche is subject to shareholder approval.

Based in Montvale, N.J., Memory develops treatments for Alzheimer's disease, schizophrenia, depression and bipolar disorder.

Star Energy stock advances

After pricing a private placement for up to $5 million Friday, Star Energy, Inc. saw its stock climb by more than 7% Monday.

The company's stock jumped by 7.26%, or 8.5 cents, Monday to end at $1.255 (OTCBB: SERG). The stock gained 4 cents, or 3.54%, to close at $1.17 Friday when the deal was priced.

In the offering, the company said it plans to raise up to $5 million and at least $1 million as part of a share agreement with Volga-Neft Ltd. Co.

The deal includes units of one share and one warrant priced at $1.00 each.

The deal is being conducted as part of a share agreement with Volga-Neft. Star purchased 100% of the outstanding shares of Volga-Neft from its shareholders for 10 million shares of Star.

Based in Salt Lake City, Star is an oil and natural gas exploration and development company.

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