Terax wraps $16 million unit offering; U.S. Gold prices $50.4 million PIPE

By Sheri Kasprzak

New York, Feb. 8 - Terax Energy, Inc. led PIPE news Wednesday, sealing up a $16,007,000 private placement that sent its stock down more than 4%.

The company issued 12,805,600 units to an institutional investment manager and four accredited investors. The units consist of one share and one warrant, each of which is exercisable at $1.50 each through Feb. 6, 2011.

As of Nov. 11, the company had 51,577,000 outstanding common shares.

J.P. Turner & Co., LLC was the placement agent.

The settlement was announced Wednesday morning, and by the end of the day, the company's stock had given up 12 cents, or 4.53%, to close at $2.53 (OTCBB: TERX).

"These funds will enable Terax to complete a minimum of its first six wells, as well as the initial leg of its gathering system, and will position Terax to address its future capital requirements on a cost-effective basis," said Lawrence Finn, the company's chief executive officer, in a statement. "We expect to complete the gathering system by the end of February and complete the Mitchell #1-H and #2-H wells shortly thereafter."

Proceeds will be used for drilling on the Barnett Shale property and for working capital.

Looking to the company's latest earnings statement, Terax reported a net loss of $493,177 for the quarter ended Sept. 30, 2005, compared with a net loss of $750 for the same quarter of 2004.

Based in Dallas, Terax is a natural gas exploration, development and production company.

Elsewhere in the natural resources sector, U.S. Gold Corp.'s chief financial officer said in a brief interview Wednesday that the company is "pleased" with the pricing terms of a $50.4 million offering the company priced after close of the market Tuesday night.

"We are very much pleased with the pricing terms of the offering," said Bill Pass in an interview Wednesday.

The company will sell up to 11.2 million subscription receipts at $4.50 each. The receipts are priced at a 12.45% discount to the company's closing stock price of $5.14 on Feb. 7.

Each receipt is exchangeable on a one-for-one basis for units of one share and one half-share warrant once the company files a registration statement covering the underlying shares. The whole warrants are exercisable at $10.00 each for five years.

The deal is slated to close Feb. 22.

On Wednesday, the company's stock slipped 3.7%, or 19 cents, to close at $4.95 (OTCBB: USGL).

Proceeds will be used for exploration and development of the company's Tonkin Springs gold project in Nevada. The rest will be used for working capital and general corporate purposes.

On Wednesday, Pass acknowledged that Robert McEwen, the company's new chief executive officer, did participate in the company's $4 million private placement of 11,111,111 shares at $0.36 each. However, Pass refused to comment on whether McEwen would also be participating in this offering.

Based in Lakewood, Colo., U.S. Gold is a gold exploration company.

The U.S. Gold offering priced despite another drop in gold prices Wednesday. After sustaining a $19.50 loss Tuesday, gold prices got hit again on Wednesday, losing $0.60 to close at $550.10 per ounce.

"Good for them that they were able to do it," said one market source who admitted to not being particularly familiar with the U.S. Gold deal. "Gold in general is better than it has been in years, but it's getting beaten right now. I think something like this is probably going to be the exception, not the rule."

EpiCept to raise $11.68 million

Moving to the biopharmaceutical sector, EpiCept Corp. secured agreements with a group of institutional investors for an $11,685,000 private placement.

EpiCept will sell 4.1 million shares at $2.85 each and issue to the investors warrants for 1 million shares.

The warrants are exercisable at $4.00 each for five years. The warrants will not be exercisable until six months after the offering closes.

After the announcement was made Wednesday morning, the company's stock slumped 12.31%, or 48 cents, to end at $3.42 (Nasdaq: EPCT).

Rodman & Renshaw, LLC was the placement agent.

"This infusion of capital will allow us to advance the development of our product portfolio toward significant clinical milestones and fund the clinical trials set to begin later this year," said Jack Talley, the company's chief executive officer, in a statement.

"Importantly, this transaction attracted investors who appreciate the promise and value of the merged company and its balance portfolio of product candidates. We are delighted to welcome these new institutional stockholders. As a newly public company, we look forward to continuing to build our investor base and achieve our milestones."

EpiCept merged with Maxim Pharmaceuticals Inc. on Jan. 4.

Proceeds will be used for the clinical development of the company's portfolio of pain products.

Based in Englewood Cliffs, N.J., EpiCept is a biopharmaceutical company focused on topical treatments for pain.

Rainmaker raises $6 million

Rainmaker Systems, Inc. concluded a $6 million private placement Wednesday, sending the company's stock down 4.6%.

After the stock deal was announced Wednesday morning, the company's stock slipped 18 cents to end at $3.37 (Nasdaq: RMKR).

Rainmaker sold 2 million shares to new and existing investors in the placement and also issued warrants for 800,000 shares. The warrants are exercisable at $4.28 each.

America's Growth Capital was the placement agent.

Proceeds will be used to strengthen the company's balance sheet and provide operating resources to expand the company's volume of business.

"Completion of this financing, coupled with the significant strategic and operational moves that we made this past year, brings us closer to achieving our goal of [Generally Accepted Accounting Principles] profitability in 2006," said Michael Stilton, the company's CEO, in a statement. "We acquired and successfully integrated two companies that have allowed us to expand our revenues, our service offering and our customer base. We moved our primary operations center to Austin, Texas, where we have been able to take advantage of a larger talent pool and a lower-cost environment. We also moved our corporate headquarters to Silicon Valley, where we are closer to many of our clients.

"With this financing closed, we now have a stronger balance sheet and are well positioned to pursue additional business opportunities with new and existing customers. We are very pleased with the quality of the investors who participated in this transaction and appreciate their confidence in the company and its prospects."

Based in Campbell, Calif., Rainmaker Systems provides business-to-business marketing services.

Challenger Energy prices C$17.2 million deal

Heading up PIPE news in Canada, Challenger Energy Corp. priced a C$17.2 million unit offering through placement agent Pritchard Capital Partners, LLC.

The company's stock climbed 10.71%, or 30 cents, to close at C$3.10 Wednesday (TSX Venture: CHA).

The offering includes up to 7,644,444 units at C$2.25 each. The units are comprised of one share and one half-share warrant. The whole warrants are exercisable at C$2.75 each through Dec. 31, 2006.

The agent has a greenshoe for up to 1 million additional units.

Proceeds will be used for exploration offshore Trinidad and Tobago. The rest will be used for working capital.

Calgary, Alta.-based Challenger is an oil and natural gas exploration and production company.

Another oil explorer, Magnus Energy Inc., priced a C$10,000,101 private placement of 2,222,300 class A shares at C$1.35 each and 3,954,800 class A flow-through shares at C$1.77 each.

A syndicate of underwriters led by Dundee Securities Corp. has an over-allotment option for up to 740,800 additional class A shares.

Proceeds will be used for development of the company's properties.

"I am pleased by our progress to date in our core areas and proceeds from this offering will be used to expand and accelerate the development of these properties," said CEO Murray Stewart in a statement.

"Magnus has an exceptionally strong technical, operational and management team as well as a wealth of experience on its board of directors. This is evident in the excellent prospects that have been put together from scratch and executed so quickly. As a result of these efforts, the management of Magnus anticipates that the exit rate for Magnus for the first quarter for 2006 will be approximately 600 [barrels of oil equivalent per day]."

The company's stock remained unchanged at C$1.45 Wednesday (TSX Venture: MEI).

Calgary, Alta.-based Magnus is an oil and natural gas exploration company.

Callisto stock slips

Callisto Pharmaceuticals, Inc.'s stock dipped on Wednesday after the company closed a $5.16 million private placement Tuesday.

The stock fell 4 cents, or 2.61%, to close at $1.49 Wednesday (Amex: KAL). On Tuesday, the company's stock lost 1.29%.

Callisto Pharmaceuticals, Inc.'s $5.16 million private placement of stock led relatively light PIPE news Tuesday.

A group of institutional biotech investors bought shares at $1.20 each.

New York-based Callisto develops treatments for cancer.

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