Auriga raises $2.04 million; Focus in $20.8 million deal; Cleanfield hits road; Pantera, Geologix plan deals

By Kenneth Lim

Boston, Feb. 14 - Auriga Laboratories Inc. said Thursday that it received an important boost of capital with a $2.04 million convertible loan from institutional investor JMJ Financial.

Meanwhile, Focus Enhancements Inc. said it will raise $20.8 million from a private placement of senior secured notes that is aimed at long-term investors.

Cleanfield Alternative Energy Inc.'s planned private offering of units for between C$5 million and C$10 million will go on the road over the coming week, and management said it will be targeting institutional investors.

Meanwhile, Pantera Petroleum Inc. announced a $10 million private placement of shares and warrants, while Geologix Explorations Inc. plans to sell C$16 million worth of securities.

Auriga raises $2.04 million

Auriga Laboratories said its $2.04 million placement of convertible promissory notes illustrates the strong support of private equity lender JMJ Financial.

"They're a very good partner," Auriga chief financial officer Frank Greico told Prospect News. "We are a micro-cap company, and you can see that we don't have a very strong balance sheet. They've agreed to support us with some capital and allowed us to continue growing our company."

The placement involved two series of convertibles. The $240,000 series A notes bear a one-time interest charge of 12% and mature on Jan. 15, 2011, with principal and interest due at maturity. JMJ can convert interest and principal into common stock at 60% of the average of the three lowest closing bid prices of the company's common stock in the 20 trading days prior to conversion.

The series B convertibles, sold for $1.8 million, also mature on Jan. 15, 2011, with a similar one-time interest charge. The conversion discount is set at 60% of the average of the three lowest closing bid prices of the company's common stock in the 20 trading days prior to conversion.

JMJ Financial is the investor for both notes.

Los Angeles-based Auriga is a specialty pharmaceutical company.

Greico said the option to raise financing through equity was not available to the company.

"I'm open to those other options [equity and straight debt] when they're open to me," Greico said. "If you know anyone who wants to offer them, please let me know. If we had lots of choices out there, we would favor equity financing, but this is what is available to us."

Auriga now has a chance to strengthen the relationship with JMJ, Greico said.

"The thinking behind these, in doing the financing, is bringing in what we think is a good partner and letting them see that we can grow the company," Greico said. "We believe that JMJ is a very good partner, and as with any shareholder, once you bring them in, you're going to have to perform for them and build some credibility. They've given us the financing, and now it's up to the company to deliver."

"Any CEO and CFO will tell you that you have to look beyond these initial investments," Greico added. "I don't mean just through this facility, but if an opportunity presents itself to the company in the future, we hope we will have the support of our shareholders again."

Focus to raise $20.8 million

Focus Enhancements said its $20.8 million fundraising plan will give it enough cash to commercialize its first generation of products and develop the next one.

Focus, a Campbell, Calif.-based specialist in video production and conversion technology, said it has engaged Ingalls and Snyder Value Partners LP to place a series of 12% senior secured notes due Jan. 1, 2011. The interest on the notes will increase to 15% on Oct. 1. Investors will also receive 26 million warrants, exercisable at $0.80 until Jan. 1, 2011.

"We secured the financing necessary to continue the development of our second-generation UWB solution - an all CMOS single chip," Focus chief executive Brett Moyer said in a press release. "In addition, this quarter, we have taken actions to reduce our sales, marketing, and general administrative costs. We believe the combination of these actions gives us sufficient working capital to commercialize the first generation of UWB technology, to continue the development of the second generation, and to launch new media asset management and acquisition products."

Cleanfield to hit the road

Cleanfield Alternative Energy, which said Tuesday that it will sell between C$5 million and C$10 million of share-and-warrant units in a private placement, told Prospect News Thursday that it will begin a roadshow in the coming week.

The deal consists of units of one share and one warrant. Each warrant will be exercisable for two years.

Jacob & Co. Securities Inc. is the agent.

Based in Ancaster, Ont., Cleanfield develops renewable energy products.

"It's institutional investors obviously that we're targeting right now," Cleanfield president and chief executive Tony Verrelli told Prospect News. "We do have a list of people that might be interested, but that list will obviously evolve in the next few days. We will start on a roadshow over the next week. We do have a number of 'green funds' that we hope will be interested."

Proceeds will be used for working capital associated with the commercialization of its wind turbine. Verrelli noted that the company has just secured a distribution agreement that is expected to sell 3,000 units of the turbines in 36 months.

Verrelli said stock-and-warrant financing was the best of what little options were available to the company.

"There really wasn't a lot of choice, to be honest with you," Verrelli said. "We knew we had to give to take it. Shares and obviously the warrants are a way to compensate the investors for raising capital."

Pantera plans $10 million sale

Austin, Texas-based oil and gas explorer Pantera Petroleum said it will sell 10 million units of one share and one warrant at a dollar apiece to FTS Financial Investments Ltd. Each three-year warrant has a strike price of $1.50 for the first year, $2 in the second year and $2.50 after that.

"With this equity financing in place, Pantera Petroleum will continue to expand its exploration activities within the Chaco Basin," Pantera president and chief executive Chris Metcalf said in a statement. "We are very excited to have the institutional backing and trust of FTS on our side."

Geologix launches sale

Geologix Explorations said it plans to sell C$16 million of share and one quarter-share warrant units at C$2.25 per unit in a private placement.

Each whole warrant has a strike price of C$3.20 and an expiry after two years.

There is an over-allotment option for a further C$2 million.

Research Capital Corp leads the placement agents, which include Haywood Securities Inc., Salman Partners Inc. and Versant Partners Inc.

Settlement is expected Feb. 21.

Proceeds will be used for exploration and general working capital.

Geologix Explorations is a mineral exploration company based in Vancouver, B.C.

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