in this mornings age

Metal Storm in danger of going offshoreAngela Harper
May 14, 2009 - 3:59PM
An Australian weapons system developer with a world-first invention is in danger of going offshore unless it raises up to $30 million by the end of August.

Metal Storm Ltd is a defence technology company that develops projectile launching systems using a unique, electronically fired, stacked projectile technology.

Metal Storm chief executive officer Lee Finniear called for financial help from both the federal government and the shareholders at the company's annual general meeting in Brisbane on Thursday.

"I would say there's a risk the company could end up owned by foreign interests," he told AAP.

"I'm an optimist and always hopeful an Australian business will stay in Australia.

"I'm also hopeful, but not confident, that the Australian government will recognise the potential of Metal Storm in time for it to provide assistance, which would be very small, in the context of the assistance it's giving to other industries."

He said the firm had been working with Australia's Defence Science and Technology Organisation, but the primary interest had been from the US military and law enforcement agencies.

Interest had not dropped off due to the global economic downturn.

But while the company has not yet sold weapons to customers, groups such as the US Marines have paid for research, development and for use of the technology behind the weapons operating systems.

Metal Storm, which has about $2.5 million in cash on its books, last week announced it wanted to raise a minimum of $2 million from shareholders through a share purchase plan (SPP), that will open in June.

It said without the capital injection, it could exhaust its resources in four months.

It also faces $20 million in repayments due to note holders on September 1, unless noteholders opt to convert their notes into shares or extend the maturity date.

If the extension isn't granted, Metal Storm could need about $30 million in new funds by the end of August.

"We would like to see a $30 million injection," chairman Terry O'Dwyer told shareholders on Thursday.

"The outlook for the company is that it will run out of money at the end of August."

Under the SPP shareholders can buy parcels worth $1,000 to $10,000 and at a 20 per cent discount to the volume weighted average price of Metal Storm's listed stock in the five business days before issuance.

Metal Storm shares were trading at three cents on Thursday.

Dr Finniear said the board was hopeful at least $2 million would be gathered under the SPP - with laws only permitting the company from earning a maximum of $5 million.

"In the last two years, we've come so far, from concept prototypes to things our employees will stand up and fire safely," he said.

"We have adopted an extraordinarily professional approach to adopting weapons that can really be sold.

"Without that the long-term survival of the company is zero."

Metal Storm's 3GL and MAUL systems are being tested at shoulder-firing stage and the remote controlled FireStorm has been test-fired by the US Marines.

The weapons are capable of being used for lethal and less lethal applications.