metal storm rights issue

Metal Storm Rights Issue
Brisbane, Australia
Thursday, 9 September 2010: Metal Storm Limited (ASX trading code: MST,OTC Symbol: MTSXY).

On 3 August 2010, Metal Storm Limited issued a Non-Renounceable Rights Issue Prospectus to
eligible shareholders which sought to raise up to $3.1 million. Under the Rights Issue, eligible
shareholders were provided the opportunity to subscribe for one new share for every four shares held
on the record date at an issue price of $0.01 per share, as well as apply for additional shares in
excess of their entitlement. For every share issued, participating shareholders will also be issued
three options (with an exercise price of $0.015) for no additional consideration.
On 27 August 2010, the Company announced that it had also entered into Subscription Agreements
with two existing shareholders and one former shareholder to subscribe for up to $1.7 million worth of
shares and options on the same terms as those offered under the Rights Issue. These agreements
enable the Company to place any remaining shares and options not subscribed for under the Rights Issue.
The Company is pleased to advise that through the Rights Issue and associated Subscription
Agreements, it has received subscriptions and commitments for approximately $4.1 million, which is
more than the $3.1 million provided for in the Prospectus.
Subscriptions from eligible shareholders under the Rights Issue totalled approximately $2.4 million.
Eligible shareholders who participated in the Rights Issue will be issued the full number of shares and
options subscribed for, including any additional shares and options in excess of entitlements.
Within the next two weeks the Company intends to place approximately $650,000 in shares and
options under the Subscription Agreements, which will complete the placement of the Rights Issue shortfall.
This will leave an unused capacity of approximately $1.05 million under the Subscription Agreements.
The Company does not have the ability to issue the shares and options to fully utilise this capacity
without shareholder approval. While the Rights Issue has provided a timely capital injection, the
Company will be continuing its search for a more substantial investment in the medium term.
The Prospectus described the current focus of the Company and, generally, the intended use of the
funds raised under the Rights Issue. Now that the Company is aware that at least $3.1 million will be
raised under the Rights Issue and the Subscription Agreements, the Company can now confirm that
these funds will be used to:
Repay $400,000 worth of outstanding loans to two existing shareholders as foreshadowed in
the Prospectus, unless the Company is able to make alternative arrangements with the
relevant shareholders (such as repaying the loans through the issue of securities).
Undertake MAUL? weapon design enhancement and increase MAUL production capacity
to deliver 500 MAUL and 50,000 rounds non-lethal ammunition under the contract with the
PNG Correctional Service (which remains subject to ratification through the usual government
protocols), plus retain a capacity to deliver on any additional contracts that may be signed in
the future.
Complete the development of MAUL? door breaching/anti-materiel ammunition.
Undertake the critical design review and commence qualification testing for the 40mm
STORM40 ammunition.
Continue design enhancement and testing of the 3GL.
Increase the Company?s capacity for marketing and business development.
If necessary, support Metal Storm Inc. to complete the MPM contract.
Provide the Company with working capital.
Metal Storm Chairman, Mr Terry O'Dwyer was pleased with the outcome of the Rights Issue and
extended his gratitude to shareholders for participating.
I would like to thank all our shareholders for their strong support of the Company, Mr O'Dwyer said.
Recent contracts with the US Marines and the PNG Correctional Service show the clear potential for
Metal Storm weapon systems, and this support and investment by our shareholders will allow us to
capitalise on these opportunities.?
Metal Storm CEO Dr Lee Finniear said that the timing and scale of this investment now allows the
Company to focus on delivering its products to market.
?The support from our shareholders has been fantastic,? he said.
The investment funds will allow the
team and I to focus on delivering the volume orders and contracts we have in hand, and increase our
marketing and business development activities to build on this initial success.
The allotment of shares and options under the Rights Issue is due to occur on 14 September 2010.