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Technology Stocks : Metal Storm Ltd -- Ignore unavailable to you. Want to Upgrade?

To: Saulamanca who wrote (36)	4/20/2004 4:12:14 PM
From: Henrik	Read Replies (1) \| Respond to of 75

Metal Storm's long-term viability under threat Anthony Marx 21apr04 FRESH concerns about the long-term viability of Brisbane weapons firm Metal Storm have been raised in the company's annual report released this week. An independent auditor warns that the company, which has yet to make a profit, continues to spend $600,000 a month on research and development while also bearing the burden of its $4.3 million acquisition of a US-based firm in December. "There is significant uncertainty whether the company and consolidated entity will be able to continue as going concerns and therefore whether they will meet their current operating cash requirements, pay their debts as they become due and payable, and realise their assets and extinguish their liabilities in the normal course of normal business and at amounts stated in the financial report," Ernst & Young partner Mark Hayward wrote. With $6 million in cash and plans to raise another $15 million to $25 million this year, the company faced risks because it was "reliant on a further capital raising in order to fund its working capital", Mr Hayward said. Metal Storm deputy chairman Terry O'Dwyer said that Ernst & Young "understands that the company has demonstrated a capability in the past to deal with the issues they raise". General manager Ian Gillespie also downplayed the significance of the warning yesterday. "It's pretty standard for a company that's still in cash burn. They've qualified the accounts, as they did the previous year and I think the year before that. "The concern only arises if the company is unable to organise the funds to continue to operate and we believe we're in a very good position to raise the additional funds if we require," he said. However, a search of the 2002 annual report found no risk alert and Mr Gillespie later described Mr Hayward's statement as merely a "notation" rather than a qualification. The annual report, which showed a pre-tax loss of $7 million in 2003, arrived as major shareholder Charter Pacific announced a significant sell-down yesterday of its holding in Metal Storm. The Gold Coast-based company unloaded 41 million shares at an average price of 58¢ over the past week, generating more than $24 million from unnamed buyers. The company, which made a $2.5 million investment in Metal Storm in 1994, still retains 65.6 million shares. Charter Pacific chief executive Kevin Dart, who stepped down as a Metal Storm director in October, said the sale pushed his company's pre-tax profit expectations to more than $20 million and would help fund new acquisitions. An 8.5 per cent surge in Metal Storm's share price to 53¢ and a huge volume of 11.2 million shares traded last week drew the attention of the Australian Stock Exchange, which asked the firm if any relevant information had been withheld from the market. The company responded that all pertinent data had been reported and said interest in the stock might have come from positive media coverage in the US in conjunction with a roadshow for investors. Metal Storm's rebounding performance has continued this week, with shares closing up 7¢ yesterday at 62¢ on an enormous volume of almost 15.3 million shares. More than 10 million shares changed hands on Monday. Mr Gillespie said Metal Storm continued to work on producing a prototype "smart" handgun in the US but commercialisation was still more than a year away. Metal Storm technology, which relies on electronic impulses to fire ammunition, is also the focus of research for military applications. thecouriermail.news.com.au