PERTH investors with an appetite for risk and a taste for something totally different are being offered an opportunity to back the development of a new kind of ‘less lethal’ ammunition.
PERTH investors with an appetite for risk and a taste for something totally different are being offered an opportunity to back the development of a new kind of ‘less lethal’ ammunition.
Shell company Harrington Group is seeking to raise $3 million to fund the development of its ShockRounds technology, which introduces an “electric” charge to traditional ammunition and other projectiles such as rubber bullets.
The deal has been put together by Perth-based investment banker Peter Boonen, whose listed US company MDM Group Inc acquired the rights to ShockRounds in February with the intention of selling it on to Harrington.
MDM Group stock achieved spectacular gains when it announced the ShockRounds deal, jumping from 10 US cents a share to a high of $US5.20 per share. It is currently trading around $US1.50 a share.
This is Mr Boonen’s second ASX transaction for the year after he put together the backdoor-listing of biotech company Stirling Products.
Investors in Stirling, which is one of several biotechs (including Chemeq and Imugene) developing an alternative to antibiotic use in intensive animal farming, are currently sitting on big gains.
Stirling shares have doubled in value over the past two months, helped by positive results from preliminary trials.
They are currently trading near 46 cents, well above the 20 cents price of its capital raisings, though the stock has also been as low as 16 cents this year.
Harrington shareholders, armed with a KPMG report that found the transaction was fair and reasonable, have already approved the acquisition of the ShockRounds technology.
Harrington will issue 80 million shares and 40 million performance options to MDM as payment for its rights to the technology, which will give MDM a 67 per cent shareholding in the listed entity.
This is subject to Harrington completing its $3 million capital raising.
Of the total float proceeds, Harrington must pay $585,175 to the original developers of the ShockRounds technology, to settle obligations under the purchase agreement.
The cost of its capital raising is a further $300,000, equal to 10 per cent of the gross proceeds, leaving Harrington with about $2.1 million to fund development of its new technology.
It is likely Harrington will need to raise a further $1.9 million to fund commercialisation of the technology, according to estimates in the KPMG report.
This could be partly met by oversubscriptions of $1 million in the current capital raising.
Upon completion of the transactions, it is proposed that Harrington will change its name and move its head office from Sydney to Perth.
The ShockRounds technology, which is at the prototype stage, is designed as an alternative to existing ‘less lethal’ munitions, such as rubber bullets, stun guns and ‘Tazer’ devices.
In contrast to these products, ShockRounds has a longer range, multiple shot capability and can be used with conventional firearms.
“There is a real recognition that alternative technologies need to be used,” recently-appointed Perth-based chief executive of the ShockRounds project Marshall Couper said.
