QRSciences commences DOTARS trials after rights issue

Cannington-based security technology group QRSciences Ltd has announced the commencement of trials of its explosives screening system with the Federal Department of Transport and Regional Services.

The news came less than a week after associated company Spectrum San Diego Inc entered into negotiations with the US Transportation Security Administration for the manufacture of its Castscope screening system - used to screen heavy bandages and prosthetic limbs.

Earlier this month, QRSciences issued a prospectus for a non-renounceable entitlements offer to raise $6.7 million, to repay promissory notes issued to New York investment advisers Vision Opportunity Master Fund and Platinum Partners V alue Arbitrage Fund LP for the purchase of Baxall Australia Pty Ltd, and through it, the stake in Spectrum.

The company will issue 16.7 million new shares at 40 cents each on the basis of one new share for every three held, along with one free option for every new share to raise the money.

The closing date for acceptances of the offer is May 31.

The full text of a company announcement is pasted below

QRSciences (ASX:QRS) (QRSNY:PK) is pleased to report that it is working with the Department of Transport and Regional Services (DOTARS) in an air cargo trial of the QXR1000 explosives screening system. This is an important step towards extending the commercial application of the company's Quadrupole Resonance (QR) technology to the field of cargo screening.

The exercise is part of an Australian Government program to further strengthen the security of domestic and international air cargo. DOTARS, in partnership with other government agencies and the freight industry, is undertaking a number of trials to test a variety of existing and emerging explosives detection technologies. The QXR1000 trial, which commenced this month, will evaluate the use of QRSciences' QR technology and Rapiscan's integrated X-ray unit in a rapidly developing market segment which is the subject of significant investment from governments around the world and a priority for many regulators.

The QXR1000 product was jointly developed by QRSciences and Rapiscan Systems and has been funded in part by the Australian Government through a grant from AusIndustry under the R&D Start program and also by the United States Technical Support Working Group, which is a Federal U.S. Government entity responsible for conducting national interagency research and development programs for combating terrorism. The product combines QRSciences' QR technology with Rapiscan's most widely deployed, operator assist, 520B Threat Image Projection X-ray unit. In June 2006, QRSciences signed a preferred pricing and purchase agreement with Rapiscan, one of the world's largest suppliers of security screening systems, for OEM subsystems incorporated in the QXR1000.

Kevin Russeth, Chief Executive Officer of QRSciences said: "This is an important opportunity for QRSciences as cargo screening applications pose a number of unique challenges requiring complementary technologies, including QR, for effective screening. We believe this work will demonstrate the unique capability of our technology and we are hopeful this will lead to a beach-head for our products in this growing sector. Added to the estimated markets previously identified for baggage screening, this segment brings the potential global addressable market for QRSciences' baggage and cargo explosives screening technology to in excess of US$1.2 billion."