MACRO METALS LIMITED — Capital/Financing Update 2006

May 25, 2006

ASX ANNOUNCEMENT

26 May 2006

1 NEW ISSUE

Brainytoys Limited (ASX Cod: BRT) ("Brainytoys") announces its intention to proceed with a 1 for 4 Renounceable Rights Issue at a price of 6 cents per share resulting in the raising of approximately \$450,000 capital.

Brainytoys has received a formal proposal from Leadenhall Australia Limited ("Leadenhall") to underwrite the issue for a 6% fee (satisfied by the issue of BRT shares), which it intends to accept following the completion of the appropriate documentation.

In addition. Brainvtovs has received a further proposal from Leadenhall to underwrite the private placement of a secured convertible Note facility on the terms detailed below.

Convertible Note Terms

The provision of \$800,000 of Convertible Notes.

The note issue (to be encapsulated in a convertible note facility agreement) will comprise eight (8) Convertible Notes of \$100,000 each.

Brainytoys issues one (1) Note on commencement and has the option if and when it wishes to call up in part or in full the other seven (7) Notes.

• Eight Convertible Notes have an issue price of \$100,000 each. $\ddot{\mathrm{i}}$
• Ï Convertible Notes to be transferable.
• Ħ Convertible Notes to be secured.
• Convertible Notes convertible at the option of the holder and at any time after issue and iv on or before 30 June 2010.
• First Convertible Note may be converted at 6 cents. $\overline{V}$
• Each other convertible note will be convertible to that number of shares equal to the vil face value of the notes divided by the higher of:
• $(a)$ \$0.05 per share; and
• (b) The rolling three month volume weighted average price of BRT shares traded on the ASX discounted by 20% prior to the conversion of the convertible note.
• vii Shares issued will be fully paid and ranking equally with existing shares on issue.
• viii Interest on notes to be paid quarterly in arrears on the face value of the notes at a rate of 10% p.a.
• The notes may be redeemed for their face value by the note holder prior to 30 June İХ 2010 if BRT breaches the terms of the note deed or any other facility.

The proposed Note issue is to be subject to approval of shareholders in General Meeting pursuant to Corporations Act and ASX Listing provisions. The Directors intend to recommend approval by shareholders of the necessary resolutions.

The funds raised pursuant to the Rights Issue and any funds to be drawn down under the proposed Note Issue will be required as working capital in order to fund initial product manufacturing against a range of expected purchase orders.

2 ANNOUNCEMENT OF INTENTIONS RELATING TO US LISTING

Brainytoys has received a proposal from a United States ("US") based investment banking entity in relation to a proposed range of services in the US, including the initiation of an OTCBB (Bulletin Board) listing to complement Brainytoys' ASX listing.

Brainytoys intends proceeding with the engagement and implementation of various US strategies designed to lift its status in the US, including an application for a Bulletin Board listing.

ENDS 26 May 2006 For further information contact: Alex Aguero, Managing Director Ph: (08) 9331 8441 alexa@brainytoys.com