BRISBANE, AUSTRALIA (ASX: MST)
All,
This CEO Report expands on progress by Metal Storm over the past
few months. I have detailed some areas particularly below. You will
see from the progress we are making why it is the Board and I are
disappointed about our share price.
By any comparison the Company has made significant steps to
commercialization in the last year. In that time the share price
has not reflected any of these advances. We do not believe that the
stock price variation of late reflects the progress we are making.
However, as our progress continues to become apparent we trust the
market will react appropriately and the stock will see upward
momentum.
STRATEGY
The NEXT part of the Metal Storm strategy is proceeding to plan.
We continue to focus the vast majority of our effort on the
commercialization of 40mm munitions and the 3 shot grenade launcher
(3GL) together with the development of the 4 barrel Redback?
anti-RPG remotely operated weapons systems. Discussions for
production engineering and manufacture are in process with
interested parties.
Our sales focus continues to be primarily on the US market,
though an increasing effort is being placed on other international
opportunities. Complementing our presence at AUSA in October, we
will also be marketing our products at the Singapore Air Show in
February and Eurosatory in Paris in June, as well as other
exhibitions as they arise and are deemed an appropriate
investment.
While it is important to have a strong plan when bringing new
technology to market, it is equally important that the plan be
sufficiently flexible to take advantage of new developments and
changes in doctrine. Interest generated from our recent firings in
Singapore and contract work in the US have focused our market
strategy and highlighted areas of the market that represent good
fit with our technology. The company has reacted to these
opportunities by forming partnerships such as the I-Robot
memorandum of understanding and by developing enabling technology
such as the purpose built "Firestorm" compact mount for small
robotic vehicles.
As a part of our product lifecycle planning, we are examining
more closely the potential spin-off products leveraging from our
activities in the USA. The objective is to move selected product
concepts to initial prototype stage rapidly and at low cost,
leveraging work already done for 3GL, Redback? and on US government
contracts. Putting these prototypes "out there" to rapidly assess
real market demand allows us to focus our upcoming product
development investments on those items that would be in greatest
demand. Simultaneously we intend to attract external development
funding through contracts or other vehicles where available. Recent
examples of these new product spin-offs are the "FireStorm"
remotely operated weapons station (ROWS) featured on the iRobot
Warrior Robot at AUSA, and the MAUL 4 shot 12 gauge lightweight
underslung launcher. Both are Metal Storm designed and built. More
information on these is provided later in the Bulletin.
MARKETING & BUSINESS DEVELOPMENT
Association of the United States Army Conference (AUSA)
At AUSA, Metal Storm presented 3GL at the VT Systems stand and
the "Firestorm" 4 Barrel weapons system mounted on the iRobot
Warrior at the iRobot stand.
3GL Display: Two versions of the 3GL were displayed. The first
was an existing design mounted to its own shoulder stock. The
second was a new design with an integral pistol grip below the
breech. This has shortened the 3GL and provided improved
ergonomics.
The 3GLs received encouraging feedback from attendees who
handled the weapon. In particular, combat soldiers were impressed
that the aluminium and carbon fibre construction had resulted in a
lightweight weapon that did not shift the centre of gravity of a
combat rifle as far forward as traditional underslung launchers.
There was also universal acceptance of the application of the 3GL
as a force multiplier.
The 3GL weapons shipped to AUSA have remained with the Business
Development team at our US office. They are being used to increase
awareness and interest in 3GL as a flagship product from Metal
Storm.
"FireStorm" Display: Metal Storm and iRobot collaborated to
mount the new 4 barrel "Firestorm" ROWS on the new iRobot Warrior
robot. Positioned prominently at the corner of the iRobot booth,
the Metal Storm/iRobot system became one of the most popular
exhibits of the AUSA, attracting many of the US military top brass,
as well as an avid following from attending journalists. Defence
Weekly, for example, put "FireStorm"/Warrior as the only lead
photograph for its coverage of AUSA, from a choice of products from
over 500 exhibitors!
The mission illustrated for the exhibit was Perimeter Defence --
A computer generated image showed several "FireStorm" Warrior
systems being deployed for base protection under the title FORCE
MULTIPLIED. The concept was for many robots to patrol bases
according to pre-defined routes, detecting and reporting any
suspicious activity to a single operator in a command center. On
intrusion detection, the operator would take control of the robot
concerned and direct the "FireStorm" lethal or less than lethal
response according to the scale of threat.
It was clear from visitors making comment at the booth that they
could envisage many other potential uses for the equipment beyond
the Perimeter Defence example.
Defense News Article covering AUSA
(http://www.metalstorm.com/clientuploads/1015_DFN_DOM_00_038_00.pdf)
Metal Storm IED Disruptor Display: Slightly less prominent, but
just as important, was the display of a prototype Metal Storm
multi-shot 40mm Improvised Explosive Device (IED) disruptor
prototype mounted to the arm of the iRobot PacBot. The Metal Storm
prototype builds on work carried out under contract with the US
Government on a stacked round IED Disruptor projectile. Given that
IEDs are the main cause of US casualties in Iraq, and iRobot
PacBots are in extensive use for counter IED missions there, the
Metal Storm IED Disruptor is of particular practical
significance.
METAL STORM - iROBOT PARTNERSHIP
Metal Storm has signed a Memorandum of Understanding with iRobot
to collaborate on integrated weaponized robot development, plus
business development and marketing. The MoU signing follows the
highly successful joint exhibit at AUSA and provides a solid
framework within which the companies can capitalize on the
combination of two cutting edge technologies to deliver an
impressive new capability to military customers.
Joe Dyer, president of iRobot Government & Industrial
Robots, said, "Together with Metal Storm, we aim to develop a
superior next-generation weapons platform that ensures absolute
safety and always places a human in the decision loop. When you are
talking about weaponizing robots, there is no margin for error. We
believe combining best-of-breed combat-proven expertise from Metal
Storm and iRobot will result in the most precise, safe, and
effective solutions for our military customers."
As CEO of Metal Storm I believe that this partnership is one of
the most important we have. Metal Storm is moving progressively
toward the point where its weapons systems are fully certified for
deployment. The unique advantages of our technology in terms of
weight, electronic control, reliability, firepower and size are
most clearly illustrated when combined with lightweight robotic
platforms. This will become one of our most important markets.
As a partner, we see iRobot is one of the most successful
military robotic platform providers in the world, with over 1000
robots performing active battlefield duties as the "eyes and ears"
of soldiers on the front line, and protecting troops and civilians
alike through its counter-IED missions. It is an ideal partner for
Metal Storm.
PRODUCT DEVELOPMENT UPDATE
The primary focus of our R&D team remains on the completion
of 40mm ammunition, 3GL and Redback? products to achieve
certification and manufacture.
AMMUNITION
The extensive test firing in Singapore in June this year
achieved its objectives in terms of proving the weapons and
munitions, and also as a development shoot it provided extensive
data on performance for analysis.
The data has provided us with opportunities to further enhance
our ammunition. For example, to further improve in-combat
robustness we have now developed the capability to move the
induction coils inside the round casing. We are also enhancing the
design further to reduce production cost during manufacture.
3GL
3GL development has been progressing in earnest. During the
Singapore test firings the 3GL prototypes performed well and proved
the functional concept of the system as a standalone weapon.
3GL development has now shifted to enhancing robustness for
combat use, and further improving weapon ergonomics. One of the
most recent designs, shown below, reduces the length of the weapon
by bringing the trigger under the barrel. The pistol grip design
also provides practical advantages with a more solid grip for the
trigger hand, and a good grip for opening and closing the weapon
during reloading.
Redback?
Redback? development continues with the enhancement of the "501"
individual reload and stick reload guns, together with improvements
to the electronics package for fire control and round exit
detection.
Our partners are also continuing with their Redback? development
work focussing on RPG tracking etc., with the teams coordinated
through regular project meetings, and a focus towards the next
anti-RPG tests.
NEW DEVELOPMENTS
Capitalizing on work performed in the US office, we have also
been progressing two additional product concepts which, with
sufficient market demand, could be rapidly transitioned to full
product development.
"FIRESTORM"
The "FireStorm" program capitalizes on our existing experience
in vehicle and robotic platform weaponization, to create a Metal
Storm lightweight gymbal mount for use in fixed position, vehicle
and small robotic mount applications. The "FireStorm" mount was
exhibited at AUSA on the iRobot Warrior platform, sporting a 4
barrel 16 shot 40mm Metal Storm weapons pod.
The prototype shown at AUSA was designed and built by Metal
Storm, and includes dual axis motors, integrated fire control
system and motor controllers. Work is currently underway to
evaluate third party sighting and control software for integration.
Whilst not confirmed, our intention is to use "FireStorm" in live
fire trials in the USA before the end of Q1 of next year.
I believe that "FireStorm" is an exciting development for the
company, allowing it to address a niche in the market it was not
able to tackle before. "FireStorm" is not designed as an ultra fast
response mount, and in that context it does not compete with our
flagship Redback? product. However it does have advantages where
the customer is more sensitive to cost than performance, or where
the complete system needs to be significantly lighter and smaller
than Redback?. We anticipate it being attractive to customers
wanting lower cost fixed asset protection using networked fixed
mount or robotic weapons systems, or any other application
requiring lightweight, low cost grenade launching capability.
MAUL
Metal Storm has applied its expertise in stacked round systems
to a 12 gauge (18mm) 4 shot under-barrel weapon codenamed MAUL.
(Multi-shot Accessory Under-barrel Launcher) as a part of a
contract with the US Marines.
The system was devised to launch multiple FRAG-12 door breeching
grenades from a safe standoff distance without reloading. However
the application can be much broader, with a range of lethal and
less lethal payloads potentially able to be launched from MAUL.
The current status of this development is that a test bench gun
has successfully fired 4 stacked test grenades from the test gun. A
video of this firing can be seen at
http://video-us.metalstorm.us/release/maul-400k.html -- Fast
link
http://video-us.metalstorm.us/release/maul-150k.html -- Slower
link
Note that this is a development shoot not a marketing shoot, so
the video is basic. On the video the bench gun uses an external
fire control system. However on a final weapon the fire control
system would be integrated into the weapon in the same manner as we
have with 3GL. The form factor of MAUL as an underslung weapon is
still being developed, but the latest design concept is shown
above.
We envisage potential applications for MAUL in both defence and
law enforcement, particularly where less lethal munitions are
desired as a complement to a lethal capability.
CONTRACTS
Our Crowd Control contract with the U.S. Army will be
culminating in a demonstration of Metal Storm less than lethal
munitions later this year. At this stage we intend to use the new
"FireStorm" mount on a Warrior Robot for the demonstration. A
considerable amount of systems integration has taken place to bring
together the motion control, targeting and sighting with our
GLL4042 guns and Less-Lethal munitions. The Less-Lethal arena is an
important one for Metal Storm and the system developed for the U.S.
Army is a major step towards our penetration of the Less-Lethal
market.
Our contract with SPAWAR is scheduled to conclude at the end of
this year and we are hoping to continue our work on a follow on
contract which has not been awarded to-date. On the current
contract we have successfully demonstrated each of the individual
elements of an area denial system. Shortly we will be demonstrating
all elements working together in a fully integrated system in a
live fire demonstration for the client.
Our first limited production weapons order was fulfilled at the
beginning of November. Metal Storm delivered a four barrel weapons
pod, fire control system and spares to the Naval Surface Warfare
Center, Dahlgren Division (NSWCDD). These items comprise the first
limited production systems to be delivered to the U.S. Military.
Order fulfilment was in the order of 12 weeks. Over the coming year
we hope to update you on how the weapons are performing, subject to
obtaining permission to release of this information from the
customer.
We have been enjoying many successes with StarChase over the
past several months as the limited production systems go through
field trials. StarChase is reporting that systems will be available
for the commercial marketplace in 2008.
Naturally the company is working diligently to secure more
contracts for research, development and for the delivery of
weapons. We will keep you informed of our successes as they
arise.
OTHER ITEMS
Website: The company website re-design has been undergoing slow
but sure development in the background. In May I defined the
website re-design as a secondary effort, with development and
business development activities taking priority over the website
work. Despite this secondary priority we confidently expect the new
website to be published within the next 2 months.
Marketing Penetration: We have been tracking the number of
articles that include Metal Storm over the last few months. I am
pleased to report that we are averaging over 60 press articles per
month where our Company is mentioned. In the first 12 days of
November, however, we are already ahead of our average with 64
articles to date. Some of the countries of publication include
Canada, Turkey, Japan, The Russian Federation, Rumania, Estonia,
Hungary, Greece, Israel, UK, Singapore Vietnam and India.
Lee Finniear
CEO
Metal Storm.
Notes:
Metal Storm's Australian Stock Exchange trading code: MST
Metal Storm's NASDAQ Small Cap ticker symbol: MTSX
About Metal Storm
Metal Storm Limited is a multi-national defence technology
company engaged in the development of electronically initiated
ballistics systems using its unique "stacked projectile"
technology. The company is headquartered in Brisbane, Australia and
incorporated in Australia. Metal Storm Limited technology and
products are represented in the USA by Metal Storm Inc., which has
offices in Arlington Virginia.
Metal Storm is working with government agencies and departments,
as well as industry, to develop a variety of systems utilising the
Metal Storm non-mechanical, electronically fired stacked ammunition
system.
Metal Storm's weapon technology uses computer-controlled
electronic ignition and a system of stacked projectiles, to achieve
a completely non-mechanical gun that is very lightweight and
compact, providing a very high firepower to weight ratio. The Metal
Storm weapons system utilizes multiple barrels mounted together on
one platform which allows varying munitions types to be deployed in
a single, low cost, lightweight weapon system. Firing the weapons
by electronic ignition requires no moving parts, allowing reliable
long term unattended weapon operation.
Safe Harbour
Certain statements made herein that use the words "estimate,"
"project," "intend," "expect," "believe" and similar expressions
are intended to identify forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks
and uncertainties which could cause the actual results, performance
or achievements of the company to be materially different from
those which may be expressed or implied by such statements,
including, among others, risks or uncertainties associated with the
development of the company's technology, the ability of the company
to meet its financial requirements, the ability of the company to
protect its proprietary technology, potential limitations on the
company's technology, the market for the company's products,
government regulation in Australia and the US, changes in tax and
other laws, changes in competition and the loss of key personnel.
For additional information regarding these and other risks and
uncertainties associated with the company's business, reference is
made to the company's reports filed from time to time with the
Securities and Exchange Commission, including the company's Form
20-F.
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Company Contact: Australia & USA Dr Lee Finniear Chief
Executive Officer Metal Storm Limited Ph: +61 7 3123 4700