not good enough

The following is my opinion only. It is not investment advice.

Following the CEO Bulletin of Thur 4 November:
In the ordinary course of company conduct, a delay in an expected report, such as the 2nd part CEO update, would not reasonably be the cause of much angst among shareholders. Some posts on this forum have made that quite reasonable point, one way or the other. And they are correct. It should be no big deal.

But because of the way this management regularly mishandles communications - it IS a big deal, and symptomatic of the ongoing poor state of communications from the Company, with both big-issue and small-issue matters.

The following big-issue matter is one example. As is on the record, the CEO and the Chairman have earlier boldly proclaimed that we would before now have revenues from product sales of H.E. based systems which would be strong enough to fund additional products to the market.

Had they delivered:- It meant full H.E. Ammo certification. Full H.E. product certification. Strong H.E. product and H.E. ammo sales. The company would be generating sufficient profit to fund not just company operations, but enough additional profit to fund future growth as well. It also meant a strong Company valuation, and a strong share price. But the fact is that none of that was achieved, with the result being that it shifted the Company from projected profit into massive dilution, merely to survive. The impact of the failures was extended by the fact that when publishing the objectives, the CEO trumpeted the view that the market takes notice of those companies that do what they say they will do, but then he went on to publically fail his very own test. By his own proclamation then, does it not follow that the market should now take very little further notice of the Company?.

When the plan failed, including most all objectives, timelines and outcomes, the matter simply disappeared from Company rhetoric, and with only a whisper from the CEO, stating that he had been 'slightly optimistic'.

What is the culture of leadership in the Company that blinds them to the harm they do to their own credibility by such nonsense. When the Board and management make much of what they will deliver, then fail to deliver, and fail to deal openly with the matters, their credibility goes out the window.

The Company market-value also depends on the assessment of the broader investment market, which includes investment professionals, experienced financial advisors, and commentators. Their examination and rating of Company management, outcomes and performance, including any resulting recommendation to their clients, is critical to the maintenance of market confidence in the company, and to the maintenance of a strong market valuation.

It is not surprising though, given the performance of the company, that the market assessment has been severe. That severity can be stated as a fact, with no less than the Chairman himself forced to acknowledge on 21 May 2010 that 'the market assessment of Metal Storm is that it is a long shot as best'. I would have thought that following that statement he would have moved on, and made room for renewal. After all, during his term as Chairman starting from 19 May 2004, the market has discounted the value of the company by a staggering 97%.

Perhaps through scepticism, the market has also been largely unmoved by the PNG contract. It is against all this background that the delay of the seemingly small-issue 2nd part of the 4th Nov CEO report should be measured.

1. It was not prudent for the CEO to state on 4 Nov that a 2nd part would be following 'soon'. What on earth does 'soon' mean in any case. For me, the expectation was later on the same day, or the following day. A CEO ought to know better than to word a release in a way that it would cause heightened expectations in the market, and then go silent.

2. It has been reported on this forum (8th Nov) that when emailed for explanation, the CEO emailed back to a shareholder that the 2nd part would be out later in that week (ending Friday 12 Nov). Why on earth would the CEO compound the problem by communicating such a commitment, then also fail to complete it as well? And in any case, why communicate his new commitment to only ONE shareholder?. Why not to ALL shareholders?. To do so takes much the same time and effort. Why too, when he then failed to meet the new commitment, did he not see fit to calm the market exasperation by a simple update regarding the delay?.

3. Later, on 15th Nov, the Company published a general release regarding the Land Warfare Conference. It would have been simple enough to add a sentence in there regarding the delay, and to centre the increasingly conflicting expectations being posted. Why was this not done?. Surely it's little more than common sense?.

The Land Warfare Conference:
The conference is over. The papers have been presented. The Metal Storm paper has been presented. Any shareholders who attended the LWC have now seen and/or has a copy of the presentation by Metal Storm. Those who did not attend do not have the same information. To address that, it could have (and should have) been posted on the ASX at the same time it as presented. It could have (and should have) also been posted on the Company website at the same time.

None of these actions can be brushed aside by claims that the CEO is busy doing deals or such. The CEO is not the only person working for the company. These are very simple tasks that can be prearranged to occur with the press of a button. They were made more important than usual because the 2nd part of the 4 Nov CEO Bulletin was to deal with, among other things, 'CONTRACTS'.

By the way, EOS, another Australian defence Company, also presented at the Conference. Yet their presentation made it onto their website dated 19 Nov, and was released though the ASX on the same day!. It's now Tuesday 23rd. What is going on?. No part 2 from 4 Nov, no Conference paper, and no explanation.

I believe the technology IS revolutionary, but that the recent years of under-achievement of Company objectives, and the loss of 97% of shareholder value, is primarily the responsibility of the Chairman and CEO.