informal report - shareholders meeting 160712

I'm assuming some shareholders will be interested in a brief outline of Monday's Shareholder meeting in Brisbane 16.07.12 to bed down the Luxinvest / ASOF deal?

1. The meeting was well attended in my experience, with about 35-40 people present including (no surprise) a few of the Company's legal representatives. There were some old hands present, notably including Graham Bugden that long-termers will remember did much of the early engineering work back in MOD's day with the original MST tech. As an aside, a couple of us had a chat to Graham later, and we all noted the current Board's successful change in direction from the old firepower dreams (Big Bertha, ship denials etc) to specific products that are needed on the ground, and most critically that have markets available today that are actually willing to pay for them. IMHO that's a critical difference from the old days. All in all, the meeting attendees were an informed group that were keen to see the Company survive and progress, now that we seem to be right at the cusp of achieving some of our goals.

2. The business part of the meeting was quite brief, as there was really only the one combined voting consideration, and there were no dissenters among the show of hands by those in attendance. Done and dusted - great. Remember that puts the Company in a much better position with much less debt in a capital restructure. Yes, completion of the deal brings considerable dilution, BUT that dilution is significantly less than it otherwise would have been. There are no free lunches, but the Company remains in the game. I understand final completion (money in the bank) is scheduled 4 business days after Tuesday i.e. on or before next Monday 23 July.

3. Given the initial Colt Canada Contract announcement a few days ago, there is no doubt the meeting 'well understood' that we appear to be at a turning point (for the better) in the Company's capacity to progress to product sales. The whole Canada small arms SIPES story has been progressing in the background (mainly via Lee's efforts I understand) and management commented this was particularly exciting given its substantial future scope. Remember from previous discussions Canada have possessed test weapons for years now, and are utilising a lot of Metal Storm tech within their whole redesign of military gear. Of course this SIPES knowledge itself wasn't new to shareholders at the meeting (and wasn't even re-discussed formally), but there WAS a new sense of realisation that these significant developments are shaping up in a wonderful timely fashion, with a perception of 'just around the corner' now. As previously announced, further specifics on the Colt Canada work will be announced as soon as possible, but after the client approves what can be released.

4. We also understand that Maul weapons for the enforcement market are going to have test runs made (as previously stated) and issued to potential buyers. However we clarified the timeframe on that is in the very near term i.e. short months. To that end, there was a series of 5-6 questions off the floor specifically targeting the Company's preparedness to shift focus QUICKLY from necessary recent engineering focus to a strong sales focus. I have to say that this shareholder felt an almost palpable relief in the room as we enjoyed beginning to have a discussion about imminent hypothetical 'sales' rather than just the financial 'survival' that has dominated for years. The good news was we learned that the Company has had significant enquiries from around the world about Maul - and that Metal Storm Inc (the USA arm - Faulkner and co) are bigtime focussed (and have been for a while) on sales with both enforcement police etc and military developments. The Company has also had a significant number of enquiries about potential Maul distributors worldwide (more sales marketing preparation), and are narrowing candidates down to maximise shareholder advantages from informed choices there. You will recall that Breon Defence (Taser) were already appointed Maul distributors for Aust NZ some time ago, but several different strategic appointments will apparently be made soon for required distribution networks in the relevant wider global marketing spaces that are expected to open up.

4. There is probably not much more to say at this time. The meeting regulars that I spoke to all agreed that body language from Lee and the board was very relaxed, kinda like the worst is probably over? I hope that's a fair comment. For that matter, many of the shareholders present were probably feeling similar. It would be reasonable to say we left the stately red cedar Polo Club meeting venue with more beans in the tank than we can remember for a long time. Hallelujah.

5. As an aside I was amused in an earlier forum post to see regular negative man Humpy8000 asking if anyone 'bothered' to attend? Give me a break, old boy, as some of us in this camp are seriously interested in our investment in this Company AND it's imminent success - it wasn't a matter of being 'bothered' to attend - we were very happy to make damned sure it was our 'business' to attend! We saw this meeting (and a successful vote) as a potential watershed in getting serious traction right as we need it with several big developments almost in our face. So we wouldn't have wanted to miss it - notwithstanding we appreciate there are still some upcoming funding bumps (hopefully comfortably managed) ahead. So were we going to be bothered? - YOU BET!

6. In closing, I congratulate the management and the board for getting us this far, and also I congratulate the Shareholders and the Noteholders for the sensible voting outcome last Monday to keep us in the game. Hopefully 'fingers crossed' the scheduled deal 'completion' will occur as a formality, with the critical 'money in the bank' on or before next Monday as scheduled.

Good luck all.