and some further analysis..2012 and 2013 will be years of...

and some further analysis..

2012 and 2013 will be years of assessment and evaluation - in the words of the document:

Continue medical and NL casualty data research and collection; human effects assessments; acceptability analysis; and technical
studies/ analysis of emerging technologies for possible NL application.

the assumption is that full scale production begins some time in 2014, extending into Q1 2015, where the latter 'date' already looks like being pushed out into Q2 or Q3 of 2015 (assuming they make an announcement on the RFP for engineering and manufacturing some time soon)

budget for 2012: ~US$ 41 million

budget for 2013: ~US$ 45 million

the budgets are broken down on page 9 showing which departments will be involved, and what the cost of their services will be - but of all the cost allocations shown, nothing indicates Metal Storm as a recipient, which suggests this costing is purely internal - as the document remarks:

Joint Program funds are distributed amongst the USA, USAF, USN, USMC, SOCOM, and USCG in support of NLW research and development efforts.

So that Metal Storm doesn't appear as a cost item at the moment shouldn't be a surprise, as they can't budget for what will be an external cost, especially when they don't know how much they should be paying yet - and for that matter, no definitive statement has been made that Metal Storm has been selected yet - this is made clearer in the Plans section on page 7:

Continue to select and test newly developed commercial products that may meet the Joint Service requirements for specific NL capability set common items.

Though what is particularly enlightening, is the wide field of application - not just Humvees:

Continue development of a tube launched NL munition for integration on HMMWVs, tactical vehicles, boats and ships, with a range of 30-150 meters (T) and 10 - 500 meters (O).

Importantly, 2012 is stated as the year for completing contracting, and this will be with an external contractor, who we all expect and hope will be Metal Storm:

Efforts will include completion of EMD contracting, preliminary design review, preliminary review boards and panels.

EMD contracting is an 'ECS Maintenance and Development' contract - which broadly stated, set objectives for final deliverables, and they define continuing developmental engineering requirements to achieve those deliverables, thus why we see further evulation and planning set down for 2013, where on page 7 it states:

Continue development of a tube launched NL munition for integration on HMMWVs, tactical vehicles, boats and ships, with a range of 30-150 meters (T) and 10 - 500 meters (O). Finalize system design and conduct pre-developmental test activities to determine system readiness for developmental testing.

Now if I read that last section correctly, it appears they want to be ready for developmental testing by the end of 2013 - given so much other testing is set down for 2012 and 2013, I understand developmental tesing to mean having modules deployed to Humvees, boats and ships to begin testing operational performance in those applications - I could be wrong, but at page 6 it specifically talks about acquisitions to provide non lethal technology:

Continue system development and design of technology development downselected items to proceed into the acquisition cycle to provide NL technology solutions to critical joint mission tasks.

Also page 3 talks about 2012 being about getting user feedback, and 2013 being about optimizing training, which could only occur if the modules are in fact put into place - Humvees, boats, ships etc..

2012 and 2013 are also about proceeding 'into the acquisition cycle' which means one thing to me - acquiring Metal Storm tech, and paying for it in the process, though these will be development monies, not full scale manufacturing contracts where all 312 modules (and maybe a lot more) get requested - a contract for large scale manufacturing is expected after 2013, as noted on page 5 namely, joint acquisition programs of record:

Continue maturation of active denial technologies to increase system efficiencies and reduce system size, weight and cost in preparation for transition to joint acquisition programs of record.

It is the award of manufacturing contracts under the joint acquisition programs of record where the big money will be at, and that's why page 1 is so interesting -- most of the budget items running into 2012 and 2013 appear as testing, development and optimization activities and there associated costs for the involvment of various departments to bring the MPMs to manufacturing readiness.

By the end of 2013 all testing is expected to be concluded, and all training manuals ready.

So come 2014 most of the activities by the USA, USAF, USN, USMC, SOCOM, and USCG are finished, which is why there are no budget items shown for them after 2013 -- but there are costs budgeted for 2014 through to 2017, which from my reading can only be sustantially the manufacturing phase.

budget 2014: ~ USD$ 61 million

budget 2015: ~ USD$ 54 million

budget 2016: ~ USD$ 55 million

budget 2017: ~ USD$ 56 million

and assuming Metal Storm is by 2014 ready to take over as lead contractor for the manufacturing of the technology we own and have developed, then it stands to reason Metal Storm would take the lion's share of those allocated budget dollars.

Add to the above the expected huge revenues to come from Maul sales, and by 2014 I would expect gross revenues exceeding USD$ 100 million.

If my guesstimates are correct, then as LTInvestor stated in a previous 'valuation exercise' post (RE PE ratios etc):

If earnings are expected to be $100m in 2014, then MST should be worth $1.7bn (17c) now and $3.3bn (33c) in 2014.

Let's not hope so, but expect so...



good luck