Notes from MOD...................................This is not...

Notes from MOD

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This is not investment advice. I am not a financial advisor. Do your own due diligence and seek professional financial advice from a qualified advisor before any investment. I hold and trade shares in this company. I have had no communication with Metal Storm regarding these notes. They represent my opinion only.

There has recently been an increased level of posting, both positive and negative, on some financial forums, regarding Metal Storm. The following are my comments regarding the content of some of the posts, and some other matters. I might add futher comments over time.

A summary of the purpose of these comments is contained in Entry 1, at the bottom of this page.

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Entry 6: 4 February 2011. Is it true that Metal Storm rounds are fat, heavy, slow, and may not reach many targets, as some are claiming?

No, it is not true.

Metal Storm ammunition has long and repeatedly been demonstrated at equivalent conventional velocity and range including in 9mm, in 50 calibre, and in 40mm grenade format. Not only that, Metal Storm has demonstrated that it can fire rounds that actually have Higher velocities and energies than those available to conventional ammunition of similar size, weight and propellant load. How possible? (See Entry 5)

Metal Storm ballistic systems has a wide potential 'fit' across military and non-military weapons requirements, but as must naturally be expected of any system, that is unlikely to extend to include every last ballistic nook or cranny that might possibly exist. As I see it, Metal Storm was quite rightly making that simple point in the original statement that "The diameter of the propellant contained in a Metal Storm munition is the same diameter as the barrel, and therefore the length of the propellant is greater than in conventional high pressure gun systems. This may have a negative impact on the way the propellant burns, and consequently slow the projectile."

However, quite early in the development of the technology (in fact as far back as 2002) a DSTO demonstration confirmed the successful firing of multiple stacked high pressure 50 calibre rounds which not only equalled the pressure of equivalent military high pressure ammunition, but which well EXCEEDED it.

As provided in U.S. Army Ammunition Data Sheets, the average chamber pressure for the 50 Cal BMG 12.7 x 99 NATO round, excluding plastic practice, short cased spotter, or proof/test loads, is 54,923 psi. By comparison, the DSTO 50 Calibre demonstration was successful at 72,000 psi, exceeding U.S. Army 50 Cal standard specs by 17,000 psi, or by 30%. (See Entry 4)

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Entry 5: 4 February 2011. Can Metal Storm match or exceed the velocities of comparable conventional ammunition?. Some are claiming it's not much better than a spud gun.

YES it can!.

Welcome to the spud gun of the millennium!

Metal Storm ammunition has long and repeatedly been demonstrated at equivalent conventional velocity and range in 9mm, in 50 calibre, and in 40mm grenade format. Not only that, Metal Storm has demonstrated that it can fire rounds that actually have Higher velocities and energies than those available to conventional ammunition of similar size, weight and propellant load. How possible? Read on.

In 2000, Metal Storm provided detail of a firing demonstration that confirmed a capability that is available to electronically fired stacked rounds. The capability was demonstrated with a (handheld) handgun, but equally applies to some other Metal Storm systems. The capability comes from the ability of a Metal Storm gun to fire two or more rounds with ANY electronically determined delay between the two firings, even extending to extreme rates that result in multiple fired rounds being in the barrel simultaneously. In the demonstration, the rate of fire was set at an incredible 500,000 rpm. The result was that the second round was fired when the first round was calculated to have moved only 1.25 inches down the barrel.

Normally, as a round moves down a barrel, the 'empty' volume behind the round constantly increases, as a result of which the barrel pressure falls away, and energy that might otherwise go to increasing the velocity of the round is lost. But in the Metal Storm demonstration, because there was a second round following (very) closely behind the first, that effectively reduced the rate of expansion of the 'empty' space, and reduced the amount of energy lost to the expansion, beneficially transferring some of that to the round. This increased the averaged base line velocity from 860fps up 22% to 1,050fps, and lifted Kinetic Energy from an averaged 185 ft-lbs to 276 ft-lbs, or +49%. Some spud gun!

The results that were achieved were not seen as the maximum available, and the boundaries were not pushed to the max, due to the need for further exploration of the best available consistent burn rates of propellants, this being a probable limiting factor. However, as has been published, my calculations indicated that if the firing gap between the two projectiles was reduced from the tested 1.25 inch to 0.25 inch, then the KE of the leading round would potentially be increased by an amazing 100%. Note that the gain does not result from an increase in the maximum barrel pressure, but from decreasing the rate and extent of decay of pressure in the barrel.

In the real world it all means this: Set on standard semi auto, the handgun would operate with conventional MV's and KE's. However at the flick of a switch, the operator could continue to effectively engage a target beyond the normal effective range of the weapon, or, at close range could engage a target with greater than the normal maximum knock-down capability of the weapon.

The only cost from the operators point of view is that in the above high-energy, high-velocity mode, the following round would give up energy, and should be regarded as a sacrificial round. However, if the result was the difference between removing or not removing the threat, such a cost is inconsequential.

The above following-round effect is not a Metal Storm discovery. It is well known in the ballistics world, and there are several known examples of experimental systems. One difficulty has been that that in non Metal Storm systems it requires the construction of often exotic, expensive, and specific-use systems which limits its practical or wide spread use. On the other hand, with Metal Storm systems it can come built-in by default, and be available at the flick of a switch.

The capability was demonstrated in 9mm, but it also has application across other calibres.

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Entry 4: 4 February 2011. Was there ever a successful high velocity, high pressure stacked-rounds demo. If so, would it be a reasonably close equivalent of the original Sniper Rifle capability?

Absolutely Yes. The DSTO team in Australia got it VERY right, as far back as 2002.

How about a multi stack 50 calibre demo at +72,000 psi. The 50 Calibre rounds were close to the conventional 50 calibre weight, size and shape. They were definitely neither fat, nor slow. The following is an extract from an ASX release.

"METAL STORM LIMITED 2002-07-11 ASX-SIGNAL-G

HOMEX - Brisbane

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Metal Storm Limited (ASX code: MST and NASDAQ Small Cap: MTSX), a pioneer of electronic ballistics technology, announced today that the Defence Science and Technology Organisation (DSTO) research efforts into the high pressure application of a development of its technology

has resulted in the first successful firing of a stacked round 50 calibre prototype system, with chamber pressures exceeding 72,000 pounds per square inch (psi).

At Metal Storm's Annual General Meeting in April 2002, the company's President and Chief Executive Officer, Mike O'Dwyer, outlined two independent research efforts in the high technical risk area where internal breech pressures exceed 50,000 psi. In Australia, this had been conducted by DSTO, while the Defense Advanced Research Projects Agency (DARPA) advanced sniper rifle (ASR) project in the United States was led by Science Applications International Corporation (SAIC) with support from Metal Storm and two subcontractors.

After initial studies the DSTO high pressure effort showed promise and resulted in a successful test firing. The SAIC effort did not yield comparable results, and DARPA, Metal Storm and SAIC have

mutually agreed not to proceed further with the program."

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Entry 3: 4 February 2011. Was the SAIC High-Pressure Sniper Rifle barrel failure to do with some inherent flaw in the Technology?

No. None what so ever. The Company that was subcontracted by SAIC to build the high velocity test system made a total mess of it. Their design of the test bed and projectile system itself was flawed, and it failed with only a single round loaded, and therefore before ever attempting to fire multiple stacked Metal Storm configured rounds. That subcontractor got it wrong, but others got it right!. (See Entry 4)

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Entry 2: 4 February 2011. Is David Pashen correct in stating "through the mid- to late-1990s, initial concept prototypes were tested that used wedge sealing a way of ensuring that as each projectile was fired, the exhaust gases didnt fire the following projectiles. These initial systems demonstrated the concept well, but lacked the practicality for operation in combat, "

No, he is incorrect. Significant high-value practical combat applications were identified for wedge sealing.

I don't know David, and it is unfortunate that he did not first provide himself the opportunity to speak with me before publishing the statement. I'd have referred him to the detail of reviews which were done before Metal Storm was a public company, and which were completed as a matter of course, to determine the number and potential value of practical applications of wedge sealing technology which could reasonably be available, and potentially produce major revenue streams for the Company. The inquiries included some reality-check meetings with field-experienced Australian military personnel. As I recall, the applications included such things as in-situ low maintenance, 9mm perimeter defence pods and repeatable claymore-type pods. It is notable that the identified applications also included 40mm+ military 'pods' and 40mm+ non-military applications (which do not require costly and time consuming military certification) such as fireworks and fire fighting. These and other wedge sealing applications remain available.

As I see it then, the more recent inclusion of internal-sealing IP in 40mm military applications added new opportunity to the company, rather than simply replace existing opportunity. I believe both systems have practical application and that both can grow to be valuable assets for the Company. To the extent that I am aware, internal-sealing presently forms the backbone of 40mm development by the company, and that the initial patent for 40mm Metal Storm internal sealing (7, 743,705) was filed by my son, Sean O'Dwyer.

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Entry 1: 4 February 2011. What is the purpose of my 'comments' page.

My primary purpose is to address inaccurate information.

Clearly, like all shareholders, I want to see Metal Storm succeed as a Company, and also see Metal Storm reach the full potential I believe it has. However, as I presently see it, that likelihood has steadily diminished over time. I believe the market generally sees it the same way, and I note that the Chairman himself has acknowledged that the market now sees Metal Storm as a long shot at best. The shares would not otherwise have collapsed to be trading at under 1 cent.

I believe the share price collapse reflects a parallel decline in confidence in the company that has been a long, slow, continuous and painful process to watch. That process has included changes of direction, the development of systems which absorbed resources but which delivered no outcome and which were subsequently dropped, and in particular the failure to reach many recent and critical milestones that the company set itself, including product development, timelines, sales, and revenue streams which were to see the company profitable well before now.

The company has been negatively impacted by some world events, and by other events outside its control, but it is disappointing to see the leadership of the company rush to claim these events as THE cause of the present situation, when I believe that it is clear that the real cause is that the company far too often did not produce the critical results it claimed it would, and while it still had the resources it needed to do so.

While I do not doubt the commitment of the team, or the very high level of personal effort that the Metal Storm management and staff have contributed, it is the unfortunate case that the outcome can only be gauged as a mix of both successes and failures which is far too heavily weighted on the side of failure, and loss of confidence.

I do not think the flat market reaction to the announcement of a major supply contract to PNG is surprising. There appears to be a good deal of scepticism evident regarding that contract, and Metal Storm announcements generally. That scepticism will have been all the more heightened following from the 2010 financing fiasco.

In part the purpose of this page is to comment on some of the failures of the company, with the single intention of encouraging change and improvement. The timing of the comments reflects my concern about the present situation. The timing is also linked to the fact that I see in the leadership of the company, a tendency to contribute company failures to other people and other circumstances. Six years on though, is I believe well past the point when today's situation can be avoided as being theirs by the present team, or shouldered on to others.

In other part, the purpose of this page is to comment on some of the accumulated information regarding Metal Storm and Metal Storm technology that I believe has become to include the increasingly inaccurate, as time has passed.

I mean to address inaccurate information, no matter if it might be pro or con the company. No doubt some comments will address issue raised by those seen as Bashers. But inaccurate information can also be quite innocently posted by company supporters, in which case I will, with respectful intent, seek to offer other opinion.

I expect that my comments are unlikely to be regularly updated.

Mike O'Dwyer