Ann: CEO Bulletin , page-13

Gents,

Not sure I understand the basis of the statements that the company would have to offer notes holders a great deal to convert. Lets look at the circumstances:

- MST doesn't have $30m (or whatever) to payout notes holders

- MST is living hand to mouth raising a couple of mil from shareholders whenever it can just to keep the doors open

- A snowflake in hell has a better chance than MST does of raising $30 from shareholders to payout notes holders

Its hard to see how notes holders would be in a position to demand very much at all. If they don't agree to extend then the company gets wound up and notes holders stand in line to get x% of bugger all.

Not even a remote chance of somebody (shareholders or new investor) stumping up a huge wad of cash just to payout notes holders at this point in time. Can't see shareholders agreeing to have their already dilluted positions further dilluted to the point of being worthless by offering notes holders discounted shares / options as part of a conversion. Why would they ?

So it seems to me that it is in everybodies interest to extend them in the hope that MST will finally get product to market and makes sales.

MST is in a catch-22. Nobody wants to be the first to buy its products and take the chance that they won't be in business to continue supplying product, parts, ammunition etc as part of an acquition program. Without an entity willing to take said risks MST cannot gain any traction and stop relying upon the market for funding.

PNG is not going to change this but a deal with Colt may. If Colt is behind the manufacture and distribution then big customers can allay a number of important fears. Even if MST as a company collapses then Colt can continue to provide product and support so I see this deal as a much more significant step than the PNG contract.

The notes have to be extended in IMHO as there is no other serious choice until we break out of this cycle. Both shareholders and notes holders have a common destiny at this point in time. Either we ride it out together until the rewards are forthcoming it we all get next to nothing.