confusion over who or what is trading

There seems to be some confusion as to who is trading and what is trading.

What Company is trading?

Metal Storm Limited (ASX code MST) has since December 2001 had it’s ordinary shares initially in the form of ADRs (subsequently in the form of American Depositary Shares (“ADSs”)) traded on the NASDAQ Capital Market under symbol “MTSX” however, in July 2008 they were moved to the Over the Counter Market (“OTC”) under the symbol “MTSXY”. As at the last SEC lodgement there were 9,245,543 ADSs representing 184,910,860 ordinary shares in MST limited outstanding.

Each ADS represents 20 ordinary shares in MST Limited. The holder of the ADSs can convert their holding into ordinary MST Limited shares, which then become tradable only on ASX, not in the USA.

MST inc is currently held 49% by MST and it’s shares are not listed on any stock exchange. So the current trading the subject of this discussion has been in ordinary MST Limited shares not MST inc stock. MST inc therefore has not relevance or bearing on the current stock movement, therefore the assumption that MST inc is one trading is not a correct one.

I had asked the question previously as to why these are trading, if as we have been advised that the stock has been delisted why would anyone be buying? There is as I understand a grace period before the stock expires and in some instances the stock can still trade in that period. Given that after delisting the holders have 2 choices firstly, they can do nothing and the stock expires and the depositary will sell their shares, given they are not trading so they will recover nothing, and probably lose their money. Their second choice is that they can convert their holding into MST limited stock, which as we know is currently delisted and cannot be sold, they will then stand in line with the Australian Shareholders and probably they lose their money. One has to wonder what investment criteria these investors must use. Of course there is always the speculator who having seen a rise in both volume and price think that there may be run on the stock. Perhaps if they did some basic research they may think twice.

Who is trading?

We all know that MST limited is not trading and again I have asked the question, do we have any evidence that MST inc is trading, as in carrying out a business, and employing new staff. This has been following someone reporting on a Linkedin post. Given that most if not all the financial support to run MST inc came from MST Limited, we have to wonder how they are funding themselves, unless the majority (51%) shareholder has come to the party. Secondly all the IP that MST inc had been marketing etc is owned by MST limited. I have not been able to see any evidence that of trading.