Intel,If we were to assume that MST as at 1 January had 10...

Intel,
If we were to assume that MST as at 1 January had 10 shares on issue and you held one share, you own 10% of MST. If on 30 June MST were to issue 10 new shares making 20 shares in total, and you took up your entitlement you would now own 2 shares of 10% of the Company. If however, you did not take up the new share entitlement you would own 1 in 20 or 5% of the company. If then on 30 December MST were to issue 100 new shares and again you took up your entitlement you would now hold 12 shares, still 10% of the total 120 shares on issue. If however you still only retained your original 1 share you would now only own 0.83% of the Company. As you can see that you ownership of the Company has been diluted from 10% to 0.83% by the issue of more shares.

This dilution does not have any effect on the share price. The lowest price that a stock can trade on ASX regardless of the number of shares on issue etc. is $0.001. Given that the shares in MST were trading at $0.001 prior to suspension and if they relist it is more than likely that they will continue to trade at $0.001 so in effect your I million shares are still worth $1,000.00.

As regards share consolidation this is where the Company reduces the shares on issue on a determined ratio. i.e 1,000 to 1, this means that if you held 1 million shares under the consolidation this means you now hold 1,00 shares. The Company does this to reduce the number of shares on issue. There is also a theory that the share price re-aligns to take the reduction of shares into account based on the market capitalisation i.e the value of the Company should not drop 1,000 times, on this basis the MST shares should then trade at $1.00. At this stage the Company will still be capitalised at $5.7 million or so. Unfortunately, the market capitalisation of MST has been artificially set at $5.7m due to the fact that the present share price cannot fall below $0.001. Once the new shares to ASOF are issued for every billion shares issued the market cap will increase by $1 million dollars which means that the market cap could be around $19 million or so. Under the consolidation outlined above the market capitalisation will be the same.

Unfortunately, reality prevails and the share price will quickly re-align to what the market sees as the true value of the Company, now that the market has the capacity to do so. Therefore in our case there is nothing to stop the share price falling back to $0.001, it is scary to think what the market capitalisation and the value of your new consolidated 1,000 shares will be. This is why as far as I am concerned the market capitalisation for stocks such as this is a meaningless figure as prior to the administration MST was not worth $5.7million. It is far more important to look at the NTA as an indication of what value the company has for shareholders. As I have also said in the past ASOF also suffers from a drop in the share price, which is why I feel that any consolidation, if at all, will not be very drastic. Also you have to ask the question, given ASX now has not limit of stock on issue why they would consolidate. Time will tell on this.

Your ownership of the Company is based on the number of share you own in relation to the total number of shares on issue, not as a percentage of what you owned as a percentage of the new shares. I.E. if you hold 1 million shares, your ownership is based on 1 million as a percentage of 100 billion or so.

Also for what it is worth I had also previously indicated that I had believed that ASOF had considered liquidation as a way of picking up the MST IP on the cheap. The Administrator had indicated that he had gone through all possible scenarios with ASOF and of course liquidation would have been one of them.

Hope I have gone some way to clarifying your thoughts, always happy to discuss differing thoughts.