"Why are we having trouble raising just a couple of million". LOL. Just a couple of mil you reckon. On May 31 the company advised that they still needed to "obtain funding of $10M-$15M to enable the Company to finalise its first commercial sales". Thats in additional to the money that Luxaflex was supposed to cough up and certainly a hell of a lot more than "just a couple of million". More importantly, even at this point its a vaugue range which indicates they still have absolutely no idea how much it will really cost.
Even if they could raise all the required funding you suggest it is just "until the contracts start rolling in". Which contracts are those? PNG? Colt?
MST recently advised the market that "At present we have over 27 Million dollars worth of proposals in active consideration by the US Defense Department, Law enforcement agencies and international defence organisations."
So even if every single one of those proposals was accepted and the customers didn't bother negotiating a good deal from a distressed vendor, the profit margin payable to MST on those net orders would be maybe a few mil?
So we just need to raise about $20mil (what Luxdefect was supposed to invest plus maybe only an extra $15mil if we are lucky) and if we get a 100% strike rate on proposals then MST will have spent another $20mil to make $3mil in profit. Thats a return on future investment of -85% at best. What then? 4 more years of paying the bills and losing money while waiting for a good defense contract which MST may never win?
Yep, let those contracts just roll on in. I applaud your enthusiasm but what we want to see and what we are likely to see are two very different things. This isn't the consumer electronics market and its not discretionary spending. MSTs tech may be good and may have a long and profitable life. Its just that MST management have no business case to attrack half decent investors looking for return on investment that doesn't have a minus sign in front of it.
The underlying assets of this company already appear to have been snapped up on the cheap by US entities under the gise of ASOF and their secured notes. Equity holders who funded the majority of this amusing expedition are unlikely to see any return whatsoever. So exactly who is going to offer to put up the cash equivalent to 3 times the entire curent market cap of this company?
$3 mil currently buys 50% of MST if you were silly enough to offer 0.001c on market. In reality investors are being offered 20/25% off that price if they will put a few dollars in via placement. That makes the company worth about $4.8mil in total as it stands. If you had the $20 mil that MST needs, how much of the company would you expect to own given the entire thing is currently worth less than a quarter of that?
Your comment was a windup wasn't it ?
MST Price at posting:
0.1¢ Sentiment: Buy Disclosure: Held
