The current MST situation looks good, but it needs to keep...

The current MST situation looks good, but it needs to keep rolling. The stars seem to be lining up, and the ducks are nearly in a row. I agree with the observation that we still need a serious (big) investor, notwithstanding that it seems the prospect of going bust has been averted for sure, but at the dilution cost we have had to live with. I've been to nearly all the MST meetings in Brisbane, and am very satisfied with the determination and results from Lee and the team on a shoestring budget.

HOWEVER I want to turn my head to some aspects of 'which upside road' from here? I will need the clarifying input of some more learned investors.

1. For a long time I was concerned about the huge share dilution. Within reason this doesn't worry me anymore. Assuming we get to a point where (after the notes, options and everything is in the tin) there 'might' be some 3.7billion shares in the show. (This is not a prediction, it is just an example for my point). If you check some of the big defence stocks this is untenable and looks like a basket case. However it only takes a regular 1:10 consolidation (leaving aside now is NOT the time) to bring this back to 370million shares, and we then have a comparable and reasonable book. To be clear, this doesn't affect the individual investor's value e.g. for a 1:10 consolidation 1 million shares at 1 cent is $10,000 (before consolidation) and 100,000 shares at 10cents is still $10,000 (after consolidation).

2. So for the moment IMHO if the current dilution stops soon, we can relax about the number of shares knowing that 'one day' (but only after serious income streams and production are in place) it will be right to do a consolidation without affecting your personal dollars.

3. A fun think for a shareholder to consider is what his current holding may be worth one day if the MST world has rose coloured glasses on. In this mode it is tempting to look at some of the big (or even medium) defence stocks and assume MST will be worth at least that and more one day. As a totally hypothetical concept, one might think say $10 per share would still be peanuts vs the promise. However I see a problem with this simplistic idea. Assuming the 1:10 consolidation is inevitable 'one day' to avoid the basket case bloated registry, this means a dream 'rose coloured' share price of $10 will have to become $100 after consolidation. Note the maths of what you have is still there on the calculator, but such a hypothetical shareprice looks somewhat untenable to me - see below.

4. Making a basic point you all know,checkout the simple (hypothetical)table below:

CurrentRegisterSP / ConsolRegisterSP / Market Cap(using 3.7B becomes 370M)
1c / 10c / $37M
10c / $1 / $370M
50c / $5 / $1.85B
$1 / $10 / $3.7B
$5 / $50 / $18.5B
$10 / $100 / $37B

5. My suggestion is the naive dream in point 3 will need to be tempered by the reality of Point 4. IMHO IF MST stays on its feet (and looking at some established defence stocks), the first 4 lines should be no particular worries, and hopefully in only 2-3 years once production is happening. The 5th line looks much harder (but the true believers will claim the likes of Raytheon are functioning on that level (Shareprice and Cap)- but this presumably isn't apples with apples) - maybe another 10 years away (I'm totally guessing)? Finally IMHO only the rose coloured and foolhardy will expect the bottom line to ever happen?

What do you reckon - is my maths and logic crap?

6. Okay - now what about takeovers? (this is where a useful discussion need some more learned input). In my book this is probably inevitable at some time, but it is also where the dream can be ruthlessly shattered real quick, as the mug shareholder has precious little 'defence' no pun.

As an example to my mind the likes of Colt Defense looks a likely party of interest in future. But Colt Defense are a ##@$%^*? 'private company' which means they have no published stock price. This means we can't think along the lines of 'I swap 10000 of mine for 1 of yours' stuff. Additionally, in my experience a takeover is usually a ruthless exercise such as offering a take it or leave it 40% premium on the current averaged share price - in the case of MST this would be code for never realising the dream, as the buyout could be at around 1 or 2 cents (say). Great for the day traders and Johnnie-come-latelies, but a disaster for the long termers.

Another thing - once a takeover is effected, if we join the party then we are locked into the much steadier shareprice growth of a big established crowd - rather than the potential meteoric rise of a speculative small cap that makes it big. Life wasn't meant to be easy, huh?

7. In summary - my dopey hope is that a WAY can be found for MST to stay on it's feet - at least until we are solidly ticking down the lines in Point 4 above!

8. I'm running out of steam - I hope this post generates some thought provoking and learned comments? I don't mind if someone says there is a lot of rubbish here - but please spell out the alternative (or corrected)scenarios that might happen in your opinion.

9. Finally a major, major issue IMHO is that we are not talking about Big Kev selling kitchen detergent - we are talking about early days in an apparent global game changing MST technology that surely might be worth squillions someday, and how to take a road that ensures the long-term supporters are not inadvertently dudded before things come to fruition.

10. Over to you blokes.

Best of luck.

P.S. All the thoughts and number examples here are my own, and do NOT remotely purport to somehow represent investment advice either way. Doh.