Metal Arts Company (MTRT)

[FrankF]

"EXHIBIT A" ATTACHED AND EXPLAINED


I received it from the Transfer Agent after market close Friday, and thought to keep it to myself until I bailed.


Gotta be honest, when I heard that the vote concerns a 2B A/S increase, my first reaction was how am I going to sell fast enough Monday morning?


But your post really made me think.


In fact, I have totally changed my mind. (About bailing.)


Allow me to babble for a moment or two.


Apart from today's developments so powerfully validating a merger,


whether partial or full,


here's what I am beginning to realize:




If MEDIUM wanted to issue preferred shares to insiders just in order to maintain control, and if, just for example's sake the preferred shares had conversion rights of 400:1 (again, structured mostly for purpose of maintaining control), WOULDN'T THEY REQUIRE A LARGE ENOUGH A/S TO HYPOTHETICALLY CONVERT THEM EVEN IF THEY HAD NO INTENTIONS TO CONVERT THEM?




The point is, IT IS POSSIBLE -- we don't know yet -- that the 2B A/S proposal is mostly a formality so they can have their 5M preferred shares (and maintain control). (5,000,000 times "400" = 2B.)




Again, give or take; I just pulled numbers out of the air for sake of example.






More likely would be slightly smaller conversion rights, because it would leave room for share issuances for business needs, acquisitions, etc.


For example, 300:1.


Just to issue 5M preferred shares (for whatever reason) with conversion rights of 300:1... would require precisely 1,518,095,802 A/S.


(Because 13,095,802 shares are already issued and we would require an additional 1.5B more authorized just so the preferred shares could exist, plus another 5M for the preferreds themselves.)


But in that hypothetical case, a 1.5B A/S would leave no room to issue a single share for business needs or acquisitions.


If they wanted to issue at least some shares, which of course they do, it would make sense to make the A/S a bit higher than the portion that allows the preferred shares to exist.


For example, 2B instead of 1.5B.


Is something like this what MEDIUM has in mind?


I think so.


Maybe.


Maybe not.


But it would be quite the shame for me to bail now,
after being so convinced of the enormity of MEDIUM and
the almost certainty of either a partial or even full
merger of all their assets into MTRT,
only to find out later that MEDIUM only ever
intended to issue a few hundred million shares
in the first place (the rest being
just to accomodate preferred shares)!







Another consideration:


What did HMBL do after raising their A/S to 7.45B upon the merger with TSNP (almost 4 times as high as the 2B proposed for MEDIUM)? Gave insiders preferred shares? With the massive A/S increase but a formality making it possible for those preferred shares to exist? Whatever the case, here we are nine months later and HMBL STILL has less than 1B O/S.


Again,


A/S DOES NOT EQUAL O/S . . .

and

a huge A/S increase that's never intended for actual issuance, is often used for facilitating the required conversion rights of preferred shares which are strategically used for maintaining control . . . AND having room to issue shares for acquisitions, etc.








Light bulb moment for me!



I HAD THOUGHT for a moment that a large A/S increase would make the enormity of MEDIUM irrelevant;



but upon some reflection, it turns out the enormity of MEDIUM would make a large A/S irrelevant instead!








A final consideration:



WHAT IF Medium's securities counsel knows what they're doing?



I mean, and has told the company what we already know?



That is, WITH SUCH AN UNUSUALLY LOW FLOAT the only way to have sufficient liquidity would be to do AN EQUALLY UNUSUALLY LARGE FORWARD SPLIT?



1:10?



1:20?



Even 1:50 would only put us at 654M O/S, not hard for that SS to trade at a few bucks per share . . . . TIMES 50!



I've some of these unusually large FS plays before.



And they were some of the most monstrous gains I've ever seen.






HERE IS THE FULL SHAREHOLDER LETTER,


INCLUDING "EXHIBIT A":



























IMHO