A Research Report Gives Medient Studios Inc (OTCMKTS:MDNT) a Push
Medient Studios Inc (OTCMKTS:MDNT) registered its 52-week high of $3 per share on March 21, 2013. On February 6, 2014, it logged a low of just $0.007. That’s more than 99.7% of the value lost in just ten and a half months. A pretty appalling performance, you would agree, but nevertheless, an entity called SeeThruEquity decided to initiate a research coverage on the company which, in turn, had a tremendous effect on the market.
The report was published about half an hour before yesterday’s opening bell and it caused quite a commotion. More than 40 million shares changed hands resulting in a dollar volume of around $866 thousand. MDNT opened the day at $0.0188 and started climbing almost immediately. Six and a half hours later, it was standing at $0.023 which is around 38% above Monday’s close.
As you can imagine, SeeThru’s report is full of estimates, graphs and charts and it puts a lofty $0.13 per share price target on the ticker. You can have a look at the document and decide for yourself whether these sort of levels are achievable or not, but while you’re at it, you might want to read through the fine print found at the bottom of the document. It says that SeeThru Equities have received no money for the publishing of the report, but they do admit that they may have a long or short position in the stock.
It would appear that the people behind SeeThru aren’t the only ones who seem confident about MDNT‘s future. On February 10, the company issued a press release which said that the CEO, Manu Kumaran, has agreed to convert $660 thousand of personal loans into around 10.3 million shares of common stock. This brings the conversion rate to over $0.06 per share and it presents quite a premium to the open market levels. The message boards are buzzing with activity and a lot of people reckon that something big is coming.
The future should tell us if they’re right or not, but in the meantime, we might as well take a look at the latest 10-Q and see how things have been going on around MDNT. The report covering the third quarter of 2013 was published on November 19 and it showed that back then, the number of issued and outstanding shares was hovering just above 41 million. It also sported the following financials:
- cash: $142 thousand
- current assets: $5.4 million
- current liabilities: $6 million
- revenue: -$38 thousand
- net loss: $595 thousand
The balance sheet is by no means perfect. They “lost” some revenues during the period for reasons that are not very well explained. There’s also a substantial net loss, but if you take a closer look, you can spot a few positive things as well. They now have some money in the bank and they did manage to log around $1.9 million in revenues during the first two quarters of 2013.
All in all, if you base your opinion on the 10-Q alone, you’ll probably think that luck could swing either way for MDNT. Take a look through the rest of the SEC filings, however, and you’ll see a few other issues.
They filed a Schedule 14 form on Monday and it informs us that the number of issued and outstanding shares as of January 6 was hovering around 140 million. This means that nearly 100 million new shares saw the light of day in a matter of just forty-eight days. No explanation is given for the massive issuance, but the filing also tells us that MDNT plan to increase the authorized capital from 500 million to 5 billion shares which could suggest that some more stock is about to be printed in the near (or not so near) future.
This could cause some severe dilution and the effects could only be lessened by solid results from the coming quarters. Hopefully, Mr. Kumaran and the rest of MDNT‘s management team will be able to achieve them.
