Medient Studios Inc (OTCMKTS:MDNT) Becomes More and More Turbulent

Back in October, Medient Studios Inc (OTCMKTS:MDNT) was sitting comfortably above the $0.10 per share mark. By contrast, at the beginning of December, it was struggling to stay above $0.015. With that in mind, SeeThruEquity’s decision to put a price target of $0.13 per share on MDNT three weeks ago seemed a bit strange.

Nevertheless, the optimism managed to boost the stock’s value. Several sessions of heavy buying dug the ticker out of the sub-penny levels and pushed it as high as $0.03 on March 28. A correction seemed inevitable, but what we have seen over the last ten days can’t really be classified as a correction.

A “nosedive” would probably be a better description. Out of the seven sessions since the beginning of April, only two ended in the green. Yesterday’s closing bell rang when MDNT was sitting at $0.014 which, as you might have calculated already, means that it has lost around 53% of its value in less than two weeks. That’s a scary drop, but what is the reason for it?

It would appear that investors aren’t really happy about MDNT‘s 10-K which was published on March 31. Neither are, as a matter of fact, SeeThruEquity who, half an hour before today’s opening bell issued an updated version of their report which now sports a lower price target – $0.10 per share. Once again, it’s up to you to decide whether their predictions will be more accurate this time, but while you’re making up your mind, we might as well check out the 10-K and see what’s bothering investors so much. Here’s a summary of the most important figures as of December 31:

• cash: $0
• current assets: $5.4 million
• current liabilities: $10.1 million
• yearly revenues: $2 million
• yearly net loss: $1.3 million

Straight away, you can see that there’s been a 37% drop in revenues year-over-year which is disturbing enough on its own, but the net loss makes things even more bleak. The losses incurred during 2013 are a whopping 1,000% higher than the ones logged in 2012.

MDNT have a very good explanation for this. They say that the revenues have decreased because most of their efforts were concentrated on the state-of-the-art Studioplex that they want to build in Georgia. The huge net loss is also explained with expenses on the construction of the massive facility.

Truth be told, if the press releases are to be believed, they are working hard on getting the project going. In March, they appointed a contractor and, as they are too happy to mention in their reports, The Effingham County Industrial Development Authority has agreed to help them complete the Studioplex.

But while they’re keen on talking about the facility, they don’t seem that interested in disclosing information about their share structure. This Schedule 14 form tells us that on February 13, there were a total of 140 million shares issued and outstanding. The annual report informs us that on March 31 (forty-six days later) the O/S count stood at nearly 328 million. Unfortunately, the 10-K gives no information on how and why the stock was issued.

It’s quite clear that, if the Studioplex gets completed and if everything goes according to plan, MDNT might turn into an extremely interesting OTC company. Until then, however, there are plenty of risks associated with a potential investment and considering them carefully is absolutely essential.