Medient Studios Inc. (fka MDNT)

[APFarmer]

Discounting the StudioPlex, a Fundamental Insight

I believe a great deal of concern has been placed on the execution of the Studio project. Much of it has been warranted. Shareholders do deserve timely insight into their investments. However, from a fundamental point of view, I think that many market participants are missing the near term revenue drivers; Movie Releases, Distribution Income and Films In Production. Ultimately, even if the Studio never happened, there is still value. Could it be delayed.. Sure. Is it less likely than it was 3 months ago, no. However the share price is reflecting that. Near term there are many great (high potential) catalysts.

With respect to movie releases, I do believe that Yellow will have a large impact on the revenues for the year. Let's say that it does $25mm in both box office and post release sales. Even with 700mm in shares outstanding the FCF (rough estimate) is about 3 cents per share (or 18 times yesterdays close). I have seen estimates all over the place on the box office from it, but stepping back, it is a driver.

The Atlas acquisition and any other acquisitions are acquisitions of cash factories. They aren't large cash factories, but if you look at the most recent earnings, they do produce cash flow. My estimate is that they will add another 2 cents in value.

The furthest our of near term catalysts are the other movies in production. The Dammed for instance will get a tax credit from the state of GA. My best guess is that they will sell that tax credit to someone else (http://www.gettaxcredits.com/resources/faqs). In addition to that and revenue from the movie, let's say it adds 1 cent to the value.

With all of that, excluding any forward momentum with the studio, we are at a target share price (based on a very back of the envelope discount model) of about 4 cents or a return of 1,805%.

For me that is a great upside. So rather than getting all pissy about the "dilution" that those of us who knew about it weren't surprised or if the studio is hitting every target.... look to the catalysts that are even more likely.

Oh yeah, and if the studio does get built, my book value based model will put the value of the stock at $0.115 excluding the revenue catalysts....