MDNT 8-K: MEGA ACQUISITION DEAL FOR $8.4MM SIMPLIFIED >> READ
naturalborninvestor and all,
It is 100% correct that this deal is very favorable not only to both MDNT and Atlas, but to MDNT shareholders because as you have pointed out, the deal is not accompanied by the issuance of billions of shares as previously opined by many on the forum. The proposed A/S increase had nothing to do with this particular deal or others in progress. From what I can see so far, I am convinced that management will indeed revise the PRE 14c as the Atlas acquisition demonstrated that the Company enters deals that are share structure friendly. This transaction used up only 5 MILLION SHARES.
So, what does the deal entail?
At a first glance, it looks like the valuation given for Atlas is $50,000 and MDNT issued 5 million shares at 1c for the acquisition. If you thought this, you also probably thought, "Whoopie, big deal...not what I was looking for." Well, the good news here is, you thought wrong and let me explain why.
What we see here is a MEGA deal with a transaction value of ~$8.4 millionwhich results from the assumption of all assets and executory contracts belonging to Atlas GmbH, including a library of over 240 titles that will be sold aggressively in the European market. Instead of buying out Atlas's debt in its entirety, MDNT assumed the debt as noted in the filings. Atlas already being a revenue generating company, and the expected release of Yellow in April which is expected to bring in over $32MM in revenues, the Company is well positioned to carry and manage Atlas's debt going forward without overwhelming the balance sheet. This is point one.
The second point here is to consider what $8.4 millions at 5 million shares means to the previous owners of Atlas GmbH:
$8.4 million @ 5MM shares = $1.68 per share.
MDNT at $1,68 per share can be considered the BREAK EVEN POINT for the previous owners of Atlas GmbH. Note that this price point is consistent with where the film financiers also converted and are holding. In other words, in order for this transaction to be a "good deal" for Atlas, the future share price of MDNT must exceed $1.68. It goes without saying that these folks at Atlas would not enter this deal unless they saw it being profitable to them.
Finally, per Rule 144, the 5 million shares issued to Atlas GmbH are restricted.
Have a great day all,
BB
In God We Trust. All Others Must Pay Cash.
