Can Medient Studios Inc (OTCMKTS:MDNT) Get a Second Chance?
Out of the last twenty sessions, only seven ended in the green for Medient Studios Inc (OTCMKTS:MDNT). The ticker managed to slash 50% of its value in less than a month and was registering new 52-week lows on almost a daily basis. The shareholders really didn’t see a light at the end of the tunnel. Has this changed?
Half an hour before yesterday’s closing bell, MDNT issued a press release with which they announced several changes to the management team. Manu Kumaran has been (in the PR’s words) terminated as a CEO of MDNT. A person called Jake Shapiro will try to fill his shoes while Charles Koppelman will take the responsibilities of the Chairman of the Board.
Mr. Kumaran is not amused. He announced through a few news websites that in his opinion, his ousting has been a hostile takeover of the company and he also said that he will take legal actions against his former colleagues. While watching Mr. Kumaran and the new management team throw accusations at each other is probably amusing, we reckon that it’s much more important to have a look at the thing that shareholders care about the most – the stock.
The market didn’t really have the time to react to the news yesterday, but we can see that there is a lot of buzz around the message boards at the moment. Some of the people posting there seem pretty happy about the developments. If you’ve been following our articles closely, you know that the massive drop MDNT has experienced over the last few months is due to some severe dilution. Many shareholders thought that Mr. Kumaran is responsible for it and the new management team said shortly after taking their positions that they’ll do everything they can to address the issue.
There is, however, a group of investors who are not entirely convinced. Mr. Koppelman is certainly a well-respected man in the industry and his CV can prove this. Things are a little bit different when it comes to Jake Shapiro – MDNT‘s brand new CEO.
He has apparently been around small cap enterprises for a while. His name is featured in this Forbes article which tells the story of a company called 360 Global Wines (once traded under the TSIXQ symbol). As you can see, he founded and headed TSIXQ for a while and shortly after he resigned, the company sought bankruptcy protection.
Mr. Shapiro’s name can also be found in the filings of another OTC stock – Seven Arts Entertainment Inc (OTCMKTS:SAPX). SAPX is a former NASDAQ ticker that is not doing very well at the moment. The company is delinquent in its filings and its CEO, Peter Hoffman, was recently indicted for conspiracy and wire fraud.
Of course, these things don’t necessarily mean that MDNT is about to be taken down by its new management team. We’ve mentioned numerous times that if the company manages to complete the ambitious Studioplex project, it could be in for a brighter future. The key to success also lies with stopping the horrific dilution and Mr. Koppelman and Mr. Shapiro might just be able to do it. Conclusive proof of this, however, will (or will not) be found in the future financial statements.
Until the reports come out, carefully considering the risks and doing your own due diligence is absolutely essential.