Here's my info and analysis.
I've heard a minimum of 100 mil gross is expected from the four, and from some experience, I'd give the potential range as between 50 and 200 mil, so 100 mil seemed reasonable. According to the 'deal' details which I had faxed to me recently, about 20 mil will go to cover phase 1 of the deal which includes paying back the investors. Of the rest, 52% will go to the company's bottom line, and another 20% will go to the company for other purposes. Usually this is for attracting quality cast and crew for the productions without paying them fat cash, thus keeping the production costs down by allowing others to share the risk. It can also be used in distribution deals to get the distributors to share more of the risk. The great thing about this deal is that it's based on gross with a fixed percentage for 'deal' money. Big studios usually make deals based on net with no controls on what's given out in deals, allowing them to sacrifice an outside financed film, along with its investors, in order to gain advantages on other projects with more profit potential for the studio, as well as to hide money for tax reasons. Anyway, 52% of 80 is about 42 mil, plus another 5-10 mil? for Lima, plus health club and film library revenues, let's make it an even 50 mil. Let's assume they can't hide from taxes, leaving about 30 mil earnings, or about 0.33 per share. At 4X penny stock valuation, that's $1.32 per share, plus a high probability of public recognition, unlike most penny stocks, which would give a much higher valuation.
Other points: Since, according to my understanding, operating expenses for the company are included in the 'deal', there will be no need for further dilution. Also, with this and other similar deals on the way, what's the company going to do with their earnings? Well, probably the most obvious thing to do would be to buy back shares until the price goes to a reasonable value, if it hasn't already. Also, we've finally hit the magical 1/8 that people have been waiting for, and which seems to be a price that penny stocks launch from, for some random mass psychology reason, given lack of much concrete information. So, this is probably the bottom, IMO, but you never know.
Sorry for the length,
Z. |
