MDCE was picked up by undervalued dog investor.
MediaConcepts, Inc. (OTC BB, MDCE)
Recent Price: $0.11-0.13/share
Daily Average Volume: 220 K
97 EPS: $0.03/share*
97 PE: 3.5
Estimated 1998 EPS:$0.30/share
Forward PE: 0.35
Book Value:$3.15/share
Price/Book Value: 0.048
Div/Shr: None
Yield: None
52-week Range: $0.06-1.00/share
Outstanding Shares: 21.7 M**
Public Float: 8 M**
Market Cap: $2.5M
1997 Revenues: $3.5 M*
Estimated 1998 Revenues: $25 M
Management holding: 63.1% (144's restricted)
* The delay in releasing of 97' 10-K may have contributed to the decline of the stock price. Since this is the first time that MDCE files its 10-K with the SEC, the procedure is much more complex than a regular filing. Mainly, the SEC requires a full disclosure of a company history, ongoing litigations and their impacts on future operation of a company, last quarter's financials of 96, 97's financials, asset auditing of newly acquired companies, etc.. Since auditor has flew all over the world to determine MDCE assets, the release of 10-K has taken much longer than expected. Further, MDCE has changed their auditor in the midst of auditing due to the previous auditor was unable to finish 10-K in a timely manner. 97' 10-K should be released sometime in August and then 10-Q for first and second quarters of 1998 will follow.
** Total outstanding shares and floating shares are 24 M and 11.3 M, respectively. 3.3 M shares held by the previous management, however, can not be traded in the market, because of the ongoing litigations. These shares are not registered with SEC and the previous management members are being sued by the current management for the illegal issuance of these shares.
BUSINESS SUMMARY AND CORPORATION BACKGROUND: Through the development
of a new corporate structure, MDCE has the following subsidiaries: Parthenon films, a theatrical and television production arm, Mindware, an interactive corporate training and educational component, Pasadena USA Ltd, and Pasadena International, a line of cosmetics and skin care
products.
MDCE, with subsidiaries, produces movies, videocassettes and television specials from its library of historical and stock film; rents its stock footage to the video industry; and converts educational materials into interactive media for home study. MDCE has the rights to do a movie production of the late Harold Robbins novel Dr. Dan and the Plates of Gold. MDCE has the right of first refusal on all of Mr. Robbins novels not yet made into motion pictures or television productions. Mr. Robbins was one of the best selling novelists in the world having sold more than 750 million books in 23 different languages. Also, MDCE has the film rights to the Louis L'Amour books. Mr. L'Amour's novels are best known for their entertainment, excitment, and advice.
RECENT DEVELOPMENTS AND ANALYSIS: In terms of its acquisition, acquisition of a Sand and Gravel Pit plus a Transit Mix Company by MDCE has been going well. The deal should be finished sometime in August. The pit consists of 1.7 million cubic yards on 33 acres. The businesses combined have 15 million dollars assets (add stock equity $0.625/share), including real estate. These projects represent approximately $7 million in annual revenues and $450 million dollars in lifetime revenues. The pre-taxed profit margin is about 60%. These revenues will give MDCE annual earnings: $0.135/share. The court hearing will be closed soon and the press release regarding the acquisition of this project by MDCE can be out anytime from now on.
In terms of its cosmetic business, Pasadena International Inc. is doing well in the first and second quarters. It has generated $5-6 million revenues in the first two quarters of 1998 with earnings of $0.06/share. The results of first and second quarter earnings should be released sometime in August. MDCE cosmetic business is on the pace to achieve earnings $0.14-0.18/share with gross sales of 10-12 million dollars in 1998. The cash flow generated by Pasadena is used to support MDCE daily operation, film projects, and company acquisitions. Also, MDCE intends to acquire two more cosmetic companies in 1998 to bolster its asset and earning bases.
In terms of its film and video business, "Suleyman The Magnificent,'' depicting the life and times of the Sultan that took the Ottoman empire to its Zenith, and enlarged the empire to the size of the entire Roman acquisition is going into pre-production in August. This movie has the sponsorship of the government of Turkey. Its budget is about US$75-90 million dollars. "Legacy", a full length motion picture that is about to go into pre production with San Francisco, CA as a possible location, as well as other novels from the late Harold Robbins. Mr. Robbins has sold over 750 million books world wide in 23 different languages and several of his novels have already been made into successful theatrical productions, such as The Carpetbaggers, The Betsey, 79 Park Avenue, King Creole and Never Love a Stranger, to name a few. MDCE has begun production of a one hour television special, based upon new theories that if a ninth bullet was fired, as many believe, there may have been !
more than one assassin of Robert F. Kennedy. MediaConcepts owns a film library of some RFK footage that has never before been broadcast.
This television production will open up many unanswered questions on the assassination and will have a question and reply segment after the broadcast. Many doubts still exist as to a lone assassin, and many are asking for an official inquiry into the event that happened 30 years ago, June 5, 1968. This special will be hosted by a very prominent and well known narrator. This television special will be broadcasted in a major TV network and made into video cassette.
Currently, MDCE is working on other movie deals with Magellin Entertainment Inc., a film company. Both sides have signed a letter of intent to make three movies and will finalize the contract within a couple of weeks. MDCE may have a press release regarding these deals sometime this week. These movie budgets will be about $5-10 million and both sides will share the profits equally. Also, MDCE will have other movie deals with Magellin and we don't know the details yet.
The delay in releasing of 97' 10-K may have contributed to the decline of the stock price. However, the company is getting better and better with all the recent developments. The company is also planning to establish a stock buy-back program up to 2 million shares, as they feel its stock is grossly undervalued. Management believes that is one way to enhance the shareholder's value. One more note, MDCE tried to have a reverse merger with a NASDAQ company to get listed on NASDAQ. MDCE gave up due to heavy debts that this NASDAQ company has. MDCE are still looking for this option to get listed on NASDAQ. Management believes that is one of best ways to enhance the shareholder's value.
MDCE is extremely undervalued, possible because of underfollowed. The company is heading in a right direction to fulfill its business plan. Again, we don't believe we can make quick money on MDCE, as it takes some time that all the events as discussed above begin to unfold. On the other hand, MDCE provides us a ground floor of an amusing opportunity when we consider its book value, growth potential, ongoing earnings, film projects, acquisitions, etc.. The stock has been traded in the range of 52-week lows and we feel the price is rock bottom. We believe the waiting is going to be over and the time is coming. Furthermore, the float becomes tight and tight, as more and more people, who doing businesses with MDCE, are aware of MDCE common stocks. All it needs for price advance are the releases of the earning reports and a project or two. We should see some nice moves in the coming months and we believe the stock price will advance to $0.40-0.50 in the short term (2-6 we!
eks) and then consolidate for next move to $1.00 within 6 months. We advice our readers to quietly accumulate the shares before all the exciting events begin to unfold. As always, don't forget to sell half of your shares when your money is doubled and let the rest have a free ride to $1.00. |
